Introduction (Section 25 of the CGST Act, 2017)
To address potential revenue leakage, the Indian government has introduced Aadhaar authentication requirements under the Goods and Services Tax (GST) laws. As per Sections 25(6B), 25(6C), and 25(6A) of the CGST Act, newly registered taxpayers and, in certain cases, existing taxpayers must undergo Aadhaar authentication. If authentication is not completed, GST authorities may conduct physical verification of the business premises under Rule 25 of the CGST Rules.
This article provides an in-depth look into Aadhaar authentication, including legal provisions, verification procedures, and exemptions.
1. Overview of Aadhaar Authentication & Physical Verification
Aadhaar authentication in GST was introduced through the Finance (No. 2) Act, 2019, and made mandatory via the 45th GST Council Meeting for new registrants and select existing taxpayers. If authentication is not completed, physical verification of business premises may be required under Rule 9 and Rule 25 of the CGST Rules.
This section covers:
- Manner of Aadhaar Authentication under GST: Legal framework, procedural requirements, and timelines.
- Manner of Physical Verification under GST: Conditions and procedure for on-site inspection.
- Exemptions: Categories of taxpayers who are not required to undergo Aadhaar authentication.
2. Aadhaar Authentication under GST
2.1 Aadhaar Authentication Requirement for New Registration
Aadhaar authentication became mandatory for new GST registrations on August 21, 2020, under Rule 8(4A) of the CGST Rules (Notification No. 62/2020-Central Tax, dated August 20, 2020).
Statutory Mandate (Section 25(6B) & 25(6C) of the CGST Act)
Every new GST applicant must either:
- Undergo Aadhaar authentication, or
- Provide proof of Aadhaar possession.
If a taxpayer does not authenticate Aadhaar, a physical verification of the place of business is conducted under Rule 9 and Rule 25 of the CGST Rules.
Persons Requiring Aadhaar Authentication
As per Notification No. 18/2020 & 19/2020-Central Tax (dated 23-03-2020), Aadhaar authentication is required for:
- Individual applicants
- Karta of HUF
- Managing Director or Whole-time Director
- Partners of firms
- Trustees, Members of the Managing Committee
- Authorized Signatories
If discrepancies arise between CGST provisions and GST portal requirements, taxpayers should follow the portal’s mandates for smoother registration.
2.2 Procedure for Aadhaar Authentication
Under Rule 8(4A) of the CGST Rules, Aadhaar authentication is completed as follows:
- Opting ‘YES’ for Aadhaar Authentication: A link is sent to the registered mobile and email of the authorized signatory for OTP-based authentication.
- Verification Timeline: Authentication must be completed within 15 days of GST REG-01 submission.
- Officer Verification: If authentication is successful, the officer verifies the application within 7 days (Rule 9(1)).
- Failure to Authenticate: If not completed within 15 days, physical verification is required, extending the officer’s verification period to 30 days (Proviso to Rule 9(1)).
New Updates:
- Biometric-based Aadhaar authentication at designated Facilitation Centres is now required for high-risk applicants (Notification No. 27/2022-Central Tax).
- Applicants unable to authenticate Aadhaar must visit Facilitation Centres for additional verification (Notification No. 09/2025-Central Tax, effective 11-02-2025).
2.3 Aadhaar Authentication Requirement for Existing Registrants
From January 1, 2022, certain existing taxpayers must authenticate Aadhaar before:
- Filing for revocation of GST cancellation (REG-21)
- Claiming IGST refunds on exports (Rule 96)
- Filing a refund application (RFD-01)
Alternative Identification Documents: If Aadhaar is unavailable, the taxpayer must provide an Aadhaar enrolment slip along with:
- Bank passbook
- Voter ID
- Passport
- Driving license
Non-Compliance Consequences: Failure to authenticate Aadhaar may lead to cancellation or invalidation of registration.
3. Physical Verification under GST
If Aadhaar authentication is not completed, a physical verification is conducted under Rule 9(1) and Rule 25 of the CGST Rules.
3.1 Before Grant of Registration
Physical verification is triggered when:
- Aadhaar authentication fails or is not opted for.
- GST portal flags applications based on risk parameters.
- An officer deems verification necessary (with Assistant Commissioner approval).
Procedure:
- Verification report (GST REG-30) must be uploaded with photos at least 5 days before registration approval.
- Registration approval timelines:
- 7 days if documentation is complete (Rule 9(1)).
- 30 days if physical verification is required (Proviso to Rule 9(1)).
3.2 After Grant of Registration
- If needed, officers may conduct post-registration physical verification.
- Reports must be uploaded in GST REG-30 within 15 working days.
- Deemed registration cases undergo compulsory post-registration verification (CBIC Instruction No. 03/2023-GST).
4. Persons Exempted from Aadhaar Authentication
As per Notification No. 03/2021-Central Tax (dated 23-02-2021), the following categories are exempt:
- Non-citizens of India
- Government departments
- Local Authorities
- Public Sector Undertakings (PSUs)
- Persons applying for a Unique Identity Number (UIN)
Key Takeaways & Business Impact
- For Business Owners: Ensure timely Aadhaar authentication to avoid delays.
- For Professionals & Accountants: Guide clients on compliance to prevent registration issues.
- For Exporters: Aadhaar authentication is crucial for IGST refunds.
| Topic | Details |
|---|---|
| Aadhaar Authentication in GST | 🔹 Introduced via Finance Act, 2019. 🔹 Mandatory for new GST registrants & select existing taxpayers. 🔹 If not completed, physical verification is required. |
| Who Needs to Authenticate? | ✅ Individual applicants ✅ Karta of HUF ✅ Directors, Partners, Trustees, Managing Committee Members ✅ Authorized signatories |
| Steps for Aadhaar Authentication | 1️⃣ Opt ‘YES’ for Aadhaar authentication in GST REG-01. 2️⃣ Receive OTP on registered mobile & email. 3️⃣ Authenticate within 15 days. 4️⃣ Officer verifies within 7 days (if successful). |
| What If Aadhaar Authentication Fails? | ❌ If authentication is not completed within 15 days: 🔹 Physical verification is compulsory (Rule 9, Rule 25). 🔹 Officer’s verification period extends to 30 days. |
| Physical Verification Process | 📌 Before Registration Approval ✔ Aadhaar failure triggers verification. ✔ GST REG-30 report + photos must be uploaded 5 days before approval. 📌 After Registration Approval ✔ Post-registration verification applies to flagged cases. ✔ Officer uploads verification report within 15 working days. |
| Exemptions from Aadhaar Authentication | 🚫 Non-citizens of India 🚫 Govt. Departments & Local Authorities 🚫 PSUs 🚫 UIN Applicants (Foreign Missions, UN Bodies) |
| Key Takeaways | 📌 For Business Owners: Authenticate on time to avoid delays. 📌 For Professionals & Accountants: Guide clients to stay compliant. 📌 For Exporters: Aadhaar authentication is mandatory for IGST refunds. |