GST Registration New Rules: GST Council Proposes New GST Registration Rules to Mitigate the Whopping of GST Frauds

GST Council is continually working to check GST fraud and that’s the reason new GST registration rules are proposed by the GST authorities during the 50th GST Meeting.

After discovering fraudulent entities that gained an astonishing Rs 17,000 crore through irregular means, the GST Council has made the decision to enhance the GST registration rules as a measure to combat fraud.

During the 50th GST Council meeting held on Tuesday, July 12, several measures were proposed to address the issue of fake registrations and fraudulent claims of Input Tax Credit. These proposed steps encompass the mandatory provision of valid bank account details for all registrants, as well as the requirement for physical verification, even if their Aadhaar details are already on record.

The GST authorities have been diligently implementing a nationwide program to prevent fraudulent claims of Input Tax Credit (ITC). As part of these efforts, they are also exploring the use of biometric verification and geotagging in specific states. 

A thorough analysis of fake registration cases has revealed that such instances have occurred in various states, including Delhi, Haryana, Rajasthan, Gujarat, Uttar Pradesh, Kolkata, Assam, Maharashtra, Telangana, and Tamil Nadu. 

These fraudulent activities have been observed in sectors such as metal scrap, plastic scrap, and waste paper, as well as in service areas like manpower supply and advertising.

To stop fake registrations and fraudulent activities, the GST Council has shortened the time period for submitting PAN-linked bank account details during registration from 45 days to 30 days. This decision was made in response to the discovery of irregular gains amounting to a staggering Rs 17,000 crore by fraudulent entities. 

The Council aims to strengthen the rules and prevent fraud in light of increasing cases of misuse and fraudulent practices. The GST council proposed the below-mentioned changes to stop the GST fraud case and strengthen the registration process. 

Following are the amendments proposed during the 50th GST Council meeting.

1. Amendment in rule 10A: This amendment is made to provide the details of the bank account including the name and PAN of the registered person within 30 days of the grant of the registration permission on or before under act 37.
2. Amendments in rule 21A(2A): A new provision, the 3rd proviso in rule 21A(4), has been added to facilitate the automatic revocation of system-based suspensions when the provisions of rule 10A are complied with.
3. A new amendment has been made by adding the 3rd proviso in rule 21A(4). This proviso ensures that any system-based suspension will be automatically lifted upon compliance with the provisions specified in rule 10A.
4. An amendment has been made to rule 59(6) which states that if a registered person has not provided the details of a valid bank account as required under rule10A, they may be restricted from furnishing the details of outward supplies in FORM GSTR-1 or using the Invoice Furnishing Facility (IFF).
5. The amendment to Rule 9 and Rule 25 eliminates the need for the applicant's presence during the physical verification of business premises. Additionally, it introduces the provision for physical verification in high-risk cases, even when Aadhaar authentication has been completed. 

Also Read: GST Council mandates E-invoicing For Registered Persons Beyond The Threshold For Supplies to Govt. Departments