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FM Sitharaman Announces Nationwide Rollout of Biometric Authentication to Combat Fake Invoicing


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On June 22, at the 53rd GST Council meeting, Union Finance Minister Nirmala Sitharaman announced a significant measure to combat instances of fake invoicing in India. The government plans to roll out a biometric authentication system nationwide. The aim is to curb fraudulent input tax credit claims, which have been a concern for the government.

Purpose of Aadhaar Authentication

The introduction of Aadhaar authentication, a biometric-based system, is expected to play a crucial role in combating fraudulent input tax credit claims made through fake invoices. By implementing this system, the government hopes to strengthen the registration process in the Goods and Services Tax (GST) and reduce the prevalence of tax fraud.

Details of the GST Council Meeting

The meeting held on June 22 was the first GST Council meeting since the formation of the Modi government 3.0. It was attended by several key officials, including Union Minister of State for Finance Pankaj Chaudhary, the chief ministers of Goa and Meghalaya, deputy chief ministers of Bihar, Haryana, Madhya Pradesh, and Odisha, finance ministers of states and Union Territories (UTs), and senior officers from the Ministry of Finance and the states/UTs.

Phased Roll-Out and Benefits

The biometric authentication system will be implemented in a phased manner. In addition to curbing input tax credit fraud, the system will also enhance the registration process for GST. The Ministry of Finance stated in a release that this measure will help strengthen the overall integrity of the GST system.

Retroactive Amendments to Time Limit for Availing Input Tax Credit

During the press conference following the meeting, the Finance Minister announced that the council has recommended retroactively amending the time limit to avail input tax credit under section 16(4) of the CGST Act. This amendment will cover invoices or debit notes filed up to November 30, 2021, and will apply to the financial years 2017-18, 2018-19, 2019-20, and 2020-21.

Improved Recovery Rate in GST Cases

Earlier this year, it was reported that the recovery rate in GST cases related to input tax credit fraud has significantly increased in FY24. The Directorate General of GST Intelligence (DGGI) has managed to recover more than 12 percent of the dues, compared to just 2-3 percent in previous years. This demonstrates the government’s commitment to tackling tax fraud and ensuring a fair and efficient tax system.

Overall, the introduction of the biometric authentication system and the retroactive amendments to the time limit for availing input tax credit are important steps towards curbing fraudulent activities in the GST system and promoting transparency and compliance in India’s taxation processes.

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