In a bid to weed out bogus entities registered under GST and plug the fake input tax credit (ITC) claims going ahead, the government is working towards making geotagging of addresses of all companies mandatory while biometric authentication will be compulsory for the ones detected as risky, CBIC Chairman Vivek Johri said.
“We are looking to tighten the GST system. The verification at the time of registration of new entities needs to be strengthened further. Currently, we establish the identity of the person via OTP-based authentication using Aadhaar and PAN. We will use biometric authentication for risky entities. The person in suspicious cases will be asked for biometric authentication,” Johri told the media as Goods and Services Tax completes six years of implementation.
Under the GST law, the place of business needs to be physical. In many cases, it is found that the address is bogus.
“We have started a pilot in 2-3 states to geo-tag the address so that the exact location is available. In the past we found an office place was created for verification, but subsequently, it's not there. To prevent this, geo-tagging location of office of the entity will be mandatory,” he said.
After the pilots, the infrastructure requirements will be evaluated and details will be worked out. The GST Council in the 49th meeting at Delhi had approved the pilots.
“After the pilots, making it mandatory will be discussed by the GST Council for approval. While geotagging will be mandatory for all entities, biometric for existing and new registrations will be compulsory if they are detected as risky on the parameters,” he said.
Fake invoicing means invoices are issued even when there is no real supply of goods or services. These invoices are then used to avail of input tax credit (ITC). Entities even obtain fake registrations under GST to obtain ITC, which causes revenue loss to the government.
The government is looking at effectively using data analytics for the clean-up of the registered entities to red flag the risky entities based on these parameters. The entities, which are flagged as risky will undergo mandatory physical verification to ensure physical infrastructure is there.
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