GoM flags Rs 2 lakh crore ITC fraud under GST; state-wise strategies discussed to plug leakages

During the meeting, states like Gujarat, Telangana, and Rajasthan made presentations on revenue augmentation strategies and shared best practices to combat fraud.

A high-level Group of Ministers (GoM), headed by Goa Chief Minister Pramod Sawant, met on Friday to assess the state of GST revenue collections and strategize on plugging tax leakages. The meeting focused sharply on the growing menace of Input Tax Credit (ITC) fraud, which has reportedly crossed Rs 2 lakh crore in recent years.

The panel, reconstituted in March by the GST Council, is tasked with analysing GST revenue trends and recommending measures to strengthen tax compliance across states.

During the meeting, states like Gujarat, Telangana, and Rajasthan made presentations on revenue augmentation strategies and shared best practices to combat fraud.

The GoM underlined that ITC misuse is one of the biggest concerns plaguing India’s indirect tax system. Between 2023-24 and 2024-25 alone, over 42,000 fake firms were detected by central and state GST officers. These entities allegedly generated fraudulent ITC claims worth more than Rs 1.01 lakh crore.

Of this, only Rs 3,107 crore has been recovered so far through ITC blocking measures, and 316 arrests have been made, officials said.

The meeting also explored technology-based solutions like wider adoption of e-invoicing and IT system upgrades to enhance traceability and reduce human intervention in tax compliance.

CM Pramod Sawant, in a post on X, said the panel discussed “state-wise revenue trends and actionable strategies for improved GST collection.”

The GoM also reviewed pre- and post-GST revenue comparisons, and focused on the need for better coordination between Centre and state tax departments to curb evasion effectively.

The GoM comprises ministers from several key states including Bihar, Chhattisgarh, Gujarat, Andhra Pradesh, Maharashtra, Punjab, Tamil Nadu, and Telangana.

Officials said the group will convene again shortly to finalise its recommendations, after which a detailed report will be submitted to the GST Council for further action.

(With inputs from PTI)