Businesses with turnover of Rs 500 crore or more have been given a four-month window until March 31, 2021, to implement QR code-based digital payment system without attracting penalty, two officials said. The move will promote digital India and check rampant misuse of fake invoices to misappropriate input tax credit under the Goods and Services Tax (GST) regime.

The government had also instructed tax officials to verify deemed GST registrations granted to business entities without Aadhaar authentication between August 21 and November 16 this year to ascertain that they are undertaking genuine business activities and not using these firms to generate fake invoices, the officials said requesting anonymity.

The decisions have been taken at a high-level meeting in the Department of Revenue (DoR) recently, which is an arm of Union finance ministry that administers matters related to direct and indirect taxes, they said.

“It was decided to give a one-time waiver on penalty provisions for four months period till March 31, 2021, on the condition that the stakeholders would set up necessary process during this period to go-live with QR code on invoices by April 1, 2021, thereby enabling GST on UPI [Unified Payments Interface],” one of the officials said.

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In order to create a cashless society, on March 21, 2020, the government mandated the issuance of invoices with dynamic QR code by registered business entities with turnover exceeding 500 crore. The system was to be effective from December 1 this year. The system requires dynamic QR codes for issuing invoices to customers or unregistered persons to track transactions.

The Central Board of Indirect Taxes & Customs (CBIC), an arm of the DoR, is taking several measures to check tax evasion through fake invoices, a second official said. “One such move is verifying business activities of all such entities that have been granted deemed GST registration,” he said.

It was noticed that many unscrupulous people were misusing the easy GST registration system to con the exchequer by generating fake invoices and misappropriating ITC, he added. Currently, the GST law permits deemed registration after 21 days of application.

An entity having deemed registration where the applicant has not opted for Aadhaar authentication has to go for mandatory physical verification of the premises, he said. “In cases where the physical verification is difficult, certain additional documents may be called for verification by the tax officer before deciding upon grant of registration,” he added.

The CBIC has also come out with standard operating procedure (SOP) for officers to carry out physical verification of entities that have been granted a deemed GST registration without Aadhaar authentication, he said.

“This SOP would effectively curb the menace of fake invoices and ITC frauds while at the same time this would ensure proper facilitation of ease of doing business for the genuine applicants/entities without any overreach,” he added.

Meanwhile, the government has also intensified its nationwide crackdown against fake GST invoices. The Directorate General of GST Intelligence (DGGI) has so far arrested 92 persons for availing or passing on ineligible ITC fraudulently through fake invoices and have booked 994 cases against more than 3,161 fake GST registered, the second official said.

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