Risky businesses may find it tougher to get GST registration

The GST Council, which meets on December 21, is likely to deliberate on a concept note proposing creation of risk-based categories for goods and services tax registration, sources have told Moneycontrol. The proposal aims to make the registration process easier for "trusted businesses" while ensuring stricter compliance for high-risk entities.

“The GST Council in its meeting on December 21 will likely discuss a concept note for issuing GST registration based on risk assessment. The council is likely to deliberate on different categories of registration, determined by risk profile and allow the passing of input tax credit (ITC) benefits based on risk profile,” a source in the GST Council said.

The proposal seeks to differentiate businesses based on their risk levels, primarily tied to their input tax credit claims and compliance history.

Right now, everyone is treated at the same level for GST registration. The council will discuss creating categories based on the threshold of the input tax credit. “Big businesses, which are trusted, will have a simpler procedure for GST registration. For high-risk profile entities — those that claim a significant amount of ITC and pose a threat to the system — GST registration will be stringent,” another source said. “For others, it will be made easier. Risky businesses will be categorised as such based on the threshold of ITC.”

The council is also likely to discuss allowing input tax credit benefits linked to a business’s risk category. This measure aims to safeguard the GST system from fraudulent claims while facilitating easier compliance for trusted entities.

GST Council is a body for making recommendations to the Union and state governments on issues related to goods and service tax. Chaired by the union finance minister, it has states finance ministers or any other minister as its members and overseas the implementation and regulation of GST.