GST Officers Uncover ₹15,851 Crore Fake ITC Claims in Q1 FY26; 3,558 Bogus Firms Busted

New Delhi, July 20, 2025:GST enforcement authorities have detected fraudulent input tax credit (ITC) claims worth ₹15,851 crore in the first quarter (April–June) of FY26, marking a significant 29% increase over the same period last year, according to official data.

Despite the surge in fraud value, the number of fake firms identified—3,558—is slightly lower than the 3,840 bogus entities uncovered in Q1 of FY25. Officials attribute the dip to an intensified crackdown on fake GST registrations in recent months.

“About 1,200 fake firms are being detected monthly on average. The reduction in total detections this quarter shows that recent enforcement drives are yielding results,” an official said.

During the quarter, central and state GST officers also made 53 arrests and recovered ₹659 crore linked to these fake ITC claims. In comparison, Q1 of FY25 saw ₹12,304 crore in fraudulent ITC, with ₹549 crore recovered and 26 arrests made.

The issue of fake ITC claims remains a major challenge under the Goods and Services Tax regime. Businesses can claim credit on taxes paid to suppliers, but many unscrupulous entities exploit the system by creating shell firms solely to claim ITC and evade taxes.

To tackle this, a panel of state finance ministers chaired by Goa CM Pramod Sawant is currently reviewing tax evasion practices in key sectors and proposing systemic solutions to curb ITC misuse.

During FY25, GST authorities had detected a staggering 25,009 fake firms responsible for ₹61,545 crore in fraudulent ITC claims.