Strict GST Registration proposed by GST Council Law Committee

By | November 25, 2020
(Last Updated On: November 25, 2020)

The law committee of the GST Council has proposed several changes to tighten registration through an Aadhaar-type mechanism and keep a tighter vigil on suspected wrongdoers as it seeks to check the menace of fake invoices .

Although the idea is to ensure that businesses do not face difficulties, the registration process could take up to 60 working days for new entities that opt for a non-Aadhaar-based authentication process and do not have income tax returns to support “adequate financial capability”.

Such entities may have to submit recommendation letters from two taxpayers of “adequate reliability”.

If the tax department deems these entities to be “trustworthy” then registration will be provided within seven working days.

Otherwise, conditional registration will be given within 60 working days only after physical verification of the place of business.

Even INPUT TAX CREDIT will be subject to stiff conditions.

The easier option for businesses is to select an Aadhaar-like registration process. Under this, a new registration can be done online with live photo and biometrics with verification of documents.

Such facilities can be provided at banks, post offices, and GST Seva Kendras (GSKs) just like Passport Seva Kendras or Aadhaar Seva Kendras, a source said.

Law committee has proposed the application of a Business Intelligence and Fraud Analytics (BIFA) tool for identification of riskier dealers based on multiple parameters

. The first lot of the “riskier traders”, especially those not filing returns for six months, faces suspension as the starting point.

There are around six lakh dormant registrants in the GST. system

It further proposed that no income tax credential be given if 99% tax is paid through tax credit.

There were about 35,000 such dealers who were registered during 2018-19 and 2019-20 with annual GST liability of over Rs 50 lakh and paid over 99% using tax credits. These entities did not pay even Rs 1-lakh income tax during the last three years, the source said.

Once a dealer is suspended, an explanation will be required of the discrepancy within the prescribed time limit for revocation of suspension.

The proposals will now be discussed with the states before being sent to GST Council.

Category: GST

About CA Satbir Singh

Chartered Accountant having 12+ years of Experience in Taxation , Finance and GST related matters and can be reached at Email :

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