GST FRAUD: UNVEILING THE MODUS OPERANDI OF INPUT TAX CREDIT FRAUD SCHEMES

Abstract

Goods and Services Tax (GST) is an effective way of raising revenue for the Government, but it also faces the problem of GST Input Tax Credit (ITC) fraud. Input tax credit is a crucial component of the indirect tax system, but it can be misused by fraudsters to evade taxes and cause a huge loss of government tax revenue. This paper studies the GST fraud modus operandi based on newspapers articles. It reveals that fraudsters have devised a unique scheme of fake billing and input tax credit fraud, involving the creation of shell companies. GST fraud poses a challenge for the GST department in India, as fraudsters exploit the loopholes in the GST system. To curb GST fraud and minimize its impact, it is important to understand the GST fraud modus operandi and its types. This paper presents two modus operandi that illustrate how GST frauds are committed by fraudsters.