Electricity theft remains a persistent challenge in many regions, causing significant financial losses for utility companies and undermining the integrity of energy distribution systems. This paper presents a comprehensive study on the simulation and development of a GSM-based smart energy meter equipped with Arduino as the central processing unit and GSM modules for data communication, aimed at detecting, and preventing electric theft in real-time. Innovative algorithms and data analysis techniques are employed to recognize anomalies in energy consumption, voltage fluctuations, and other indicators indicative of theft. Simulations and real-world testing are conducted to assess the system's effectiveness in detecting and preventing theft instances. Moreover, the suggested detection technique is replicated in Proteus to assess its performance under typical conditions and diverse theft scenarios. Ultimately, the system's capabilities are evaluated by applying various theft techniques, and the figures within the research paper illustrate the warning messages corresponding to each specific theft scenario.