New GST Registration System from November 1: What Will Change for Small Businesses

New GST Registration System from November 1: What Will Change for Small Businesses

Issue: To curb the menace of Goods and Services Tax (GST) fraud, particularly the registration of fake companies for illegal Input Tax Credit (ITC), the GST Network (GSTN) is implementing a comprehensive new registration system with stringent verification protocols, which will significantly impact new and existing small businesses.

Facts:

• The new registration system is set to be implemented nationwide starting November 1, 2025.
• The primary motivation is to combat large-scale GST evasion schemes based on the creation of bogus firms using fake or stolen documents.
• The changes introduce multi-layered verification to ensure the legitimacy of the applicant and their declared place of business before a GST Identification Number (GSTIN) is granted.

Decision:

The government is implementing a new, more robust GST registration system with a focus on risk mitigation and accelerated processing for verified applicants.

Key TakeDowns:

• Mandatory Biometric Authentication: The most crucial change for applicants is the introduction of mandatory biometric and Aadhaar-based authentication for the primary authorized signatory. This step is designed to prevent the use of stolen or fake identities.
• Risk-Based Verification: The system utilizes data analytics and risk scoring to classify applicants.
  • High-Risk Applicants may face mandatory physical verification or detailed scrutiny by tax officers before registration is approved.
  • Low-Risk Applicants are expected to see their registration approved faster (potentially within three days), ensuring ease of doing business for genuine applicants.
• Impact on Small Businesses: New small businesses must prepare for mandatory in-person biometric enrollment at GST Seva Kendras. While this adds a layer of initial effort, it provides greater legitimacy and protection against fraudulent operators within the marketplace.
• Focus on Security: The new system integrates technology to address security flaws in the old, entirely online system that was heavily exploited by fraudsters.