State's GST Department Sees 43% Drop in GSTIN applications with New Biometric Verification to Combat Bogus Billing

In a significant move, the state's GST department has seen a 43% reduction in the monthly average of GSTIN (Goods and Services Tax Identification Number) applications since November 2023, following the introduction of an extra authentication step in the online registration process. Between November last year and February this year, the number of monthly applications has decreased from 26,800 to 15,350. This downturn is attributed not to a slowdown in business or fewer companies being established but rather to a strategic effort by the state government aimed at preventing fake billing practices right from the start.

A new requirement for biometric verification for those applying for a GSTIN has been implemented as part of a pilot initiative. This measure effectively screens out fraudulent applications, leading to the observed decrease in application numbers. First introduced in November 2023, this initiative seeks to enhance the security and efficiency of the registration process. Similar pilot projects are also being conducted in Andhra Pradesh and Puducherry.

A senior official from the SGST department explained that the process for committing fraud through fake billing often starts with acquiring a counterfeit GST registration by deceiving people. The GSTINs of these non-existent firms are then used to generate fictitious invoices and claim input tax credits without any real transfer of goods. Moreover, there have been instances where individuals discovered the unauthorized use of their banking and identity documents for these fake registrations.

The issue of bogus billing has been a significant problem for Gujarat, especially since the rollout of the GST. The state government has incurred losses of Rs 11,443 crore due to false billing schemes aimed at evading taxes. The amount involved in these bogus billing operations is close to Rs 1 lakh crore since the introduction of GST.

Under the new verification framework, applicants are required to provide a thumbprint and various identification documents at the time of GST registration. This is to confirm the applicant's identity. Furthermore, GST applicants might be called in for additional verification in the future if deemed necessary. The adoption of biometric verification is anticipated to deter fraudulent activities by ensuring that GST registrations are issued exclusively to genuine applicants.




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