Company Registration to be Biometric-Based to Curb Tax Fraud

In a major step to prevent tax evasion and fraudulent company registrations, the Indian government is introducing biometric verification for registering new firms. Until now, registration was done using Aadhaar-based authentication, but rising cases of GST fraud through fake companies have prompted the government to tighten the process.

New Registration Process
Under the new system, biometric verification will be mandatory for registering a new company. The government has already conducted pilot projects in Gujarat and Assam, successfully testing the biometric process. Once fully implemented nationwide, the system is expected to significantly reduce bogus firm registrations used for tax fraud.

As per the new procedure:
•    The fingerprints of the person registering the company will be scanned.
•    The registration process will be completed in just 15 minutes with real-time authentication.
•    This change aims to ensure that only genuine individuals register firms, eliminating the possibility of fraudulent registrations using stolen identities.

Old Firms Will Also Have to Comply
The government is also considering extending this biometric verification to existing firms. This means that businesses already registered will be required to undergo biometric authentication to continue operating legally. Once verified, the registered person will be held accountable for any misuse of the company’s name for tax fraud.

What Are Fake (Bogus) Firms?
Bogus firms are shell companies created solely for tax evasion, often used to claim fraudulent input tax credits (ITC). These firms exist only on paper and do not conduct any real business. They are commonly used to show fake purchases and sales to manipulate tax filings.

Impact of the New System
The biometric verification system is expected to drastically reduce fake company registrations and improve tax compliance. Initial results from pilot projects indicate a sharp decline in fraudulent firms, as biometric authentication makes it nearly impossible for individuals to register companies under false identities.
With this major regulatory shift, the government aims to strengthen the financial system, ensuring that only legitimate businesses operate in the country.vvvvvvvvvvvvvvvvvvv