CBIC To Assign Risk Rating To GST Applications, Taxmen To Verify Documents

CBIC to Assign Risk Rating to GST Applications And Taxmen to Verify Documents

The Central Board of Indirect Taxes and Customs (CBIC) has announced that it will be assigning a risk rating to all applications for GST registration. This is in an effort to crack down on fake registrations and ensure that only genuine businesses are able to avail the benefits of the Goods and Services Tax (GST) regime.

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Under the new system, tax officers will assess each application for registration and assign it a risk rating of low, medium, or high. Applications with a high risk rating will be subject to more stringent scrutiny, including physical verification of the premises and documents.

CBIC to assign risk rating to GST applications, taxmen to verify documents

The CBIC has also said that taxmen will be required to verify the documents submitted by applicants with municipal records. This is to ensure that the applicant is the actual owner of the premises and that the business is being conducted from the address mentioned in the application.

The new system is expected to be implemented from July 1, 2023.

Why is the CBIC doing this?

The CBIC has said that the new system is being implemented to curb the menace of fake GST registrations. In recent months, there have been a number of cases of fraudsters using fake PAN and Aadhaar numbers to obtain GST registrations. This has allowed them to avail the benefits of the GST regime without paying any taxes.

The new system is expected to make it more difficult for fraudsters to obtain GST registrations. By assigning risk ratings to applications and requiring taxmen to verify documents, the CBIC hopes to weed out fake registrations and ensure that only genuine businesses are able to avail the benefits of the GST regime.

How will the new system work?

The new system will work as follows:

Applicants for GST registration will submit their applications online.
Tax officers will assess each application and assign it a risk rating of low, medium, or high.
Applications with a high risk rating will be subject to more stringent scrutiny, including physical verification of the premises and documents.
Applicants will be required to provide the following documents to support their applications:
- PAN card
- Aadhaar card
- Proof of identity
- Proof of address
- Proof of ownership of premises (if applicable)
Tax officers will verify the documents submitted by applicants with municipal records.
If the application is approved, the applicant will be issued a GST registration certificate.

What are the benefits of the new system?

The new system is expected to have a number of benefits, including:

Reduced incidence of fake GST registrations
Increased compliance with GST laws
Increased revenue collection for the government
Improved ease of doing business for genuine businesses

What are the challenges of the new system?

The new system is not without its challenges. Some of the challenges that may be faced include:

Increased workload for tax officers
Increased cost of compliance for businesses
Increased complexity of the GST regime

Overall, the new system is a positive step towards curbing the menace of fake GST registrations and improving compliance with GST laws. The challenges that may be faced can be overcome with careful planning and implementation.

(Only the headline and picture of this report may have been reworked by the Business Standard staff)

What is the purpose of assigning a risk rating to GST applications?

The purpose of assigning a risk rating to GST applications is to identify and prevent fraudulent registrations. Fraudulent registrations can be used to evade taxes, launder money, or commit other crimes. By assigning a risk rating to each application, tax officers can focus their verification efforts on the applications that are most likely to be fraudulent.

What factors are considered when assigning a risk rating?

The factors that are considered when assigning a risk rating include the applicant’s name, address, PAN number, Aadhaar number, and business activity. Tax officers will also consider the applicant’s history of compliance with GST laws.

What happens if an application is assigned a high risk rating?

If an application is assigned a high risk rating, the tax officer will conduct a more thorough verification of the application. This may include contacting the applicant for additional information or conducting a physical inspection of the applicant’s business premises.

What are the penalties for filing a fraudulent GST registration application?

The penalties for filing a fraudulent GST registration application include a fine of up to ₹10,000 and/or imprisonment for up to six months. In addition, the applicant may be barred from registering for GST in the future.

Where can I find more information about the risk rating system for GST registrations?

More information about the risk rating system for GST registrations can be found on the website of the Central Board of Indirect Taxes and Customs (CBIC). The CBIC website also provides a list of documents that are required to be submitted with a GST registration application.