CGST Detects Rs. 74,782 Crore Fake ITC Fraud in FY26; Over 30,000 Cases Unearthed, 358 Arrested

The Central Goods and Services Tax (CGST) administration uncovered 30,162 cases of fraudulent Input Tax Credit (ITC) involving an estimated ₹74,782 crore during the financial year 2025–26, reflecting a significant escalation in the government’s campaign against GST fraud. The figures were disclosed by Minister of State for Finance Pankaj Chaudhary in a written response to a question in the Rajya Sabha on Tuesday.

The data indicates that GST enforcement agencies have intensified their scrutiny of fake invoicing networks, shell entities, and fraudulent ITC claims, resulting in one of the largest enforcement drives since the introduction of the Goods and Services Tax. During the year, 358 individuals were arrested in connection with these investigations.

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Maharashtra and Gujarat Lead in Detection of Fraud Cases

Among all states, Gujarat and Maharashtra accounted for the largest share of fraudulent ITC cases detected during FY26.

According to the information tabled in Parliament, Gujarat reported 12,511 cases involving fraudulent ITC valued at approximately ₹12,633 crore, while Maharashtra recorded 9,629 cases with fraudulent claims amounting to nearly ₹18,320 crore. Together, these two states represented a substantial portion of the nationwide enforcement action both in terms of the number of cases and the financial magnitude of the fraud.

The government did not attribute the concentration of cases to any specific industry or region but indicated that investigations covered multiple sectors where fake invoicing and fictitious transactions were allegedly used to unlawfully avail Input Tax Credit.

Multiple Industries Under Scanner

The Finance Ministry informed Parliament that the detected frauds spanned a broad spectrum of industries, highlighting the widespread nature of GST-related tax evasion.

Manufacturing sectors under investigation included iron and steel, textiles, plastics, paper products, plywood, cement, and copper, while several service industries such as works contract services, manpower supply, real estate, and other commercial activities also came under scrutiny.

Investigators found that many of these frauds allegedly involved the creation of bogus invoices, circular trading arrangements, shell entities, and fictitious business transactions designed solely to generate ineligible Input Tax Credit without any actual supply of goods or services.

Enforcement Action Has Intensified Over Three Years

The parliamentary data also reflects a sharp increase in GST enforcement activity over the last three financial years.

During FY2024–25, CGST authorities detected 15,283 fraudulent ITC cases involving approximately ₹58,773 crore, resulting in 178 arrests.

In FY2023–24, enforcement agencies unearthed 9,190 cases involving fraudulent ITC worth nearly ₹36,373 crore, leading to the arrest of 182 individuals.

The progression from over 9,000 cases in FY24 to more than 30,000 cases in FY26 demonstrates a significant expansion in detection efforts, suggesting both enhanced surveillance capabilities and continued attempts by organised fraud networks to exploit the GST system.

Fake GST Registrations Continue to Facilitate Tax Fraud

Apart from fraudulent ITC claims, the government also disclosed details regarding the misuse of forged identity documents for obtaining fake GST registrations.

During FY2025–26, authorities detected 1,517 GST registrations that had allegedly been obtained using forged PAN and Aadhaar credentials. These entities were linked to fraudulent ITC claims amounting to nearly ₹9,940 crore.

The investigations led to the arrest of 60 persons, while seven accused remain absconding, according to the Minister’s reply.

Fake Registrations Show Declining Trend but Remain Significant

Although fake GST registrations continue to pose a serious challenge, the number detected has shown a decline over the past three years.

Government data revealed that in FY2024–25, authorities identified 3,977 fake GST registrations associated with fraudulent ITC claims of approximately ₹13,109 crore.

Earlier, during FY2023–24, enforcement agencies detected 5,699 fake registrations connected with tax fraud involving nearly ₹15,085 crore.

While the number of fake registrations has gradually reduced, the financial value involved continues to remain substantial, indicating that organised fraud syndicates continue to exploit forged identity documents to facilitate GST evasion.

Technology-Driven Enforcement Strengthening GST Compliance

Tax experts have long pointed out that shell companies established using forged PAN and Aadhaar documents form the backbone of many organised GST fraud operations. Such entities typically exist only on paper and are allegedly used to issue fake tax invoices without any genuine commercial activity, enabling fraudulent Input Tax Credit claims across multiple layers of transactions.

The government reiterated that it is increasingly relying on advanced data analytics, digital intelligence tools, risk-based profiling, and inter-agency coordination to identify suspicious GST registrations, detect fake invoicing networks, and dismantle organised tax evasion syndicates.

With enforcement agencies significantly expanding their detection capabilities, the latest figures underscore the government’s continued focus on protecting GST revenue and curbing fraudulent ITC claims through technology-driven investigations and coordinated enforcement action across the country.