Mudra Loan Scheme Used In Rs 1.3 Crore GST Fraud: How The Gang Operated

A gang in Lucknow has been busted for exploiting the Mudra loan scheme to create fake GST firms and commit a Rs 1.3 crore input tax credit fraud, highlighting vulnerabilities in the system.

Key Points

A gang in Lucknow was busted for exploiting the Mudra loan scheme to commit GST fraud.
The gang collected identity documents under the guise of providing Mudra loans.
These documents were used to create bogus GST firms for input tax credit fraud.
The fraud involved generating fake invoices and e-way bills to show fictitious transactions.
Police have arrested one individual and anticipate further arrests as the investigation continues.

Police on Wednesday said they busted a gang that lured people with promises of loans under the Mudra scheme, collected their identity documents, and used them to set up bogus GST firms to carry out input tax credit (ITC) fraud worth about Rs 1.3 crore.

Accused Arrested And Mobile Phones Recovered

Police arrested Ravindra Giri (35), a native of Lakhimpur Kheri, and recovered three mobile phones from his possession.

Additional Deputy Commissioner of Police (Crime Branch) Kiran Yadav said, "In the Rs 1.3 crore GST ITC fraud case, the accused revealed during questioning that he collected Aadhaar and PAN from people on the pretext of facilitating Mudra loans, procured SIM cards using those details and created fake GST firms to execute the fraud."

Modus Operandi: Fake Firms And Invoices

Using the illegally obtained SIM cards, the accused registered fake GST firms with forged rent agreements and electricity bills, police said.

These shell entities were then used to generate fake invoices and e-way bills to show fictitious transactions as legitimate and sell fraudulent ITC on commission, causing significant revenue loss, officials said.

The case was registered at the Rahimabad police station based on a complaint by a state tax official regarding a non-existent firm claiming ineligible ITC.

Investigation Underway, More Arrests Expected

Yadav said the accused has confessed to the crime, and further investigation is underway.

"Necessary legal action is being taken, and more arrests are likely," she added. Police said cyber and surveillance teams assisted in busting the racket.

The Mudra scheme aims to provide loans to small businesses and entrepreneurs. GST, or Goods and Services Tax, is an indirect tax levied on the supply of goods and services in India, and input tax credit allows businesses to reduce their tax liability by claiming credit for taxes already paid on inputs.

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