The Central Board of Indirect Taxes and Customs will soon make biometric verification and geotagging mandatory for all new registrants under the GST law, CBIC Chairman Vivek Johri said.
While this would be mandatory for only new registrants, already registered “risky taxpayers” would also come under it, Johri told the media.
This initiative of biometrics and geotagging has already been approved by the GST Council and has been rolled out as pilot projects in two or three states. The outcomes are still “under examination” and once there is a concrete report, the indirect tax department would take it up with the GST Council again, he said. However, it is unlikely to be taken up at the next GST Council meeting scheduled for Jul 11 here, he added.
The move comes in the aftermath of the indirect tax department going big on weeding out fake invoicing and evasion of goods and services tax by businesses. The CBIC had first launched a drive to identify businesses doing fraudulent activities in August 2020, Johri said. So far, fake invoicing to the tune of 630 bln rupees has been identified under this.
Considering the issue specifically pertains to issuing fake invoices, recovering the evaded tax is tricky, he said. “Recoveries are very difficult…they are by definition fake,” he said.
“…The recoveries are slow and so far we have been able to recover 30 bln rupees,” Johri told the media.
The indirect tax body, along with states, also launched a two-month special drive on May 16 to crack down on fake invoicing by businesses. Under this, the indirect tax department has identified around 60,000 suspicious cases, of which verification has already been completed in 50,000 cases. During the course of the investigation, it has been found that about 25% of these 50,000 cases, amounting to 12,500 cases, are “bogus”, Johri said.
With two weeks left in this special drive, the department has not yet decided if it will extend it, but will take a call on the matter soon, he said.
Compared to other states, the department had identified more cases in the Delhi-Haryana-Rajasthan belt, certain parts of Gujarat, Uttar Pradesh, Noida, Kolkata, Assam, Telangana, Tamil Nadu, and Maharashtra, the chairman said.
The sectors in which such cases were seen more intensely include metal scrap, plastic scrap, and waste paper scrap industries, and also in the services sector, including manpower and advertisement services, Johri said.
With regard to this special drive and geotagging, a lot of e-commerce companies had flagged their concerns due to lack of proper registered addresses, which is a criterion to be identified as a registered business, under the GST law.
To this, Indirect Taxes Committee Chair of the PHD Chamber of Commerce Bimal Jain told Informist that smaller companies should declare to the authorities that they are using a designated amount of space in a commonly shared warehouse. That way, auditing and verification by authorities become much easier, and these businesses do not have to fear incomplete registration and coming under fake invoicing radar, he said.
Johri said this was an issue and the department had received some suggestions, which are currently under examination.
He added that the government is trying to seal the leakage of taxes and track such fraudulent invoicing by using advanced analytics and their income tax footprint.
Source from: https://www.informistmedia.com/cbic-head-says-biometrics-to-be-mandatory-soon-for-new-gst-registrants/