Find
Fake suppliers often show common warning signs. These include very recent registration with large sales, residential or untraceable addresses, prices far below market and requests to pay a third party. Spotting them early protects your credit.
GST
Red flags of a fake or risky supplier
Updated . Every paid answer is checked by a CA. Free AI answers are labelled until a CA verifies them.
Provisions
Sec 16(2)(c), CGST Act 2017; Sec 155, CGST Act 2017; Rule 86A, CGST Rules 2017
Analysis
Departments detect fake firms through data analytics, return mismatches, physical verification and Aadhaar authentication. If your supplier is caught, your ITC can be blocked under Rule 86A and recovered. Example red flags: GSTIN two months old billing Rs 2 crore, no e-way bills for goods, payment asked in a different firm's account, steel offered 8 percent below market. Avoid such suppliers and record why you trusted others.
Close
- Check registration date versus the size of the deal
- Visit or video-verify the premises and warehouse
- Insist on e-way bills and named transporters for goods
- Pay only to the supplier's own bank account by banking channel
- Record your checks in a supplier file
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