Increase in Fake Credit Claims Detected in FY24; Haryana and Delhi at Forefront

A total of 1,999 cases of fraudulent input tax credit (ITC) claims have been identified in India during the ongoing fiscal year of 2023-24, up to January, amounting to Rs 19,690 crore. The highest number of cases were reported in Gujarat, West Bengal, Haryana, Assam, Rajasthan, Maharashtra, Karnataka, and Delhi, as per data examined. This amount represents a substantial increase of 49% compared to the Rs 13,175 crore detected in 1,940 cases during FY23. 

While Gujarat and West Bengal reported the highest number of fake ITC cases among the states and union territories, Haryana and Delhi led in terms of the value detected, with an aggregate of Rs 10,851 crore. Despite comprising only 14.5% of the total number of cases, Haryana and Delhi collectively contributed to 55% of the total detected amount in fake ITC claims under GST for the current fiscal year.

Interestingly, the number of fake ITC cases decreased compared to the previous year in 10 states and union territories, including Gujarat and Haryana. However, the number of cases doubled in seven states and UTs during 2023-24, notably in Delhi (a 150% increase), West Bengal (134% increase), and Telangana (228% increase).

The total detected amount of fake ITC cases for FY24, until January, stands at Rs 19,690 crore, marking nearly a 50% increase compared to Rs 13,175 crore detected in the previous fiscal year of 2022-23. These figures pertain to cases booked by the Directorate General of GST Intelligence (DGGI) and do not encompass cases handled by central GST (CGST) and state GST (SGST) authorities.

A senior government official emphasized the ongoing efforts to combat evaders, acknowledging that while progress has been made, the issue of fake ITC remains significant. Measures such as enhanced registration protocols and stricter enforcement actions have been implemented to address the problem, with a focus on apprehending the perpetrators behind these fraudulent activities.

Instances of GST fraud typically involve the use of fake invoices to improperly claim ITC, often through entities engaging in circular invoicing schemes or creating shell companies. Sectors such as construction, metals, tiles, marbles, insurance, pharmaceuticals, and manpower supply services have been particularly susceptible to such fraudulent practices.

Despite challenges in tracing and apprehending perpetrators, efforts to curb the fraud cycle continue. In FY23-24, out of the total detected amount of Rs 19,690 crore, 105 individuals were arrested, and Rs 2,504 crore was recovered. Similarly, in FY22-23, 68 arrests were made, and Rs 1,597 crore was recovered out of the Rs 13,175 crore detected in fake ITC cases.

Additionally, Central GST zones recorded 6,303 cases of fake ITC in FY22-23, amounting to Rs 10,965 crore, leading to 85 arrests and a recovery of Rs 887 crore.