The Goods and Services Tax Council will soon consider comprehensive changes to the registration process for new applicants which will make the process stringent for those not opting for the Aadhaar-based authentication, government sources said. The new regulations are aimed at curbing fly-by-night operators who use fake invoices to avail input tax credit (ITC).

The law committee of the GST Council that met last week has submitted its recommendation on both fresh registrations and on weeding out existing risky taxpayers that are more likely to be involved in the scam. Sources said that suggestion are based on need to curb fake invoice menace while retaining simple compliance norms under GST.

Existing registrants can be suspended on displaying risky behaviour, including non-filing of return for six months, high proportion of tax payment through ITC and suspicious income-tax profile, sources said. Currently, around 6 lakh GST taxpayers are dormant, and about 35,000 other assessees with more than Rs 50 lakh yearly tax liability have paid as much as 99% of tax through ITC. These taxpayers have also paid less than Rs 1 lakh income tax in the last three years.

The recommendations came after the GST intelligence wing arrested 48 persons, including 3 chartered accountants, and have booked 648 cases besides identifying 2,385 entities in the last 10 days of a nationwide drive to apprehend a fake invoice racket.

While a new registrant process based on an Aadhaar identification will be done at facilities where the applicant can provide live photo and biometrics along with relevant documents. These centres would be run at banks, post offices and GST Seva Kendras (GSKs), sources said.

Further, if taxpayers wish to register under GST but don’t want to take the Aadhaar route, they will have to produce income-tax return verifying required financial credibility. In its absence, they will have to finish recommendation letters from two reliable taxpayers, sources said.

The law committee further suggested that another level of filter should be applied to ‘untrustworthy’ applicant — those who may have had GST registration cancelled earlier or violated PAN provisions. Their registration will be approved within 60 days but only after physical verification of place of business, sources said.

Additionally, such applicants will need to pay 2% of their tax dues, in cash instead of using ITC for most of the liabilities.

Also, taxpayers who are suspended in future for having a risky profile will have to explain the discrepancy within the prescribed time limit for revocation of suspension, sources said.

Source : Financial Express