Biometric-based Aadhaar authentication in GST Registration – A deep dive!

Any person who applies for registration under GST will have to undergo the process of Aadhar Authentication, mandatorily in terms of Section 25 CGST Act 2017 read with Rule 8 of CGST Rules 2017.   Aadhaar authentication under GST is the process of verifying the Aadhaar number of GST registrants/ applicants through the Unique Identification Authority of India (UIDAI). The goal is to maintain integrity and transparency in the tax system. This enhancement aims to streamline the GST registration process while maintaining security and compliance. This is a fascinating and evolving aspect of India’s GST framework, designed to balance compliance, security, and facilitation for taxpayers.

Let’s plunge into the proviso to sub-rule (4A) of Rule 8 of the Central Goods and Services Tax (CGST) Rules, 2017, which has introduced biometric-based Aadhaar authentication, photography of the applicant, and document verification for certain categories of GST registration applications. In order to understand it clearly, let us vivisect it down step-by-step, explaining what it entails, how it works, and its broader implications for taxpayer facilitation in a detailed manner.

What is the Proviso to Sub-rule (4A) of Rule 8?

The Rule 8 CGST Rules, 2017, govern the procedural aspects and specifically deals with the application process for GST registration. Sub-rule (4A) of Rule 8, was introduced and subsequently amended to incorporate Aadhaar authentication as a means to verify the identity of applicants seeking GST registration. The proviso to this sub-rule, as updated through notifications viz. Notification No. 27/2022-Central Tax, dated December 26, 2022 and further expanded via Notification No. 13/2024-Central Tax, dated July 10, 2024, specifies additional requirements for certain applicants flagged by the GST system for certain categories of registration applicants i.e. those identified by the GST common portal based on data analytics and risk parameters.  Here the process goes beyond simple Aadhaar authentication. It mandates three vital verification points :

1. Biometric-based Aadhaar authentication: This involves fingerprint or iris scanning to confirm the applicant’s identity via their Aadhaar number.

2. Taking a photograph: A real-time photo of the applicant (if an individual) or a designated/authorised person (like a partner, director, or karta, depending on the entity type) is captured.

3. Verification of original documents: The applicant must present the original copies of documents uploaded with their GST registration application (Form GST REG-01) for physical verification.

This process must be completed at a designated Facilitation Centre (GST Seva Kendra-GSK) notified by the respective Jurisdictional Commissioner and the application is deemed complete only after these steps are successfully carried out. The category of applicants subject to this proviso is determined by the system’s risk-based assessment, which flags entities based on factors like potential fraud risk, inconsistencies in data, or prior compliance history.

How the Rule evolved?

To understand this proviso fully, let’s trace its journey chronologically. Aadhaar authentication was first introduced into GST laws via the Finance (No. 2) Act, 2019, amending Section 25 of the CGST Act, 2017 to allow identity verification through Aadhaar. Initially, Rule 8(4A) (inserted via Notification No. 16/2020-Central Tax, effective April 1, 2020) required applicants opting for Aadhaar authentication to complete it online, (OTP based) with the submission date tied to the authentication date or 15 days from filing Part B of Form GST REG-01, whichever was earlier.  However, concerns about fake invoicing, fraudulent input tax credit (ITC) claims, and bogus registrations prompted stricter measures. Thereafter Notification No. 94/2020-Central Tax (December 22, 2020) substituted Rule 8(4A) to introduce biometric authentication and physical verification for high-risk cases, though its implementation was deferred. The proviso, as refined in Notification No. 27/2022, dated:26-12-2022, formalized this risk-based approach, initially piloted in Gujarat and later extended nationwide via Notification No. 13/2024, dated: 10-07-2024. Now, it’s a cornerstone of GST registration security.

To whom Does It Apply?

The proviso doesn’t apply to all applicants. It targets a specific subset in terms of Section 25 of the CGST Act 2017.:

1. Persons not notified under Section 25(6D): Certain individuals or entities (e.g., government bodies or non-residents) may be exempt from Aadhaar authentication by government notification. The proviso excludes these exempted persons.

2. Applicants opting for Aadhaar authentication: Only those who choose this route and are flagged by the system’s risk parameters fall under the proviso.

3. Risk-based identification: The GST portal uses data analytics to identify applicants with potential red flags say, unusual business patterns, mismatched PAN-Aadhaar details, or links to previously cancelled registrations, etc the reasons quoted here are symbolic and not exhaustive.

Just to illustrate, if an applicant for registration is a sole proprietor starting a small business and the system detects no anomalies, then he might simply authenticate their Aadhaar online. But if the portal flags the application—perhaps due to a history of tax evasion linked to such PAN— then one shall need to visit a Facilitation Centre for biometric checks described supra.

What is the Process in Action ?

