7 Basic Things You Need To Know About GST Number
What is GST Number? What are the facts and details surrounding the all-important number, indispensable if you need to do business in India? Read on to learn the 7 basic things you need to know about GST Number – what is GST Number, why is it important, how to apply for it etc., etc. Before that though, what is GST?
What Is GST?
One Nation, One Tax, And One Market – This is the premise for GST, one of the biggest economic reforms launched this century by the Government of India. Four years into its launch and implementation, GST is still a work in progress.
GST expands as Goods and Services Tax.
In India, we have one direct tax that is the income tax. Before 2017, we had a host of indirect taxes – VAT, CST, service tax, central excise, customs duty, additional customs duty, luxury tax, entertainment tax, etc., etc. These taxes differed from state to state as well. To avoid the resulting confusion and simplify the procedure, the Government of India launched the GST which is one single indirect tax, uniform to all states and union territories.
All businesses, large and small will now have to register under GST and a unique GSTIN or GST Number will be provided on registration. What is GST Number?
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1. What Is GST Number?
Any business that has a turnover of over 20 lakhs annually needs to register under GST and obtain a GST number or GSTIN. Now, what is the GST number? The GST Identification Number is a unique 15-digit pan-based identification number, which is provided to every business concern registered under the GST. GSTIN replaces the earlier multiple registration numbers like TIN (Taxpayer Identification Number), CST, service tax, excise, etc., used in the previous system of taxation.
There can be multiple GST Numbers under a single PAN. That is a person can hold multiple businesses in a state or union territory under one PAN number and each business will have a different GSTIN.
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2. Structure Of GSTIN
The structure of the GST number is as below:
- Digits 1 and 2 – the state code according to the Indian Census 2011, unique to every state and union territory. For example, the code for the state of Jammu and Kashmir is 01, Himachal Pradesh is 02, Punjab is 03, Tamilnadu state is 33, the Union Territory of Pondicherry is 34, etc,. For the complete list of codes of states, click on the link.
- Digits 3 to 12 – the ten-digit alphanumeric PAN number of the business concern or the taxpayer.
- Digit 13 – the number of registrations within a state for the same PAN. This is alpha or numeric. If for the PAN of a business house say A has registered just one entity in a state, the 13th digit of GSTIN will be 1. 2 businesses will give 2 and so on up to a possible 35 registrations, 1 to 9 and then A to Z.
- Digit 14 – the 14th place is the alphabet Z by default.
- Digit 15 – a check code to detect errors. This is also alphanumeric.
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3. Why Do We Need A GST Number
There are a whole number of reasons why a GSTIN becomes mandatory for business houses in India. Let us look at them now:
- It is legal recognition of the business house.
- In every invoice made in a trade, the presence of the GSTIN of the supplier as well as the customer is mandatory to facilitate input tax credit. Under the new taxation scheme of GST, when you pay tax on your sales or output, you can deduct the tax already paid on the purchase or input. This is an input tax credit. For example, if you are a distributor making a sale for which tax is Rs.600, and you have already paid a tax of Rs.400 on your purchase, then you need to pay only Rs.200 as tax. An Input Tax credit can be claimed for input services as well.
- Every registered business house has to file GST returns. If GST filed is more than your GST liability, you can claim a refund through GSTIN.
- Possession of GSTIN enables interstate trade, free of restrictions.
- To hold an E-commerce website of your own or register on an E-commerce site, GSTIN is necessary.
- To avail business loans for purposes of expansion or inventory, GSTIN is mandatory.
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4. How To Apply For GST Number
To Register under GST and obtain a GSTIN, there are 2 avenues. Either you can approach the GST Seva Kendras set up by the Government of India to help in registration or you can register online at the GST portal Registering online is fairly simple. Follow the following steps:
- Go to the online GST portal
- Under the Taxpayer (Normal/TDS/TCS) tab, click on the ‘Register Now.’
- Choose ‘New Registration’.
- Fill in the details asked, followed by two OTPs sent through email and mobile, and then the captcha. Click on ‘Proceed’.
- On the next page, fill in the OTP sent through email and mobile. Click ‘Proceed’.
- A TRN, Temporary Reference Number will appear on the screen. Make note of it.
- Go back to the home page of the GST portal and click ‘Register now’ under Taxpayer.
- On the next page, choose the Temporary Reference Number option. Enter the TRN and captcha. Click on ‘Proceed.’
- Fill in the OTP sent through email and mobile and click on ‘Proceed’.
- On the succeeding page, you will be able to see the status of your application. Snap at the ‘Edit’ button on the right side.
- The necessary details under ten sections have to be filled and the necessary documents uploaded. Documents needed include Address proof of the business house, Constitution of the Taxpayer, photos, bank details and, authorization form.
- Check the declaration on the Verification page. Submit either through EVC (Electronic Verification Code) or the E-sign method. In the EVC link, OTP will be sent through the registered mobile number and in the second it will be sent to the mobile number linked with the Aadhar card. For company registration, the DSC or Digital Signature Certificate is to be used.
