The Union government has uncovered fake goods and services tax input-tax-credit claims worth Rs 74,782 crore during the financial year 2025-26, marking a sharp increase in tax fraud detection as authorities increasingly rely on artificial intelligence, data analytics, and digital verification tools.
The fraud was detected across 30,162 cases, the government told the Rajya Sabha.
"These cases of ITC fraud have been detected across diverse sectors dealing in both goods and services, including iron & steel, textiles, plastics, paper products, plywood, cement, copper and various service sectors such as works contract service, manpower supply services, real estate services etc," Minister of State for Finance Pankaj Chaudhary said in a written reply.
The latest figures show a significant rise in enforcement compared with previous years. In FY25, central tax authorities detected 15,283 cases involving fraudulent ITC claims worth Rs 58,773 crore. In FY24, they uncovered 9,190 cases amounting to Rs 36,373 crore.
Input Tax Credit allows businesses to reduce their GST liability by claiming credit for the tax paid on purchases. However, fraudsters exploit the system by creating fake companies and issuing invoices without any actual supply of goods or services, enabling businesses to claim tax credits illegally.
Also Read: India's GST Collections Rise 13.9% YoY In June To Rs 1.94 Lakh Crore
The Finance Ministry said technology has become central to identifying such fraud.
Authorities are using AI-powered data analytics, invoice matching, and risk-based verification systems to detect suspicious transactions and fake GST registrations. These tools are helping officials trace fraudulent credit chains more efficiently and identify shell entities before large-scale revenue losses occur.
Government data also indicates progress in tackling fake GST registrations.
During FY26, authorities detected 1,517 fake GST registrations obtained using forged PAN and Aadhaar details, down from 3,977 in FY25 and 5,699 in FY24. These fake entities were linked to fraudulent ITC claims worth Rs. 9,940 crore. Officials arrested 60 people, while seven accused remain at large.
The Finance Ministry said enforcement efforts are now moving beyond detecting fraud to preventing it through stronger digital checks at the registration stage and continuous monitoring of GST filings.
Also Read: GST Turns 10, Focus Shifts To AI-Led Compliance, Quicker Refunds, Simpler Tax Processes
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