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UIDAI delays India’s biometrics program for fighting GST fraud by blocking database

UIDAI delays India’s biometrics program for fighting GST fraud by blocking database

Biometric authentication measures meant to combat tax fraud committed through India’s Goods and Services Tax (GST) registration process are on hold, with government officials pointing to restrictions on access to the national database of Aadhaar biometrics as the reason.

The biometric authentication pilot program rolling out in Odisha and Puducherry was intended to curb what India’s Central Board of Indirect Taxes and Customs (CBIC) calls “rampant” GST fraud. Fake entities are being set up to claim ITC, a tax credit against the GST, disguised as legitimate companies in metal, waste and other industrial sectors.

Trials of biometric and geotagging were set up to prevent these fake companies from registering for ITC. They require directors or representatives of firms that fail risk-assessment tests to provide biometric authentication. Registrants deemed suspicious must show up in person at an Aadhaar centre to participate in biometric identity verification.

According to Moneycontrol, Indian officials said the delay was caused by problems in accessing the Unique Identification Authority of India (UIDAI) database. The UIDAI is willing to grant access to the database to the Goods and Services Tax Network (GSTN). The tax body, however, had not approved a policy for managing the requests of states, an official explained.

However, the government said it was confident both Aadhaar-based biometric authentication and geotagging will roll out in fiscal year 2025.

Use cases of India’s national identity registration system have been increasing. As of July, more than 10.5 million face-authenticated transactions had been recorded since its launch in 2010.

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