The detection of 10,700 bogus firms involved in GST evasion amounting to over Rs 10,179 crore reveals a stark reality-the GST system, while transformative, remains vulnerable to loopholes. The ongoing all-India drive, spearheaded by the Central Board of Indirect Taxes and Customs, marks a critical moment in the battle against tax evasion, aimed at safeguarding the nation’s exchequer. The magnitude of these fraudulent activities not only jeopardises revenue collection but also undermines the integrity of honest businesses. These fake companies exploit loopholes, siphoning off funds that could be directed towards development projects and public welfare. The Government’s detection efforts, while commendable, indicate the vast extent of tax fraud and highlight the pressing need for systemic reforms.
A significant stride towards tightening GST compliance is the introduction of Aadhaar authentication for GST registration. This step, already in effect in 12 states, is set to expand to 20 states by October. The use of Aadhar-based verification is pivotal in ensuring the legitimacy of businesses seeking GST registration. This biometric-backed authentication acts as a robust deterrent, filtering out fraudulent firms at the registration stage itself, thereby preventing tax evasion before it occurs. Furthermore, there is the possibility of introducing additional safeguards for new taxpayers based on risk profiling, including limiting the number of invoices they can issue monthly. Such measures, though stringent, are necessary to prevent the misuse of the GST system by unscrupulous entities. The idea of imposing restrictions based on risk profiles highlights the Government’s focus on adopting a targeted approach, ensuring that genuine taxpayers are not burdened while tightening the noose around those seeking to defraud the system. The detection of fake GST registrations, accounting for 27 percent of verified GSTINs, is alarming. Physical verification, currently being ramped up, must remain a central feature of this campaign. Only through rigorous oversight can authorities ensure that businesses operate in a fair and compliant manner. However, long-term solutions will require ongoing vigilance, stronger regulatory frameworks, and the widespread adoption of digital tools like Aadhaar authentication.
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