The Central Board of Indirect Taxes and Customs (CBIC) has identified over 12,000 fake entities in GST registration. These entities were used to claim fake Input Tax Credit (ITC) and defraud the exchequer.
In order to curb this fraud, the CBIC is planning to implement biometric authentication and geo-tagging of GST registered firms. This will help to verify the identities of individuals connected to businesses that are suspected of fraudulent activity.
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.
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.
"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.
The biometric authentication will be done using Aadhaar and the geo-tagging will be done using the GPS coordinates of the registered premises. This will help to ensure that the entities are genuine and that they are located in the places that they claim to be.
The CBIC is also considering tightening the norms in the GST return filing system to limit the scope of ITC claims. This will make it more difficult for fraudulent entities to claim ITC.
The implementation of biometric authentication and geo-tagging is a welcome step by the CBIC. These measures will help to curb GST fraud and protect the exchequer.
Here are some additional details about the biometric authentication and geo-tagging measures
- Biometric authentication will be done using Aadhaar. This will help to verify the identities of individuals connected to businesses that are suspected of fraudulent activity.
- Geo-tagging will be done using the GPS coordinates of the registered premises. This will help to ensure that the entities are genuine and that they are located in the places that they claim to be.
- The biometric authentication and geo-tagging measures will be implemented in a phased manner. The CBIC has not yet announced a timeline for the implementation of these measures.
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