The Indian government is planning to implement biometric and geotagging authentication measures during the Goods and Services Tax (GST) registration process to prevent the registration of fake entities and curb false input tax credit claims. However, these pilot projects have faced delays due to disagreements over access to the Aadhaar identity database.
Key Points to be considered here are as follows
- Authentication Measures: The government aims to enhance the GST registration process by introducing biometric and geotagging authentication. Currently, identity verification is done through OTP-based authentication using Aadhaar and PAN.
- Pilot Projects: Pilot projects were planned in Odisha and Puducherry, with subsequent phases in Rajasthan, Maharashtra, and Gujarat. However, the initial pilot projects were delayed due to disputes over access to the Unique Identification Authority of India (UIDAI) database.
- Access to UIDAI Database: There were disagreements between states and the Goods and Services Tax Network (GSTN) regarding how access to the UIDAI database should be handled. Some states wanted a specific approach, while UIDAI preferred a single point of contact through GSTN.
- Timeline: Despite the delays, the government is confident that the biometric and geotagging authentication measures will be rolled out in the fiscal year 2025. The proposal and results of the pilot projects will be presented to the GST Council in the upcoming months.
- Verification Process: The government plans to make geotagging of company addresses mandatory to ensure that the place of business is physical. Biometric authentication will be compulsory for entities considered risky.
- Fake Entities: The Central Board of Indirect Taxes and Customs (CBIC) conducted a drive and discovered 20,800 fake entities, with false input tax credit claims amounting to Rs 19,500 crore. These bogus firms often use someone else's PAN and Aadhaar for registration.
- Efficiency Concerns: While implementing new verification processes, the government aims to ensure that they do not slow down the GST registration process. A streamlined and quick access system is essential to address complaints of delays in registration, which can take up to 15 days.
In summary, the Indian government is working on introducing biometric and geotagging authentication measures to improve the GST registration process and reduce fraudulent registrations and claims. However, the implementation has faced delays due to disputes over database access, but the government is hopeful of rolling out these measures in the near future.