State’s GST Department Witnesses 43% Decline in GSTIN Applications Following Introduction of Biometric Verification to Combat Fraudulent Billing

A notable development within the state’s GST department reveals a substantial 43% decrease in the average monthly count of GSTIN (Goods and Services Tax Identification Number) applications since November 2023. This reduction, from 26,800 applications to 15,350 between November last year and February this year, is not indicative of a slowdown in business or establishment formations. Rather, it reflects a strategic initiative by the state government aimed at curbing fraudulent billing practices right from the registration stage.

A new protocol mandating biometric verification for GSTIN applicants has been initiated as part of a pilot program. This additional step effectively filters out illegitimate applications, thereby contributing to the observed decline in application numbers. Rolled out in November 2023, this initiative aims to bolster the security and efficacy of the registration process. Similar pilot projects are also underway in Andhra Pradesh and Puducherry.

According to a senior official from the SGST department, fraudulent billing often commences with the acquisition of counterfeit GST registration through deceptive means. These fictitious entities’ GSTINs are then exploited to generate sham invoices and claim input tax credits without any actual exchange of goods. Additionally, instances have surfaced where individuals have discovered the unauthorized use of their banking and identity credentials for these fake registrations.

Bogus billing has posed a significant challenge for Gujarat, particularly since the GST rollout. The state government has incurred losses amounting to Rs 11,443 crore due to tax evasion schemes involving fraudulent billing practices. The cumulative value involved in such operations is nearing Rs 1 lakh crore since the GST’s inception.

Under the revised verification framework, applicants must undergo thumbprint authentication and furnish various identification documents during GST registration to verify their identity. Moreover, applicants may undergo further scrutiny in the future if deemed necessary. The integration of biometric verification is anticipated to act as a deterrent against fraudulent activities by ensuring that GST registrations are exclusively issued to legitimate entities.