Detecting Fraudulent GST Invoices: Methods for Validating GSTINs and Tax Rates
This article outlines methods for identifying fraudulent GST invoices by examining crucial elements like the GSTIN. It details how an invoice without a valid GSTIN or from an unregistered entity using a fake GSTIN is considered illegitimate. The guide provides step-by-step instructions for verifying a GSTIN's authenticity through the official GST portal. Additionally, it explains how to confirm the accuracy of charged GST rates using the CBIC portal's rate chart, emphasizing the importance of HSN code verification for products.
A Goods and Services Tax (GST) invoice represents a record of goods supplied or services rendered, detailing the payment due. Businesses registered under GST are mandated to issue invoices including a legitimate Goods and Services Tax Identification Number (GSTIN) and itemized breakdowns of Integrated GST, Central GST, and State GST. Understanding invoice components and confirming their authenticity is crucial.
Format of a GST Invoice
A GST tax invoice generally incorporates 16 compulsory data fields. These documents follow a standardized structure to ensure all necessary information is present.
Identifying Fraudulent GST Invoices
An invoice is deemed fraudulent if crucial information required for a GST invoice is absent. For instance, an invoice lacking a GSTIN from the issuer is considered fake. Similarly, if an unregistered business uses a fabricated GSTIN to levy GST, the invoice is fraudulent, as the collected tax will not reach the government. A GSTIN is a unique 15-digit, PAN-linked code assigned to each taxpayer based on their state. Any deviation from its standard structure indicates a counterfeit number. However, merely having a correctly formatted GSTIN does not guarantee its validity or its association with the issuing entity. This guide will further explain how to pinpoint fake GSTINs and verify the tax rates applied on invoices.
Verifying GSTIN Authenticity on an Invoice
If an invoice raises suspicion, the GSTIN's authenticity can be confirmed using the official GST portal. Follow these steps to verify a GSTIN:
- Access the official GST portal at https://www.gst.gov.in. Navigate to 'Search Taxpayer' and then select 'Search by GSTIN/UIN'.
- Enter the GSTIN into the designated field and click 'Search'. A valid GSTIN will display company details such as name, state, and registration date. If the GSTIN is invalid, a message indicating its invalidity will appear. It is important to note that a GSTIN showing as 'Active pending verification' is still valid; it signifies that the business's application for the GSTIN is provisional and awaiting final confirmation.
Confirming Applied GST Rates
Once the GSTIN is validated, customers should confirm the accuracy of the applied GST rate. The official CBIC portal provides a GST rate chart for verification. When searching by product name, it is crucial to ensure it corresponds to the correct HSN code, as identical product names may have varying HSN codes and, consequently, different tax rates based on their specific descriptions.