Aadhar Authentication for GST Mandatory to Get GST Refunds

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Aadhar authentication of taxpayers is now mandatory for claiming GST refund, according to the latest changes backed by the government. The Central Board of Indirect Taxes and Customs (CBIC) amended existing GST rules to incorporate anti-evasion measures and better transparency in GST claims and filings. 

The GST Council, consisting of the central and state finance ministers, convened for its 45th meeting in Lucknow in early September 2021. This meeting came to an end with the members of the council agreeing to make Aadhar authentication a compulsory norm for claiming GST (Goods and Services Tax) refunds. CBIC made an amendment to the GST rules for accommodating GST Council’s measures on 26th September 2021. 


The amended rules will pave the way for much-needed anti-evasion measures to prevent government’s revenue leakage. GST is a comprehensive multistage tax system that curbs the cascading effect of indirect taxes on the sale of goods and services across India. Tightening and strengthening the measures associated with the GST portal creates better visibility in the financial dealings of businesses and individuals and the taxes paid or refunds claimed by them. 

Aadhar authentication is now mandatory for the proprietor, partner, managing director, Karta, whole-time director, and authorized signatory before filing for revocation of cancellation of registration and refund application too. 


As of 21st August 2020, CBIC made opting for Aadhar authentication a compulsory procedure for GST registration. If the Aadhar number isn’t furnished, the GST registration will only be granted after verifying the physical place of business. An important amendment to the existing GST rules ensures GST refunds are disbursed only to the bank account linked with the PAN (Permanent Account Number) used to obtain the GST registration.

The CBIC’s notification modified Rule 59(6) of the Central GST rules and it comes into force from 1st January 2022. According to the rule, businesses that don’t comply with filing the summary return and monthly payment of GST are no longer eligible for filing GSTR-1 sales return in the following month. This move is believed to help plug any gaps caused in the government’s revenue due to evasion of GST. If implemented as desired, the modification made to the indirect tax regime will ensure refunds are claimed only by verified taxpayers, which will reduce the risk of fraudulent refunds. 


As per the existing rules, no business can submit its report for external suppliers or Form GSTR-1 for a month if they haven’t filed Form GSTR-3B for the preceding two months. The new rules reduce the risk of default by making the monthly submission of GSTR-1 compulsory. The GSTR-1 for a given month must be submitted by the 11th day of the following month. The GSTR-3 for a given month, that’s used for settling taxes, should be submitted within the 20th and the 24th days of the subsequent month. 

This is a well-thought-out and needed change that acts as a control check. It effectively eliminates scenarios where taxpayers report supply invoices in their GSTR-1 but the corresponding GSTR-3B return is not submitted. The submission of GSTR-3B is proof that the required taxes are duly paid to the government.


Compliant taxpayers will rejoice in these changes because their input tax credit will no longer be at risk even if the vendor defaults on their GSTR-3B filing even if the said invoice reflects in GSTR-2A.    

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