The government has made Aadhaar authentication of taxpayers mandatory for claiming GST refund.
The Central Board of Indirect Taxes and Customs (CBIC) has amended GST rules bringing in various anti-evasion measures, including disbursal of GST refunds only in the bank account, which is linked with same PAN on which Goods and Services Tax (GST) registration has been obtained.
The notification also states that from January 1, 2022, businesses who have defaulted in filing the summary returns and paying monthly GST will not be able to file GSTR-1 sales returns for the succeeding month.
The notification follows the decisions taken at the meeting of the GST Council in Lucknow on September 17.
AMRG & Associates Senior Partner Rajat Mohan said, "To arrest tax evasion, the government has made Aadhaar authentication for the proprietor, partner, karta, Managing Director, whole-time Director, and authorised signatory compulsory before filing an application for revocation of cancellation registration and refund application."
EY Tax Partner Abhishek Jain said with the objective of preventing revenue leakage, the government has made Aadhaar authentication mandatory for a taxpayer to be able to claim refunds.
"The move will help in reducing cases of fraudulent refunds as only the verified taxpayers will obtain the refunds now," Jain added.
With regard to taxpayers not being able to file their GSTR- 1 if they have not filed their GSTR-3B of the previous month, Jain said this is a well-thought restriction and a necessary control check to eliminate the cases where taxpayers although report their supply invoices in GSTR-1 (due to constant follow-ups from recipients' side) but they do not submit their corresponding GSTR-3B return through which tax is actually paid to the government.
"Compliant taxpayers would appreciate this move as till now their input tax credit was also at risk in case vendors do not file their GSTR-3B even though such invoice is appearing in GSTR-2A," Jain added.
Currently, the law restricts the filing of returns for outward supplies or GSTR-1 in case a business fails to file GSTR-3B of the preceding two months.
While businesses file GSTR-1 of a particular month by the 11th day of the subsequent month, GSTR-3B, through which businesses pay taxes, is filed in a staggered manner between the 20th-24th day of the succeeding month.