Massive GST Fraud Exposed: ₹645 Crore ITC Scam Busted Through 229 Fake Companies

The government introduced GST rules to provide relief and simplify processes for crores of traders across the country. However, some people have been misusing these provisions. A similar case has now been uncovered, where a group managed to fraudulently claim ₹645 crore from the government as refunds without supplying any goods or even running actual companies. For this, they created 229 fake firms and used them to claim Input Tax Credit (ITC).

According to information shared by the Finance Ministry, the DGGI conducted raids at multiple locations across Delhi–NCR. During these operations, GST officials busted a gang that had allegedly defrauded the government of ₹645 crore ITC through 229 bogus GST-registered firms. A large amount of fake documents, digital devices, and account books were seized. It was found that these fake companies were issuing invoices without providing any actual goods or services.

What Did the Investigation Reveal?

During the raids, officials seized 162 mobile phones, which were reportedly used to receive OTPs for GST and banking operations. In addition, 44 digital signatures and more than 200 cheque books belonging to different firms were also recovered. The fraudsters  used these fake companies and cheque books to show business activity and generate bogus invoices to claim ITC.

How the Scam Worked

The entire fraud revolved around claiming Input Tax Credit (ITC). ITC is given when the GST paid on raw materials is higher than the GST applicable on the final product. In such cases, companies claim a refund of the difference through GST returns.

The scammers exploited this system. They showed the supply of raw materials through one fake firm—on which high GST was charged. Then they showed fake supply of finished goods through another one of their own companies. After that, they filed GST returns claiming the difference in GST as ITC. In this way, without supplying any raw materials or finished products, they siphoned off ₹645 crore from the government.

A ₹2 Lakh Crore Scam Last Year

ITC fraud under GST has been happening ever since the system was implemented. In the previous financial year 2024–25 alone, more than 25,000 cases of bogus ITC claims were detected across the country, amounting to ₹1.95 lakh crore. Since GST came into force, over ₹5 lakh crore has been claimed fraudulently through bogus ITC. Though some recovery has been made, it remains very small compared to the total amount lost.