GST registration can be linked to biometrics
New goods and services tax (GST) registrations may not be instant for those who do not possess an Aadhaar identity number. An authorized panel is considering linking the GST record to biometric details with a live photograph of the applicants in an attempt to verify GST fraud, two officials said.
The GST Council law committee has suggested that new or new GST applicants follow a process similar to Aadhaar whereby new online registrations can be made with a live photo, use of biometric data and document verification, officials with direct knowledge of the matter. he said, requesting anonymity.
“Such facilities [registration with biometric details] can be provided at banks, post offices and GST Seva Kendras (GSK) as well as Passport Seva Kendras (PSK) or Aadhaar Seva Kendras (ASK). GSKs can work with Passport employer Seva Kendras to provide new registration facilities with the required controls over false registration, ”said one of the officials.
This process is under consideration to verify GST-related fraud, the second official said. “Annually, 18-19 lakhs of new GST registrations are made, but at the end of the year only 30% of them remain. Approximately 13-14 lakh of GST registrants disappear. Most of them are fleeting operators, creating bogus companies, claiming input tax credit (ITC) without supplying goods and services, ”he said.
The committee held a two-day meeting at a time when the government launched a nationwide crackdown on GST fraud and has so far arrested 48 people, including a woman and three certified public accountants (CAs). It has registered 648 cases in addition to identifying 2,385 false entities in just 10 days.
Alarmed by the rampant misuse of the liberal GST registration rules that made generating false invoices a business for unscrupulous elements, the legal committee has felt the urgent need to modify the existing GST registration rules. Currently, GST registration is almost instantaneous, as there is a presumptive registration provision in place to avoid bureaucratic delays, officials said.
“The new system is proposed to honor the honest, who will not face any difficulty registering with Aadhaar numbers. It will be difficult only for those who want to scam the system, “said the second official.
The legal committee has proposed two measures: addressing the threat of false invoices and also ensuring “ease of doing business” for the honest: liberal registration, easy refunds and self-fulfilling with small checks, he said.
The panel also suggested that these measures be discussed with states and other stakeholders before they are implemented, the officials said.
“A new registrant should opt for a mandatory physical verification and personal identification in case he opts for a registration process not based on Aadhaar authentication and does not have the adequate financial capacity supported by the income tax return. . In such a case, the applicant may have to present a letter of recommendation from two taxpayers of adequate trust ”, he added.
On the basis of documents, a “trustworthy” applicant could be registered within seven business days. If an applicant is not deemed “trustworthy”, the conditional search must be done within 60 business days only after physical verification of the workplace.
In such cases, the input tax credit to your buyers will be allowed only after filing their returns, officials said. It also proposes to take some cash deposits against their tax debts from those merchants instead of allowing 100% settlement of tax obligations through an input tax credit, they added.
The committee is of the opinion that to be categorized as trustworthy, a registrant or merchant must have good income tax credentials, not have previously canceled the GST registration in the same permanent account number (PAN) for any violation of the law, and it should undergo Aadhaar Authentication, as required in the case of an individual, owner and partners, the officials said.
An applicant can obtain exemptions from some of the conditions by submitting relevant documents, the first official said. “A jurisdictional official, satisfied with the credential verification, would waive some or all of the restrictions. Also, a certain class of applicant (who seems riskier) will have to undergo an in-person verification at GSK, ”he added.
In the opinion of the Legal Committee, once a merchant is suspended, he has to explain the discrepancy within a prescribed time limit for the revocation of the suspension, he said.
Archit Gupta, Founder and Chief Executive Officer (CEO) of the financial technology platform ClearTax, said: “The government has been taking various steps to curb fraud in ITC’s GST claims. Several measures have been implemented; Automatic filling of GST return forms has been introduced. With electronic invoicing, gaps in billing and related ITC claims can be further reduced. With the introduction of the biometric registry similar to Aadhaar, the government is now tightening controls on registrants at the first point of contact. “
“However, Aadhaar-based e-KYC is already required for GST registration. Therefore, introducing live photos and live biometrics can become another hurdle for genuine businesses. Especially during the times of Covid, it can be impractical to implement. This will be an additional layer to all the authentications currently required through Aadhaar linked to OTP one-time password,” he said.