• 03 Jul 2023 06:11 PM
  • Back

Over 12,000 fake entities in GST registration, CBIC plans for biometric authentication and geo-tagging

news details
In the ongoing drive against fake registration, GST officers tracked 12,000 bogus entities across India. To curb rampant fraud cases, CBIC is planning to implement pan-India biometric authentication and geo-tagging of GST registered firms

In the ongoing drive against fake registration, GST officers tracked 12,000 bogus entities across India. To curb rampant fraud cases, CBIC is planning to implement pan-India biometric authentication and geo-tagging of GST registered firms

UIDAI CEO Ajay Bhushan Pandey says Aadhaar is based on minimum information and biometrics which is 'least intrusive'. Photo: MintPremium
UIDAI CEO Ajay Bhushan Pandey says Aadhaar is based on minimum information and biometrics which is 'least intrusive'. Photo: Mint

In a bid to curb rampant cases of fake GST registration, the Central Board of Indirect Taxes and Customs (CBIC) is planning to implement biometric authentication and geo-tagging of risky entities under GST. Other than this, tax authorities are also mulling over the tightening of norms in the GST return filing system to limit the scope of Income Tax Credit (ITC) claims.

Also Read: Nirmala Sitharaman on GST called as 'Gabbar Singh' tax rates, says common-use items lower from pre-GST rates

The planning has come in the wake of rising cases of fraudulent cases of GST registration by misusing PAN and Aadhaar details of other people, said CBIC chief Vivek Johri.

Also Read: Centre, states collect 1.61 trillion in GST in June

During CBIC's ongoing drive against fake registration, GST officers identified around 12,500 bogus entities across India, which were used to claim fake ITC and defraud the exchequer.

As per the planning, authorised representatives or directors of companies applying for new registration and existing registered firms would require to get their biometric authentication done. They would be asked to authenticate their biometric information if tax officers have a suspicion that the entities are being set up only to fraudulently claim ITC.

Geo-tagging of all entities

CBIC officers are also planning to make geo-tagging of all entities mandatory for all GST-registered firms. Geo-tagging will help officers in authenticating the address provided by the companies during their GST registration.

The organisation has already implemented biometric authentication and geo-tagging in some states on a trial basis to understand its efficacy and repercussions. The project will be launched pan India after evaluating the result of the trial project.

"We are trying to see how we can tighten the system further...We have been using OTP-based authentication earlier. Now, we are going to go in for biometric authentication also. Which would mean that in suspicious cases, persons will be asked to go to an Aadhaar centre to have their biometrics verified," Johri said.

CBIC found rampant fake entities in Haryana, Rajasthan, and Delhi

Rampant fake entities were identified in states like Haryana, Rajasthan, and Delhi, said Vivek Johri. Certain parts of Gujarat, Noida, Kolkata, Assam, Telangana, Tamil Nadu, and Maharashtra also have fake businesses with GST registration. Most of the fake entities belonged to sectors like metal or plastic scrap and waste paper.

"We are also finding that it is being generated for services. So, manpower services and advertising services have instances of fake billing," Johri added.

About controlling fake ITC claims, Johri said the tax authorities have tightened the system but there is still some latitude for taxpayers to edit how much ITC they will be able to claim in GSTR-2A.

He also added that IT applicants are provided with some editing facilities as well. Officers are also planning to figure out ways to tighten further norms in ITC's editing facilities to reduce fake applications.

Related Premium Stories

Catch all the Business NewsMarket NewsBreaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.