Amid the strong economic growth, India is facing a surge in fraudulent input tax credit (ITC) claims that is impacting government revenues, straining the tax administration and distorting competition in key markets, despite a series of nationwide enforcement drives. The Goods and Services Tax (GST) regime, rolled out in 2017 under the “One Nation, One Tax” framework, was designed to replace a patchwork of central and state levies and create a unified domestic market.
However, a sharp rise in fake ITC claims has emerged as one of its most persistent challenges. The fraud typically involves companies availing credits on taxes that were never paid, inflating their claims and reducing their overall tax liability. The revenue leakage has begun to weigh on the fiscal balance and complicate compliance efforts across sectors.
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