New Delhi, Jun 27 (KNN) In a significant move to tackle fraudulent tax claims, the Goods and Services Tax (GST) Council has recommended implementing biometric-based Aadhaar authentication for GST registrations across India.

The decision, announced by Finance Minister Nirmala Sitharaman following the 53rd GST Council meeting on June 22, 2024, aims to curb the misuse of input tax credit (ITC) claims through fake invoices.

The recommendation comes after successful pilot projects in Gujarat and Puducherry, along with a study conducted in Andhra Pradesh. The phased rollout is expected to begin soon, marking a crucial step in enhancing the integrity of the GST system.

Fraudulent ITC claims have been a persistent issue since the GST regime's inception. These scams typically involve the use of fake invoices to claim tax credits without actual supply of goods or services, leading to significant revenue losses for the exchequer.

The Central Board of Indirect Taxes and Customs (CBIC) has identified various methods employed by fraudsters, including direct misuse of invoices, diversion of goods, and circular transactions through shell companies.

The scale of the problem is substantial. A recent CBIC drive against bogus registrations, launched in May 2023, uncovered over 29,000 fake firms involved in suspected ITC evasion totaling Rs 44,015 crore. The crackdown resulted in savings of Rs 4,646 crore and 121 arrests.

Industry experts have largely welcomed the move. Mahesh Jaising, Partner at Deloitte India, noted that the focus on high-risk applicants demonstrates a commitment to a credible and transparent GST system.

He also expressed hope for a streamlined, single biometric authentication process for companies operating across multiple states.

However, Shashi Mathews, Partner at INDUSLAW, while acknowledging the progressive nature of the measure, cautioned that its success would depend on state governments' readiness and the user-friendliness of the system.

As the GST Council moves forward with this initiative, it remains to be seen how effectively it will curb tax evasion and strengthen the overall GST framework.

(KNN Bureau)