If one is applying for GST registration, they submit Part A of Form GST REG-01 with relevant PAN and basic details, get a temporary reference number, and then file Part B with supporting documents. If you opt for Aadhaar authentication and the system flags you, here’s what happens:

1. A Notification is issued: Through the registered e-mail ID in the Application form submitted in GST REG-01 the applicant is directed to a Facilitation Centre (e.g., a GST Seva Kendra or a designated office).

2. Biometric Authentication: At the centre, the fingerprints or iris are scanned to match Aadhaar data of the Authorised Person.

3. Photography: A live photo is taken to ensure the person present matches the application.

4. Document Check: One need to present originals of uploaded documents (e.g., address proof, PAN card) for verification and return on the spot.

5. Completion: After all steps are cleared the application shall move forward for approval.

This process is in contrast with the simpler online Aadhaar OTP-based authentication available to low-risk applicants, highlighting the proviso’s focus on heightened scrutiny and ensure proper identity validations to avoid nefarious registration applications. The legal provisons and the process associated with it reflects a broader government push to curb GST fraud. Fake firms issuing bogus invoices to claim ITC have cost the revenues to exchequer negatively. By linking registration to biometric Aadhaar data a robust, government-backed identity system is established while the authorities aim to:

1. Prevent identity fraud: Biometrics ensure the applicant is a real person, not a ghost entity.

2. Enhance traceability: Photos and verified documents tie the registration to a physical individual or representative.

3. Deter non-compliance: The added effort discourages fly-by-night operators.

Actually here, the risk-based approach is key. Rather than subjecting every applicant to this rigorous process, the system targets only those posing potential threats, balancing security with efficiency.

How it Impacts on Taxpayer Facilitation?

The impact can in fact be termed as  a double-edged sword—offering benefits, but at the same time also posing challenges.  Though the primary objective is to curb fake registrations it also has two point of views – Positive impacts as well as practical challenges.

(A) Positive Impacts: –

1. Improved Trust and Compliance: For honest taxpayers, the proviso strengthens the GST ecosystem by weeding out fraudulent players. A cleaner system means fewer audits or scrutiny for compliant businesses down the line as well as bringing down litigations for “no fault of mine”. It aligns with the government’s “Ease of Doing Business” ethos by ensuring only genuine entities operate, fostering a level playing field.

2. Streamlined Verification: Facilitation Centres centralize the process, providing a structured environment for verification. This can be quicker than ad-hoc physical visits by tax officers to business premises (required if Aadhaar authentication fails or isn’t opted for). The use of technology (biometrics, real-time photography) reduces human error and subjectivity compared to manual checks.

3. Long-term Efficiency: Once registered, taxpayers benefit from a system less clogged with fake entities, which consequently and potentially speed up refunds, ITC claims, and other processes.

(B) Challenges to Facilitation:-

1. Increased initial Burden: For flagged applicants, who was caught as risky in the data analytics, visiting a Facilitation Centre adds time, cost, and effort. Small businesses in remote areas might find this particularly taxing, especially if centres are far away. The process could delay registration, impacting businesses needing swift GST numbers to start operations.

2. Selective Application: The lack of transparency in risk parameters might confuse taxpayers. Why was I flagged? Was it a glitch? This uncertainty could create misunderstanding of the eco-system. Genuine applicants mistakenly identified as high-risk face unnecessary hurdles, potentially discouraging registration.

3. Infrastructure Dependence: The success hinges on the availability and efficiency of Facilitation Centres. Overburdened or understaffed centres could lead to bottlenecks, negating the facilitation intent. The technical glitches in biometric systems or connectivity issues could further complicate matters.

So, clearly a Balancing Act in execution is absolutely necessary. The process should  enhance security without overly burdening taxpayers.

What is the step by step process ?

Let us now take a step-by-step guide to undertaking the biometric-based Aadhaar authentication process for GST registration as outlined in the proviso to sub-rule (4A) of Rule 8 of the CGST Rules, 2017, on the GST portal (www.gst.gov.in). This process as already discussed above applies only to applicants flagged by the system for biometric verification.

Step-by-Step Process for Biometric Aadhaar Authentication on the GST Portal:-

Step 1: Initiate GST Registration Application

(i) Access the GST Portal:

• Open your browser and go to gst.gov.in
• On the homepage, locate the “Services” tab in the top menu bar, hover over it, and select “Registration” > “New Registration” from the dropdown.

(ii) Start New Registration:

• You’ll see a form asking whether you’re a “Taxpayer,” “Tax Deductor,” or “Tax Collector.” Select “Taxpayer” (most common for businesses).
• Choose “New Registration” and fill in basic details:
• Select your entity type (e.g., Proprietor, Partnership, Company).
• Enter your state and district.
• Provide your legal name, PAN, email, and mobile number.
• Click “Proceed.”

(iii) Receive Temporary Reference Number (TRN):

• After submitting Part A of Form GST REG-01, you’ll receive a TRN via email and SMS.
• This is a 15-digit number used to log back into the portal.

