What is Goods and Services Tax Identification Number (GSTIN)?
Goods and Services Tax Identification Number (GSTIN) is a unique 15-digit number, which has gradually replaced the Tax Identification Number (TIN). Dealers that were registered under the state laws were given a unique TIN by the respective state authorities before GST was implemented. Business organizations and entities registered under GST will be provided a unique identification number known as GSTIN.
Under the GST regime, all the registered taxpayers are fairly consolidated into one single platform for compliance and administration purposes by the government authorities.
You can register for GST through:
GST online portal
GST Seva Kendra to aid individuals, this is set up by the government.
What is the Structure of GSTIN?
Businesses that migrate their registration from previous indirect tax regimes to applying for a GST number would have received a 15-digit provisional GSTIN with a confirmation upon successful verification of the documents submitted.
The very first two digits in the 15-digit number represent the state code as per the 2011 Indian Census. As per government norms, every state has a unique code. For example, the State code of Telangana is 36, the State code of Delhi is 07.
Further, the next set of 10 digits will be the PAN number of the concerned taxpayer/business entity.
The next thirteenth digit is assigned based on the number of registration within the state.
The fourteenth digit among the 15-digit unique code will be ‘Z’ by default.
The last digit will primarily be for check code. It can be a number or an alphabet.
Here’s a diagram explaining the same:
What is the Importance of GSTIN for a Business?
A business needs to know its GST number, as the suppliers of the business need to quote the GSTIN correctly in every transaction. It is important to quote the GST number correctly as the GST invoice serial number in all the invoices that are made and are supplied will lead to the right allocation of an input tax credit. It is furthermore important for businesses to seek GST numbers from their customers, which can be included in invoices issued to them. GSTIN will help businesses not only to avail the right input tax credit but also to uphold its credibility and goodwill in the market. It is advised that businesses should go through ‘how to get a GST number’ and ‘how to apply for the GST number in India’.
What are the Benefits of having a GST Number in India?
Business entities that are registered under the GST act are required to apply for a GST number.
GST registration is required for business entities like manufacturers, traders, and service providers based on their turnover. The benefit that is granted to businesses is that you can charge GST on your sales invoices, and the buyers can claim the credit called input credit, which they can utilize for payment of their tax liability. Businesses registered with the GST department can avail input credit of the GST paid on the purchased invoices, which can be utilized and adjusted for the payment of GST.
How to Apply for a GST number/GSTIN?
To understand the working of GST reform, businesses have to migrate the registration under the previous indirect tax regime to the new GST era. As discussed earlier, GST registration is quite seamless due to everything taken to online platforms. One needs to ensure that all the information filled is correct, and the documents submitted are authentic to complete the procedure in time.
The procedure to apply for a GST number is as follows:
Enter the URL ‘gst.gov.in’ and log in.
As a part of the registration form, fill out the following pages one by one:
All business details
Promoter and Partner details
Authorized Signatory details
Identify the Principal place of business
Additional place of business
Goods and service details
Bank account details
After the submission of the GST REG-01 form, the business proprietor will receive an email and SMS, notifying that your new registration application has been submitted. This exact notification will contain the 15-digit Application Reference Number (ARN).
There might be certain fields that may require additional explanation or further approval of documents, so in such cases, a Show Cause Notice (SCN) reference number will be provided. Using this number, you can log in to your portal and navigate towards the page where clarification is needed and upload relevant documents.
Once all the necessary changes or clarifications are made, and your new registration is approved, you will receive a 15-digit GSTIN along with a temporary password. You can access your portal with your GSTIN number and also reset your temporary password after your first log in.
What are the Disadvantages of GST?
· Increased Costs due to Software Purchase
Businesses have to either update their existing accounting software or buy a new GST software so that their business keeps going. In either way, there is an increased cost that is availed by the business for the effective working of the organization.
· Being GST- complaint
Some of the small and medium scale organizations who haven’t signed for GST still have to understand the GST tax regime as they might have to issue GST-complaint invoices and file timely returns.
· GST Came into Effect while the Financial Year was already Midway
GST was implemented on 1st July 2017, which shook the working of every industry. Businesses that followed the old tax structure have to undergo a thorough procedure to continue further tax-paying. It was hard to adjust to the new tax regime, resulting in confusion and compliance issues.
· GST increases Operational costs
GST has changed ways on how tax is paid. Businesses will now have to employ a tax professional to be GST-Complaint. This will increase costs for small businesses as they will have to bear all the additional costs that might have to hire tax experts.
While the pros of GST include a comprehensive and compact tax system, the cons of GST are something to be worked around. However, it is also important to consider both the advantages and disadvantages of GST.
What are the Fees Applicable to Register Under GST?
Registering for GST and also obtaining GSTIN is free of cost. So beware of anyone charging you for this.
What is the Difference between GSTIN AND GSTN?
GSTN and GSTIN are very much separate from each other, so you should not get confused between these two numbers.
GSTIN (Goods and Services Tax Identification Number) is the number for registering under GST tax.
GSTN (Goods and Services Tax Network) is an organization that manages the entire working of the IT systems in the GST portal. This portal is authentically used by the government of India to track every financial transaction. All services from registration to filing taxes are done through this portal.
GSTIN is a unique number that is quoted on all invoices to improve your credibility in the industry. And so use only the authorized sites to apply for a GST number. All the information addressed above is verified and consolidated.