The Government of India has confirmed a sharp rise in GST evasion through fake invoicing, including schemes involving sleeping modules and inactive pharmaceutical firms used as fronts for fraud. The details were shared by Minister of State for Finance Shri Pankaj Chaudhary in a written reply to an unstarred question in the Rajya Sabha.
Over 55,000 Fake Invoicing Cases Detected in Three Years
According to Central GST authorities, fake invoicing and ITC fraud cases have surged in recent years. Data shows:
- 2022-23: 7,231 cases involving Rs 24,140 crore
- 2023-24: 9,190 cases involving Rs 36,374 crore
- 2024-25: 15,283 cases involving Rs 58,772 crore
- 2025-26 (up to Oct 2025): 24,109 cases involving Rs 41,664 crore
The figures reveal a significant increase in both the number of cases and the scale of detection, highlighting how fraud networks continue to exploit loopholes using dormant firms, bogus entities, and fake GST registrations.
Pharmaceutical Firms Also Used as Fake Fronts
The Ministry acknowledged that sleeping or inactive pharmaceutical companies were also used to generate fake invoices. The number of such pharma-related ITC fraud cases includes:
- 2022-23: 3 cases (Rs 31.71 crore)
- 2023-24: 0 cases
- 2024-25: 2 cases (Rs 5 crore)
- 2025-26 (up to Oct 2025): 2 cases (Rs 7.25 crore)
Although fewer in number, officials consider these cases particularly sensitive because fraudulent pharma units can pose both fiscal and public-health risks.
Government Rolls Out Stringent Measures to Block Fake Registrations
To curb the misuse of dormant firms and prevent fraudulent ITC claims, the government has introduced a series of technology-driven and compliance-focused measures. These include:
- Mandatory GSTR-1 vs GSTR-2B invoice matching
- Restriction on filing GSTR-1 without filing GSTR-3B
- Mandatory e-invoicing for B2B transactions above Rs 5 crore turnover
- OTP-based PAN verification and risk-based Aadhaar biometric authentication
- Mandatory physical verification in high-risk cases, even after Aadhaar validation
- Requirement to furnish valid bank account details within 30 days of registration
- Geo-tagging of business premises for new GST registrations
- Automatic suspension of non-compliant GSTINs under Rule 21A
- System-generated notices (DRC-01B/01C) under Rules 88C/88D
- Introduction of the Invoice Management System (IMS) to help taxpayers verify and accept supplier invoices
- Nationwide special drives conducted in 2023 and 2024 to identify and cancel fake registrations
The government also emphasized that fraudulent ITC availment without invoice is now a cognizable and non-bailable offence, and beneficiaries of such frauds are liable for penalties.
Crackdown Intensifies as Cases Continue to Rise
The Ministry's data suggests that despite sustained enforcement efforts, GST evasion networks are expanding rapidly, especially through dummy entities and dormant firms. Officials believe that enhanced digitization, stricter registration protocols, and targeted verification will help curb large-scale ITC fraud as authorities continue to intensify surveillance and coordination across states.
Official copy of the data has been attached
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