Step 2: Complete Part B of Form GST REG-01

(iv) Log in with TRN:

• Return to the GST homepage, go to “Services” > “Registration” > “New Registration,” and select the “Temporary Reference Number (TRN)” option.
• Enter your TRN and the CAPTCHA code, then click “Proceed.”
• Verify via OTP sent to your registered email/mobile.

(v) Fill in Application Details:

• You’ll see a dashboard with 10 tabs (e.g., Business Details, Promoter/Partners, Authorized Signatory, etc.).
• Complete each tab:
• Business Details: Trade name, constitution, commencement date.
• Promoter/Partners: Name, PAN, Aadhaar, address, photo upload (JPEG/PDF, max 1 MB).
• Authorized Signatory: Details of the primary authorized signatory (PAS).
• Upload supporting documents (e.g., PAN, address proof).
• In the “Aadhaar Authentication” tab, select “Yes” to opt for Aadhaar authentication.

(vi) Submit Part B:

• Review all details, then click “Save & Continue.”
• Sign the application using DSC (Digital Signature Certificate), E-Signature, or EVC (Electronic Verification Code). Submit the form. The system now processes your application and assigns a risk score based on data analytics.

Step 3: Receive Notification for Biometric Authentication

(vii) Check Email/SMS for Instructions:

• If flagged for biometric authentication (per the proviso), you’ll receive an email and SMS with one of two outcomes:
• OTP-based Aadhaar Authentication: Proceed online (simpler process).
• Biometric-based Authentication: Instructions to visit a GST Suvidha Kendra (GSK).

(vii) Understand the Intimation Email:

The email will include:

• A link to book an appointment at a GSK.
• GSK location and jurisdictional details.
• A deadline (typically within 15 days from Part B submission) to complete the process.

Step 4: Book an Appointment at GSK

(ix) Access the Appointment Booking Link:

• Open the email and click the provided link.
• It directs you to a GST portal page for slot booking.
• Log in using your TRN if prompted.

(x) Select GSK and Time Slot:

• Choose a GSK from the list (allows home-state GSKs for promoters/directors in 33 States/UTs,).
• Pick a date and time within the permissible period (check the email for the exact window).
• Confirm your selection. You’ll receive a confirmation email with a booking reference and instructions.

Step 5: Visit the GST Suvidha Kendra

(xi) Prepare Required Documents:

Bring:

– Hard/soft copy of the appointment confirmation email.

– Original Aadhaar card and PAN card.

– Originals of documents uploaded in Form GST REG-01 (e.g., address proof, partnership deed).

– Jurisdiction details from the intimation email.

(xii) Attend the Appointment:

• Visit the designated GSK at the scheduled time.
• Present yourself (if an individual applicant) or the relevant person (e.g., partner, director, karta) as per Form GST REG-01.

(xiii) Complete Biometric Authentication:

At the GSK:

• An official will scan your fingerprints or iris using a biometric device linked to the Aadhaar.
• A real-time photograph will be taken.
• Original documents will be physically verified against the uploaded copies.

 Step 6: Finalize Registration

(xiv) Application Processing:

• Once biometric authentication, photography, and document verification are complete, the GSK updates the portal.
• Your application is now “deemed complete” under the proviso.

(xv) Receive Application Reference Number (ARN):

• Post-verification, an ARN is generated and sent via email/SMS within 7 working days, if no,
• Track the status under “Services” > “Registration” > “Track Application Status” using the ARN.

 (xvi) GSTIN Issuance:

• If approved, you’ll receive your GST Identification Number (GSTIN) and
• Registration certificate downloadable from the portal under “My Profile” > “Download Certificate.”

It is very important to note that:-

1. Timeframe: Complete biometric verification within 15 days of Part B submission, or the TRN expires, requiring resubmission.

2. Who needs to Attend: If the promoter/partner and PAS differ, both must visit; if the same, only one visit is needed.

3. Flexibility: As of March 3, 2025, home-state GSK visits are allowed for promoters/directors, but PAS may still need to visit the jurisdictional GSK if document verification is pending.

Before bidding adieu……

For taxpayers, this is more than a procedural tweak—it’s a shift toward a tech-driven, compliance-focused GST regime. Small businesses might initially grumble about the added step, but the long-term payoff is a more robust tax system. The government also will ensure adequate infrastructure like more GSK centres, trained staff to man them, and glitch-free technology to guarantee a facilitation from becoming pleasant experience combined with satisfaction. The proviso to sub-rule (4A) of Rule 8 is a calculated step to secure GST registration while striving to facilitate genuine taxpayers. It may not be at the expected standards as conceived, but as the system matures, it could strike that elusive balance between enforcement and ease of doing business. For now, taxpayers navigating this process should stay informed, be prepared, and perhaps a little patient as India’s GST framework evolves.

So, clearly a Balancing Act in execution is absolutely necessary. The process should enhance security without overly burdening taxpayers.

Jai Hind !!!!!