The scheme will authenticate the applicant with Aadhaar and biometrics using special devices, Central Board of Indirect Taxes and Customs (CBIC) chairperson Vivek Johri said. The scheme will be tested out in Andhra Pradesh and Puducherry first before being scaled nationwide in three to six months.

"At present, when somebody opts for Aadhaar authentication, what typically happens is that the person gets an OTP on his mobile number, which, when fed into the system, confirms that this person is whoever he is presenting himself to be. But we found that in cases of stolen identity, the mobile numbers were also changed," Johri said in an interview referring to a recent case of fake GST registrations in Gujarat's Bhavnagar.

The tax authority has detected that crooks who wrongfully secured the Aadhaar ID of others, often poorer individuals, in some instances changed the mobile number linked to these IDs and were creating fake entities using passwords sent to them by the system.

The CBIC chairperson explained that this was the manner in which those involved in the Bhavnagar fake GST registration scam, which came to light earlier this year, operated.

"Now, the Aadhaar authentication that we are talking about will involve biometric verification. To make it (GST registration) more foolproof, what we are saying is that we will not rely on OTP-based authentication. The person will have to subject himself to biometric authentication," Johri said.

The idea is to prevent registering entities without the knowledge of the person whose identity is used. Johri said that it should not take very long to roll out this scheme, for which more trials will be held in some of the states.

To a question on how much time it may take for the scheme to be rolled out, Johri said that the pilot projects will give an idea about the rollout and that the authorities will require some infrastructure. "It will require some infrastructure and may not be very elaborate because these days, you would be aware that in the banking sector and all, Aadhaar authentication is happening on the basis of hand-held devices also. It may not require a very elaborate infrastructure, but still, you know we have to make arrangements. I think, three to six months at best."

The scheme was discussed at the GST Council meeting on Tuesday in the capital. Central and state tax authorities have been taking several steps to step up the security of the GST system, which included greater use of technology and disclosure requirements for businesses. The efforts have aided in GST receipts reaching a historic high of ₹1.87 trillion in April.