Aadhaar Authentication: Latest Indian GST Update

Introduction (Section 25 of the CGST Act, 2017)

To address concerns of potential revenue leakage, the Government introduced Aadhaar Authentication requirements under the Goods and Services Tax (GST) laws. Pursuant to Sections 25(6B), 25(6C), and 25(6A) of the CGST Act, newly registered taxpayers and, in certain cases, existing taxpayers must undergo Aadhaar Authentication. When a taxpayer cannot complete such authentication, the GST authorities are empowered to conduct a physical verification of the business premises under Rule 25 of the CGST Rules.

This document provides a detailed overview of all legal provisions concerning Aadhaar Authentication under the GST legislation, including the procedure for undertaking authentication and the circumstances under which physical verification may be conducted.

1. Overview of Aadhaar Authentication & Physical Verification (Finance (No. 2) Act, 2019 read with Section 25 of the CGST Act)

• The requirement for Aadhaar Authentication was introduced into GST law via the Finance (No. 2) Act, 2019 and is detailed under Section 25 of the CGST Act and the corresponding CGST Rules.
• As approved in the 45th GST Council Meeting, Aadhaar Authentication has been made mandatory for new GST registrants and, in specified cases, for existing GST registrants.
• Where an individual does not undergo or is unable to complete Aadhaar Authentication, physical verification of the principal place of business may be conducted by the proper officer, both before and after the grant of registration (as per Rule 9 and Rule 25 of the CGST Rules).

The ensuing sections elaborate on:

• Manner of Aadhaar Authentication under GST: Explains legal requirements, procedure, and associated timelines.
• Manner of Physical Verification under GST: Details scenarios and procedure for physical inspection of business premises by the proper officer.
• Persons Exempted from the Aadhaar Authentication Requirement: Discusses categories of taxpayers notified by the Government who are not subject to mandatory Aadhaar Authentication.

2. Aadhaar Authentication under GST

Section 25(6B) and 25(6C) of the CGST Act stipulate that both new GST applicants and, in certain cases, existing registered persons must undergo Aadhaar Authentication or furnish prescribed alternate documentation.

2.1. Aadhaar Authentication Requirement for New Registration

Aadhaar Authentication for new GST registrations became mandatory with effect from August 21, 2020 (vide Rule 8(4A) of the CGST Rules, inserted retrospectively from April 1, 2020, by Notification No. 62/2020-Central Tax, dated August 20, 2020).

Statutory Mandate (Section 25(6B) & 25(6C) of the CGST Act)Every new GST applicant must either:

• • Undergo Aadhaar Authentication, or
  • Furnish proof of possession of the Aadhaar number.

If the individual does not have an Aadhaar number, an alternate mode of identification (i.e., physical verification of the place of business) will be conducted under the proviso to Section 25(6B) and 25(6C) of the CGST Act, read with Rule 9 and Rule 25 of the CGST Rules.

Persons Whose Aadhaar Number Requires Authentication (Section 25(6B), 25(6C) of the CGST Act & Notification No. 18/2020 & 19/2020 - Central Tax, dated 23-03-2020)

• • As per the CGST Act, the Aadhaar Authentication or furnishing of Aadhaar number is required for:
    • Individual
    • Karta (in case of HUF)
    • Managing Director or Whole-time Director
    • Partners
    • Members of Managing Committee of Association
    • Board of Trustees
    • Authorized Representative/Signatory
    • Other persons as notified by the Government.
  • Subsequent notifications and FAQs on the GST Portal emphasize that, in practice, Aadhaar Authentication must be completed for:
    • Proprietors/Primary Authorized Signatory
    • Managing or Authorized Partners of Partnership Firms
    • Karta of HUF
    • At least one Director in case of Companies, etc.

In the event of any discrepancy between the CGST provisions and the GST Portal's practical requirements, taxpayers must comply with what the GST portal mandates to ensure smooth registration.

