COMBATING GST INPUT TAX CREDIT FRAUD IN INDIA: FORENSIC ACCOUNTING, DATA ANALYTICS, AND LEGAL ENFORCEMENT STRATEGIES
DOI:
https://doi.org/10.55829/ykz3ea41Keywords:
GST Fraud, Input Tax Credit, Forensic Accounting, Fake Invoicing, Shell Companies, IndiaAbstract
This research paper provides an overview of the growing problem of Goods and Services Tax (GST) Input Tax Credit (ITC) frauds in India, which has become a serious risk to the country's fiscal health. Input Tax Credit (ITC) fraud refers to the illegal or wrongful availment and utilisation of input tax credit. The research paper will detail how these frauds are executed—through fake invoices and circular trading schemes, through the creation and use of networks of shell corporations—"virtual economies" and the schemes used to defraud the system. Using recent data from the Central Board of Indirect Taxes and Customs (CBIC) and the Directorate General of GST Intelligence (DGGI), the economic cost of GST frauds has been assessed in this article. The paper provides evidence for a rapidly expanding trend in the scale of fraud, which demands further research, including distinct forensic accounting techniques and forensic practices, as the forensic response to fraud grows. In this study we will investigate the use of forensic methods (such as data analytics, digital forensics and network analysis) that can help identify large scale GST tax frauds in India. This is based on data from government sources along with several case studies of high-profile cases and it was determined that forensic accountants are required to work on investigations into these types of crimes and create effective deterrent programs. It was also found that a combined approach of utilizing advanced technology, harsh legal enforcement and highly skilled forensic personnel will be necessary for protecting the integrity of India’s GST initiative going forward.
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