Govt Detects ₹38,134 Crore Fake ITC Fraud in 3 Years; 177 Arrests Reported

In reply to Rajya Sabha Unstarred Question No. 1050 answered on 28.07.2026, the Ministry of Finance stated that Input Tax Credit (ITC) fraud cases detected by Central Tax formations during the last three years spanned multiple goods and services sectors, including iron & steel, textiles, plastics, paper products, plywood, cement, copper, works contract, manpower supply and real estate services, with State/UT-wise details provided in Annexures I–III. The Government outlined measures to curb ITC fraud, including introduction of the Invoice Management System (IMS) on the GST portal in late 2024 for invoice reconciliation, two nationwide special drives against fake registrations and fraudulent ITC during 2023 and 2024, pan-India biometric Aadhaar authentication for GST registration applications with document verification through GST Suvidha Kendras where applicable, and mandatory sequential filing of GSTR-1 before GSTR-3B from 01.10.2022. It further reported that fake GST registrations obtained using forged PAN and Aadhaar cards numbered 5,699 in 2023-24, 3,977 in 2024-25 and 1,517 in 2025-26, with detections of ₹15,085 crore, ₹13,109 crore and ₹9,940 crore respectively, alongside 67, 50 and 60 arrests and 14, 2 and 7 masterminds reported absconding during the respective years.

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
RAJYA SABHA
UN-STARRED QUESTION NO. 1050
ANSWERED ON – 28.07.2026

“EVASION OF GST INPUT TAX CREDIT”

#1050. Shri Neeraj Dangi:

Will the Minister of FINANCE be pleased to state:

a. the details of the perpetrators involved in Input Tax Credit fraud cases during the last three years, State-wise and sector-wise;

b. the stringent measures being taken by Government to deal with cases of Input Tax Credit fraud during the said period;

c. the number of fake GST registrations obtained through the misuse of forged PAN cards and Aadhaar cards; and

d. the number of individuals arrested in such cases over the past three years and the number of masterminds still absconding?

ANSWER

MINISTER OF STATE IN MINISTRY OF FINANCE

(SHRI PANKAJ CHAUDHARY)

a. The details of the ITC fraud cases year wise and State/UT wise, for the last three years detected by Central Tax formations is given as Annexure-I to III. These cases of Input Tax Credit (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.

b. The measures taken by the Government to deal with cases of ITC fraud are:

i. In order to further streamline auto-population of ITC data in returns, the Invoice Management System (IMS) facility has been introduced on the GST portal in late 2024, to help recipient taxpayers manage incoming invoices more effectively. It allows recipients to accept, reject, or mark invoices as pending when these are saved or filed by their supplier taxpayers. With the implementation of IMS, registered recipients can now cross-verify and reconcile invoices reported by suppliers in their GSTR-1, thereby streamlining and strengthening the ITC claim process;

ii. Two special drives, respectively for the period l6.05.2023 to 14.08.2023 and 16.08.2024 to 30.10.2024 were launched on all India basis both by Central as well as State tax administrations, for a concerted and coordinated action against fake registrations and fraudulent passing of ITC;

iii. Biometric-based Aadhar authentication of GST registration applications has been extended on pan-india basis. Besides, it has been provided through amendment in rule 8(4A) of CGST Rules that an applicant who has not opted for Aadhaar authentication, will be required to visit GST Suvidha Kendra for taking of photograph and for document verification;

iv. Filing of GSTR-1 has been made mandatory before filing of GSTR-3B for a tax period with effect from 01.10.2022. Also, sequential filing of GSTR-1 has been mandated w.e.f. 01.10.2022. Thus, GSTR-l as well as GSTR-3B has been made totally sequential tax period wise. This ensures that invoice details declared in GSTR-1 by the seller are used to auto-populate available ITC in GSTR-2B.

(c) and (d): The details of the fake GST registrations obtained through misuse of forged PAN cards and Aadhaar cards, no. of persons arrested and the no. of masterminds absconding are as under:

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ANNEXURE-I

ANNEXURE as referred in reply to part (a) of Rajya Sabha Unstarred Question No. 1050 (to be answered on 28.07.2026)

ANNEXURE-II

ANNEXURE as referred in reply to part (a) of Rajya Sabha Unstarred Question No. 1050 (to be answered on 28.07.2026)

ANNEXURE-III

ANNEXURE as referred in reply to part (a) of Rajya Sabha Unstarred Question No. 1050 (to be answered on 28.07.2026)