2.2. Procedure for Aadhaar Authentication for New Registration

Under Rule 8(4A) of the CGST Rules, the new registrant is offered a choice to undergo Aadhaar Authentication. The detailed procedural steps are:

Opting 'YES' for Aadhaar Authentication

• • Upon selecting the Aadhaar Authentication option during online registration (Form GST REG-01), an authentication link is sent to the registered mobile number and email address of the Primary Authorized Signatory (PAS) and one Promoter/Partner (where applicable).
  • Authentication is completed by validating the One-Time Password (OTP) received from UIDAI on the Aadhaar-linked mobile/email.
  • Time Limit for Aadhaar Authentication: The law (Rule 8(4A) of the CGST Rules) allows 15 days from the submission of Part B of Form GST REG-01 to complete this OTP-based verification.
  • Verification by Proper Officer: If Aadhaar Authentication is successfully completed, the proper officer must verify the application within 7 days of the submission date (Rule 9(1) of the CGST Rules).
  • Failure to Authenticate Within Time: If the applicant does not complete Aadhaar Authentication within the 15-day window, registration will only be granted after a physical verification. In such a scenario, the proper officer has up to 30 days (from the expiry of the aforesaid 15-day period) to process the application (Proviso to Rule 9(1)).
  • Deemed Approval: Under Rule 9(5) of the CGST Rules, if the proper officer takes no action within the prescribed timelines, the application is deemed approved.

Biometric-based Aadhaar Authentication & Risk-based Physical Verification

• • Proviso to Rule 8(4A) of the CGST Rules (as substituted via Notification No. 27/2022-Central Tax, dated 26-12-2022, further extended for PAN-India implementation by Notification No. 13/2024-Central Tax, dated 10-07-2024) empowers the GST Portal to identify applicants (based on data analytics and risk parameters) for a biometric-based Aadhaar Authentication at designated Facilitation Centres.
  • The applicant's original documents and real-time photograph are verified.
  • Even if Aadhaar is authenticated, Rule 9(1)(a)/(aa) of the CGST Rules allows the proper officer to undertake a physical verification if the applicant is flagged under risk parameters.

Opting 'NO' for Aadhaar Authentication

• • If the applicant chooses not to authenticate or is unable to authenticate Aadhaar, the GST registration is granted only after physical verification of the principal place of business. In such cases, the time limit for the proper officer to decide on the application is 30 days from the submission date (Proviso to Rule 9(1)).
  • Deemed Approval: If the proper officer does not act within 30 days, registration stands deemed approved (Rule 9(5)).
  • Mandatory Verification at Designated Centres: Under the newly inserted second proviso to Rule 8(4A) (effective from 11-02-2025, vide Notification No. 09/2025-Central Tax, dated 11-02-2025), such applicants must undergo a prescribed verification process (photograph, original documents, etc.) at a Facilitation Centre. Only upon completion of this process will the application be considered complete.

2.3. Aadhaar Authentication Requirement for Existing Registrants

Legal Basis and Applicability (Section 25(6A) of the CGST Act & Rule 10B of the CGST Rules)

• • From January 01, 2022 onward (vide Notification No. 38/2021-Central Tax, dated 21-12-2021), certain existing taxpayers must complete Aadhaar Authentication before:
    • Filing an application to revoke cancellation of GST registration (Form GST REG-21).
    • Claiming IGST refunds on export of goods (Rule 96 of the CGST Rules).
    • Filing a refund application in Form RFD-01.

Identification Documents in Lieu of Aadhaar (First & Second provisos to Rule 10B of the CGST Rules)

• • If Aadhaar is not assigned, the taxpayer must furnish:
    • Aadhaar enrolment ID slip, and
    • Any one of:
      • Bank passbook with a photograph,
      • Voter identity card,
      • Passport, or
      • Driving license.
  • The individual must authenticate Aadhaar within 30 days of obtaining the Aadhaar number.

Persons Required to Authenticate (Rule 10B of the CGST Rules)

• • Proprietorship: Proprietor and Authorized Signatory.
  • Partnership: Any partner and the Authorized Signatory.
  • HUF: Karta and Authorized Signatory.
  • Company: Managing Director/Whole-time Director and Authorized Signatory.
  • AOP/BOI/Society/Trust: Members of Managing Committee/Trustees (as applicable) and Authorized Signatory.

Consequences of Non-compliance (Second proviso to Section 25(6A) of the CGST Act)

• • The law currently states that a failure to undergo the required Aadhaar Authentication, or to furnish alternative documents, may render the registration deemed invalid.
  • However, in practice, Aadhaar Authentication for existing registrants is only triggered in specific scenarios (e.g., revocation of cancellation, claiming refund, etc.). Therefore, the invalidation provision typically applies only if the taxpayer seeks such benefits without completing Aadhaar formalities.
  • Applicants who do not authenticate Aadhaar during registration are subjected to mandatory physical verification of their principal place of business.

