In a significant move to combat fraudulent practices in Goods and Services Tax (GST) registration, the GST Council is considering a proposal to make biometric-based Aadhaar authentication mandatory pan-India for individuals deemed suspicious, seeking GST registration, according to Sanjay Kumar Agarwal, Chief of the Central Board of Indirect Taxes and Customs (CBIC). Currently, the states of Gujarat and Andhra Pradesh, along with the Union Territory of Puducherry, have implemented Aadhaar authentication for taxpayers on a pilot basis, yielding encouraging results.
Agarwal highlighted the success of the pilot programs, noting a decrease in registration applications in Gujarat, indicating a check on individuals using fake identities to establish bogus Input Tax Credit (ITC) firms. With positive outcomes observed, Agarwal expressed optimism that more states may adopt the practice or it could be uniformly applied across the country to safeguard revenue impacted by fake registrations.
Until now, GST authorities relied on OTP-based Aadhaar authentication to verify the identity of applicants seeking registration. However, instances of identity misuse prompted a shift towards biometric authentication, particularly in suspicious cases where individuals applying for registration may be required to visit an Aadhaar center to undergo biometric verification.
While Agarwal affirmed that no formal proposal had been presented to the GST Council as of now, he acknowledged the possibility of such a proposal in the future.
Highlighting the CBIC's proactive measures, Agarwal mentioned a recent crackdown against the masterminds of syndicates involved in creating fake ITCs. The registration process has been tightened with a focus on risk assessment, and applicants are now subject to physical verification before registration.
Since the GST's launch in July 2017, tax officers have identified and recovered Rs 1.42 lakh crore in fake ITC, leading to the arrest of 1,350 individuals involved in defrauding the exchequer. Agarwal emphasized the collaborative efforts with various government agencies, including the Income Tax Department, in data exchange, contributing to the identification of potential GST taxpayers. The proposed biometric authentication initiative aligns with the broader objective of the GST Council to enhance the integrity and authenticity of the registration process and curb fraudulent practices in the GST ecosystem.