- A success message appears on the screen. The Application Reference Number or ARN will be sent to your mobile number and email.
- Verification by the GST officer may take up to three working days. Additional information may be required which must be provided within seven working days.
- The status of the GST registration can be checked on the GST portal. Click ‘Registration’ under the Services tab and click on ‘Track Application Status’. Enter ARN and captcha. Click on ‘Search’. The registration status appears on the screen.
- Download the registration certificate with the following steps: Log in to the GST portal with username and password. Go to ‘User Services’ under ‘Services’. Click on ‘View/Download Certificate’ and Download.
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The list of documents needed for GST registration are:
- For Proprietors and Individuals:
- Valid Pan card of the owner
- Valid Aadhaar card of the owner
- Photograph of the owner
- Address proof
- Bank account details
- For Partnership Firms and Limited liability Partnerships (LLP):
- Deed of Partnership
- Valid address proof of business house
- Valid Pan cards of the partners
- Photographs of the partners
- Address proof of the partners
- Aadhaar card of any authorized signatory
- Proof of appointment of the signatory
- Proof of LLP registration
- Bank details
- For Hindu Undivided Families:
- Valid card of the HUF
- Address proof of the business house
- Photograph of the owner
- Valid Pan card of the patriarch of the HUF
- Bank Details
- For Private Limited Companies:
- Valid Pan card of the Company
- Valid pan card of all directors of the company
- The Incorporation Certificate from the MCA
- Memorandum/Articles of Association
- Address proof of the Company House
- Address proof of the directors
- Bank Details
- Proof of Appointment of Signatory
- Signatory’s Pan card
- Signatory’s Aadhaar card
5. Penalty For Not Registering Under GST Or For Non-Payment Of Tax
The penalty for not registering under GST is the full tax amount plus the full tax amount due as a fine. The penalty for not paying tax or paying a lesser amount than the due amount is 10% of the tax amount as a fine or Rs10000, whichever is more.
However certain businesses are exempted from registering under GST like:
- Businesses with a turnover of less than 20 lakh annually.
- Businesses that do not supply goods or services. For example, the sale of a property, funeral services, etc.
- Businesses dealing in or manufacturing non-taxable goods like petrol, natural gas, electricity, etc.
- Businesses dealing with Exempt or Nil Rated goods.
6. Verification Of GSTIN
Some firms may use a fake GST for purposes of tax evasion. They may print the fake GSTIN on their invoices. If you doubt the veracity of any GSTIN validity, you can verify the same on the GST portal.
- Go to the GST Portal
- Select ‘Search Taxpayer’
- Enter the GSTIN that needs to be checked and enter the captcha.
- If the GSTIN is valid, the GSTIN status, the date of registration, and the details regarding the type of business and the type of taxpayer will appear on the screen.
- If the GSTIN is not valid, a message of error will appear on the screen.
7. Benefits Of GSTIN
The benefits of GSTIN are numerous. To name a few:
- The possession of a GSTIN is legal recognition of the business.
- Input tax can be claimed on input purchases and services.
- You can trade freely across states.
- You can trade online.
- A current bank account can be opened using the GSTIN.
- Business loans can be availed using the GSTIN.
- You will be the preferred destination for traders since they can claim input tax.
Frequently asked questions.
- Who needs GSTIN?
Business houses in India with a turnover of over 20 lakhs annually need to register for GSTIN. Also, businesses dealing in or manufacturing products that are not taxable, not exempt, or nil-rated need to register under GST and obtain a GSTIN.
- How to apply for GSTIN?
You can approach the GST Seva Kendras set up by the Government of India or apply online through the GST portal
- Is GSTIN free?
Yes. GSTIN has been made available free of cost by the Government of India. If you enlist the services of a consultant to help you with the registration process, they may charge you.
- How to identify GSTIN from PAN?
The PAN is an alphanumeric number having ten digits. The GSTIN is a fifteen-digit number that includes the ten-digit PAN number in the 3rd to 12th places.
- Is GSTIN mandatory for online sales of products on Amazon or Flipkart or your website?
GSTIN is mandatory for the online sale of all products that are eligible for GST taxation, irrespective of what your turnover is.
- Can GSTIN be canceled?
Yes, GSTIN can be canceled under the following three scenarios:
- The taxpayer can request cancellation if they are shutting down their business, if turnover is less than the stipulated threshold or if the company format changes or from other causes.
- The Tax Officer may cancel the GSTIN on account of any irregularities they may find. In that case, a show-cause notice will be served to the taxpayer who will have to reply within seven days. If the officer is satisfied, he will drop the cancellation. If not, he will pass an order for cancellation within 30 days of reply.
- Can more than one GSTINs be applied on one PAN?
Yes. More than one GSTINs may be applied under the same PAN if
- The business house is operating in more than one state.
- When the taxpayer may have two different businesses in the same state.