3. Physical Verification under GST (Rule 9(1) and Rule 25 of the CGST Rules)

The proper officer may conduct a physical verification of a taxpayer's principal place of business in the following circumstances:

1. Failure of Aadhaar Authentication before registration.
2. Non-selection of Aadhaar Authentication.
3. Cases flagged by the GST Portal based on data analysis and risk parameters.
4. With prior approval of an officer (not below the rank of Assistant Commissioner) whenever deemed necessary.
5. Where the officer is satisfied that verification is required after registration is granted.

The Superintendent of Central Tax has been clarified (vide Circular No. 1/1/2017, dated 26-06-2017 read with Circular No. 223/17/2024-GST, dated 10-07-2024) as the proper officer for physical verification under Rule 25.

3.1. Physical Verification Before Grant of Registration (Rule 25(2) of the CGST Rules)

• Trigger:
1. Failure to authenticate Aadhaar or refusal to opt for Aadhaar Authentication.
2. Applicants identified on the common portal for risk-based verification.
3. Proper officer deems verification necessary (with approval of an officer authorized by the Commissioner, at least of the rank of Assistant Commissioner).
• Verification Report: The proper officer must upload the verification report (Form GST REG-30) with photographs and relevant documents at least 5 working days before the expiry of the statutory timeline.
• Time Limit to Grant Registration:

• In general, 7 working days if all documentation is in order (Rule 9(1)).
• 30 days, if the applicant undergoes physical verification in lieu of Aadhaar Authentication (Proviso to Rule 9(1)).
• If the applicant originally opted for Aadhaar Authentication but failed to complete it within 15 days, the 30-day timeline starts after the expiry of those 15 days (Rule 8(4A)).

3.2. Physical Verification After Grant of Registration (Rule 25(1) of the CGST Rules)

• Trigger:If the proper officer deems post-registration verification necessary, they may visit and inspect the premises.
• Verification Report: Must be uploaded in Form GST REG-30 within 15 working days from the date of inspection.
• Deemed Registration & SOP for Post-Registration Verification:
• Under Rule 9(5), if registration is granted due to lapse of time (i.e., deemed registration), the CBIC has issued Instruction No. 03/2023-GST, dated 14-06-2023, outlining an SOP for post-registration verification. Physical verification is mandatory, especially where the registration was obtained without Aadhaar Authentication.

4. Persons Exempted from Aadhaar Authentication Requirement

Pursuant to Section 25(6D) of the CGST Act, the Government has notified the following categories of persons as exempt from Aadhaar Authentication (Notification No. 03/2021-Central Tax, dated 23-02-2021):

1. Non-citizens of India.
2. Departments or establishments of the Central Government or State Governments.
3. Local Authorities.
4. Statutory Bodies.
5. Public Sector Undertakings (PSUs).
6. Persons applying for a Unique Identity Number (UIN).

References

1. GST Legislation: Central Goods and Services Tax Act, 2017 (CGST Act), Integrated Goods and Services Tax Act, 2017 (IGST Act), State Goods and Services Tax Act, 2017 (SGST Act), Central Goods and Services Tax Rules, 2017 (CGST Rules).
2. Section 25 of the CGST Act: Legal basis for Aadhaar Authentication provisions.
3. Rule 8(4A), Rule 9, Rule 10B, Rule 25 of the CGST Rules: Detailed procedural rules for Aadhaar Authentication and Physical Verification.
4. Notifications & Circulars:
   • Notification No. 62/2020-Central Tax, dated 20-08-2020
   • Notification No. 18/2020 and 19/2020-Central Tax, dated 23-03-2020
   • Notification No. 27/2022-Central Tax, dated 26-12-2022
   • Notification No. 13/2024-Central Tax, dated 10-07-2024
   • Notification No. 09/2025-Central Tax, dated 11-02-2025
   • Notification No. 38/2021-Central Tax, dated 21-12-2021
   • Notification No. 03/2021-Central Tax, dated 23-02-2021
   • Instruction No. 03/2023-GST, dated 14-06-2023
   • Circular No. 1/1/2017-GST, dated 26-06-2017
   • Circular No. 223/17/2024-GST, dated 10-07-2024

Disclaimer: This note is for informational purposes only and not intended as legal advice. Stakeholders should refer to the latest notifications, circulars, and legal texts to ascertain the most current and applicable guidelines.