Fake GST Bills: Over 3,000 Shell Companies Exposed, ₹15,000 crore GST loss

A major fraud case has come to light in the first quarter of the current financial year, in which 3,558 fake companies caused a loss of over ₹15,851 crore to the government.

A major Goods and Services Tax (GST) fraud case has come to light in India, involving 3,558 fake companies that caused losses exceeding ₹15,851 crore (approximately £1.5 billion) to the government. This was revealed in an investigation conducted by GST officials during the first quarter (April-June 2025) of the current financial year. These companies perpetrated the scam through fraudulent Input Tax Credit (ITC) claims.

How the Fraud Occurred?

The GST system allows companies to claim tax paid on raw material purchases as ITC. The fraudulent companies misused this provision by creating fake invoices without any actual transactions and obtained refunds of thousands of crores of rupees through ITC. According to officials, this scam is 29% higher than last year, when 3,840 companies committed fraud worth ₹12,304 crore in the first quarter.

Action Taken

GST officials have so far arrested 53 people in this case and recovered ₹659 crore. However, this amount is significantly less than the total loss. The fact that over 25,000 fake companies were involved in a ₹61,545 crore scam during the previous financial year highlights the seriousness of the problem.

Government’s Challenge

Officials say that the number of fake companies is constantly increasing. The government has taken several steps to curb this, but much work remains to be done. Special drives are being conducted to prevent GST fraud, such as the one launched in May-June 2023, which uncovered a ₹30,000 crore scam across 16 states.

Expert Advice

Experts believe that technological improvements in the GST system, stricter monitoring, and the use of data analytics can curb such fraud. The government plans to further strengthen digital tracking and Aadhaar-PAN based verification to prevent such scams in the future.