In a major GST Scam, GST authorities have exposed fake input tax credit (ITC) fraud amounting to ₹15,851 crore during the April-June quarter of the current financial year
In a major GST Scam, GST authorities have exposed fake input tax credit (ITC) fraud amounting to ₹15,851 crore during the April-June quarter of the current financial year (FY26). This amount is 29% higher compared to the same quarter last year, highlighting the growing scale of tax fraud in India. However, the number of fake firms detected has slightly decreased compared to the previous year.
During Q1 of FY26, both Central and State GST departments uncovered 3,558 fake GST firms involved in fraudulent ITC claims. This is a drop from 3,840 fake firms identified during the same quarter last year. Under the leadership of Goa Chief Minister Pramod Sawant, state-level discussions are ongoing to track tax evasion and implement strategies to combat ITC fraud effectively.
According to a report by Moneycontrol, officials have revealed that, on average, 1,200 fake companies are being detected every month. Although the number of fake firms caught in the April–June quarter is slightly lower than last year, it reflects that the ongoing crackdown against fake GST registrations is yielding positive results. The GST Scam in Q1 FY26 involved fake companies defrauding the government of ₹15,851 crore, leading to 53 arrests and ₹659 crore in recovery.
Under the GST system, Input Tax Credit refers to the credit a business receives for the tax paid on purchases of goods or services. For example, if a business purchases goods worth ₹1,000 with 10% GST (i.e., ₹100), it can claim that ₹100 as ITC. Later, if the same product is sold at ₹1,500 with 10% GST (i.e., ₹150), the business must pay the net GST of ₹50 to the government after adjusting for the input credit.
However, in the GST Scam, fraudulent companies generate fake invoices and pass on bogus ITC without any actual transaction, causing massive losses to the exchequer. Such fraudulent practices exploit the GST mechanism, and this scam is one of the largest uncovered in recent years.
The recent GST scam involving ₹15,851 crore worth of fake Input Tax Credit (ITC) claims underscores the growing sophistication of tax fraud in India. While the number of fake companies has slightly decreased compared to last year, the scale of financial loss has increased, highlighting the urgent need for stricter monitoring and enforcement. The detection of 3,558 bogus firms and the arrest of 53 individuals reflect the government’s active crackdown on GST fraud. However, continuous efforts, stronger digital verification mechanisms, and inter-agency coordination are essential to curb such scams and protect public revenue from being siphoned off through fraudulent means.
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The recent GST scam refers to the fraudulent claim of ₹15,851 crore through fake Input Tax Credit (ITC) by 3,558 fake companies during the April–June quarter of FY26.
A total of 3,558 fake GST-registered companies were found to be involved in the scam, generating fake invoices to claim ITC fraudulently.
As part of the enforcement action, the government recovered around ₹659 crore and arrested 53 individuals linked to the fraud.
A GST scam typically involves fake companies creating false invoices to claim Input Tax Credit without any actual sale or purchase of goods/services. This leads to loss of tax revenue for the government.
ITC is the tax a business can claim back on purchases made for its operations. For instance, if you pay GST while buying raw materials, you can deduct that amount from the GST you collect on your sales.
