What is Penalty for fraudulent claim of ITC?

For fraudulent claims of Input Tax Credit (ITC), the penalty can be 100% of the tax amount involved. In serious cases involving large amounts, it can also lead to arrest and prosecution under GST law.

Startup Example: A startup claims ITC on invoices from a supplier who did not actually supply any goods. During a GST audit, this is identified as a fraudulent claim, leading to ITC reversal and heavy penalties.

Our bookkeeping services ensure ITC is claimed only on eligible invoices.