The Goods and Services Tax (GST) is a comprehensive indirect tax system in India that came into effect on July 1, 2017. Indirect taxes like the Value Added Tax (VAT), Service Tax, and Central Excise Duty are all replaced by it. GST has a significant effect on Indian businesses. Any company with yearly revenue over Rs. 20 lakhs must be registered for GST. Every link in the supply chain is subject to the consumption-based GST tax from the manufacturer to the consumer. The buyer may submit an Input Tax Credit (ITC) claim for the tax that was paid on purchasing goods or services.
GSTIN is a key identification number that enables companies to submit returns and adhere to GST rules. The number is issued by the GST Common Portal, which is administered by the Goods and Services Tax Network (GSTN).
Meaning of GSTIN
The GSTIN, or Goods and Services Tax Identification Number, is an important identifier for businesses in the GST era. Every taxpayer (mainly a dealer, supplier, or any other business entity) registered under the GST regime is given a unique 15-digit identification number. Obtaining a GSTIN and registering for GST are both completely free of charge.
A single individual who is a taxpayer under the Income Tax Act for each State or Union Territory in which they conduct business may have more than one GSTIN. When a person registers for GST and reaches the threshold for GST registration, it becomes compulsory for them to acquire a GSTIN.
Full Form of GSTIN
GSTIN stands for Goods and Services Tax Identification Number. It is an alpha-numeric identification number unique for every business.
Format of GSTIN
The Goods and Services Tax Identification Number is a 15-digit number provided to firms in India that are registered under the Goods and Services Tax (GST) regime. To maintain continuity and make it simple to identify businesses, the GSTIN format has been standardised. Its structure is essential in the GST system, allowing businesses to adhere to GST requirements and file returns.
The format of GSTIN is as follows:
First Two Digits
The first two digits stand for the state code in which the company is registered. The state code is allocated by the Government of India and is based on the 2011 Indian Census.
Next 10 Digits
The taxpayer’s PAN is represented by the next 10 digits of the GSTIN. PAN is a special 10-digit number that the Income Tax Department issues to individuals and businesses.
This indicates the numeric value of business vertical registrations the business entity has in the state under the same PAN. For companies having up to nine business vertical registrations in the state, it can range from 1 to 9, and for more than nine registrations, it can range from A to Z.
The fourteenth digit of GSTIN is reserved for future use and is presently assigned as “Z” by default.
The fifteenth digit serves as a check digit to ensure that the GSTIN number is accurate. Based on the first 14 digits, a mathematical formula is used to calculate it.
It is important to note that the GSTIN format is standardised and cannot be altered. To avoid compliance difficulties, businesses must ensure that their GSTIN number is in the proper format.
How to Apply for GSTIN?
All businesses in India that have registered for the GST regime are eligible for a GSTIN number. This comprises businesses that provide goods and/or services and have yearly turnovers that are higher than the set threshold level. The steps involved in the registration process are as follows:
Step 1: Obtain a PAN Card
To apply for a GSTIN, you must first obtain a Permanent Account Number (PAN). PAN is a 10-digit alphanumeric identification number required for all businesses registered under the GST regime and is provided by the Income Tax Department. A company can apply through the Income Tax Department if it doesn’t already have a PAN.
Step 2: Obtain a DSC
You need a Digital Signature Certificate (DSC) to sign the GST registration application. An electronic signature known as a DSC is used to protect data sent over the internet. Licensed Certifying Authorities (CAs) acknowledged by the Controller of Certifying Authorities (CCA) can provide DSCs to businesses.
Step 3: Apply for GST Registration
Once the business has secured the PAN and DSC, it can submit a GST registration application using the GST Common Portal, which is run by the Goods and Services Tax Network (GSTN). To complete the application, you must provide the following details:
- Business Information: Name, address, PAN, and other necessary information must be submitted.
- Business Structure: The type of business, such as a sole proprietorship, partnership, corporation, or any other structure, must be mentioned.
- Bank Information: The business’s bank account information must be provided.
- Authorised Signatory Details: The authorised signatory’s name and PAN must be provided.
Step 4: Upload the Documents
As part of the application procedure, you must upload the following supporting documents:
- The PAN of the business.
- A document proving the business’s address.
- Identification and residency verification for the authorised signatory.
- A bank statement or a cancelled cheque.
- The authorised signatory’s Digital Signature Certificate (DSC).
Step 5: Submit the Application
The application can be submitted once it has been fully completed and all necessary supporting documents have been uploaded. The GST authorities will examine the application, and the GSTIN will be issued if it is accepted.
Step 6: Verify the GSTIN
The business must verify the GSTIN number to ensure it is accurate and current. You can use the GST Common Portal to complete the verification process.
Benefits of GSTIN
The benefits of GSTIN number include the following:
- Obtaining a GSTIN will ensure that your company is legally compliant with the law if your turnover exceeds the threshold level. As a business, this is essential because the penalties for noncompliance with GST regulations can be severe.
- When you buy raw materials or other products and services from a dealer who has registered for GST, and you have a GSTIN, you can claim input credit for the GST you paid on your purchase. You can vastly lower your GST obligation by putting off input credits.
- With the use of GSTIN, you can undertake interstate sales of goods and services without any hassles or unwanted legal implications.
- Applying for a GSTIN number provides you with legal recognition, eventually improving your company’s visibility and reputation in the market.
In summary, the GSTIN is a key identification number for companies registered under the GST regime in India. The format is standardised and serves an important role in the GST system, allowing businesses to comply with GST requirements and file returns. Whether you are a seasoned entrepreneur or a novice business owner, understanding the GSTIN number format and ensuring that your GSTIN is in the correct format is essential. Businesses that comply with GST requirements and take advantage of the GST system will benefit from understanding the significance of this number.