The Central Government has uncovered a large number of fake Goods and Services Tax (GST) registrations created using forged Permanent Account Number (PAN) and Aadhaar credentials, resulting in massive tax evasion running into thousands of crores.
Parliament was informed on Monday, December 15, that 489 such fraudulent GST registrations were detected up to October this year, with the estimated tax evasion exceeding Rs. 3,000 crore.
In a written reply to the Lok Sabha, Minister of State for Finance Pankaj Chaudhary provided detailed figures highlighting the scale of the problem. During the financial year 2024–25, authorities identified 3,977 GST registrations obtained using fake or forged PAN and Aadhaar details, leading to tax evasion amounting to ₹13,109 crore. In the preceding financial year, 2023–24, as many as 5,699 similar fraudulent registrations were detected, causing revenue losses estimated at ₹15,085 crore.
Arrests Made in Fake GST Registration Cases
The enforcement action against those involved has also intensified. From April to October this year, GST officers arrested 16 individuals in connection with fake registration and fraudulent input tax credit (ITC) cases. The total number of arrests stood at 50 in the financial year 2024–25 and 67 in 2023–24, reflecting a sustained enforcement effort by tax authorities.
DGARM Using Data Analytics to Detect Fraud
Chaudhary informed the House that the Directorate General of Analytics and Risk Management (DGARM) has initiated a comprehensive exercise to detect irregularities in digital information submitted by proprietorship firms during the GST registration process. DGARM is using advanced data analytics and risk assessment tools to identify suspicious patterns and anomalies that may indicate fake entities.
In addition to scrutinising registration data, DGARM is focusing on identifying high-risk taxpayers whose sole purpose is to generate fake or bogus invoices and pass on ineligible input tax credit within the supply chain. Such entities are often used to facilitate large-scale tax evasion without any genuine business activity.
Nationwide Special Drives Against Fake GSTINs
To strengthen enforcement, the government launched two nationwide special drives against non-existent and fake GST registrations. The first drive was conducted from May 16, 2023, to August 14, 2023, while the second took place from August 16, 2024, to October 30, 2024. These drives were carried out jointly by Central and State tax authorities to ensure coordinated and effective action.
As part of these initiatives, specially constituted teams of tax officials conducted physical verification of business premises linked to GST registrations. During the drives, several GST Identification Numbers (GSTINs) were found to be non-existent. Such registrations were promptly suspended or cancelled after due verification, Chaudhary said.
Stricter GST Registration Norms in Place
The government has also strengthened the GST registration process to prevent misuse. Biometric Aadhaar authentication has been implemented nationwide, supported by data analytics and risk-based parameters. Every GST registration application is assigned a system-generated risk rating, which is shared with Central Board of Indirect Taxes and Customs (CBIC) field formations to enable thorough verification before approval.
Providing bank account details has been made mandatory at the time of registration. The bank account must be in the name of the registered person and linked to their PAN. In the case of proprietorship firms, the account must also be linked to Aadhaar. Applicants are required to submit valid bank details within 30 days of registration or before filing their first outward supplies return, whichever is earlier.
Failure to comply with these requirements can result in system-based suspension of the GST registration. Additionally, registrations are automatically suspended if returns are not filed continuously for six months.
Cross-Verification of Address Proofs
To further curb the issuance of fake registrations, tax authorities now cross-verify documents submitted as proof of business address using publicly available databases. These include records from land registries, electricity distribution companies, municipal bodies, local authorities, and other relevant government websites. This multi-layered verification process aims to ensure the authenticity of registration details and prevent the creation of shell entities.
The government’s latest disclosures underline the magnitude of GST-related fraud and signal a firm resolve to tighten compliance through technology-driven oversight, coordinated enforcement, and stricter registration norms.
