GST Council Law Committee recommends Aadhaar-like registration for new applicants

The law committee of the GST Council, after two days of deliberations, has recommended for an Aadhaar-like registration process for new applicants under the GST regime. Its proposals aims to tighten compliance measures and target restrictions on firms identified as risky.

Rishi Agrawal, co-founder and CEO of Avantis Regtech Pvt Ltd, told a local media house that the government is better armed to enforce greater compliance with deep digital capabilities for automatically detecting evasion, leakages, defaults and delays. He pointed out that India Inc., sooner rather than later, will need to focus on accurate and timely compliance. Agrawal said ignorance of the law will not be an excuse for non-compliance.

Sources said the new registration can be done online with live photo and use of biometrics after document verification. They added that the committee suggested the new registrant must opt for compulsory physical verification and personal identification in case he opts for non-Aadhaar authentication-based registration and does not have the income-tax return supporting his adequate financial capability. The speed of the registration process will depend on the trustworthiness of the applicant. Moreover, the committee was of the view that to be trustworthy, a registrant or a dealer must have I-T credential and no previous cancellation of GST registration on the same permanent account number for any violation of law. As such, the trustworthy applicants would be given registration within seven working days.

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Besides Aadhaar-like biometric identification for new registrations, the committee recommended steps to identify businesses that pose a risk of revenue loss to the exchequer, use of income tax returns to verify the credentials of entrepreneurs seeking GST registration, and restriction on using tax credits from the purchase of raw materials to meet the final tax liability.

Moreover, not filing GST returns for six months could cost a business its registration. The committee also proposed a full application of the business intelligence and fraud analytics tool for precise identification of riskier dealers, based on the riskier input supply chain and outward supply chain, and abnormal taxpayer behavior in terms of input tax credit availment. Sources said the committee suggested suspension of the first lot of riskier traders and identification of such taxpayers on the basis of significant criteria, including non-filing of tax return for six months.