To understand GSTIN, let's first learn about GST (Goods and Services Tax). GST is an indirect tax levied on goods and services manufactured, sold, and consumed throughout India. GST removes the effect of cascading (tax on tax), and the final consumer bears the burden. The previous indirect taxes were removed when GST was introduced.
What is GST Number?
- GSTIN or Goods and Service Tax Identification Number or GSTIN number means a number allocated to manufacturers, dealers, and service providers by the Central Government. Earlier, VAT TIN and CST TIN were given to the manufacturers, dealers and service providers.
- It is the 15-digit alpha-numeric number containing letters and numbers granted during registration to the applicant. According to the different categories, every person who crosses the threshold limit must make an application for registration to obtain the GSTIN. Also, the taxpayer can obtain the GSTIN voluntarily, even without crossing the threshold limit.
- GST number is granted to every person who makes an application, whether resident or non-resident. However, under Section 25(9), Any specialized agency of the United Nations Organization or any Multilateral Financial Institution and Organization notified under UN Act, 1947, Consulate, or Embassy of foreign countries and any other person or class of persons, as may be notified by the commissioner shall be granted a Unique Identity Number (UIN).
Concept of Distinct Person in GST
- There is a new concept introduced in GST, where the taxpayer has been given an option to obtain the different GSTINs for his/her multiple businesses. This is not compulsory.
- However, this can be possible only after reaching certain conditions. To obtain a separate GSTIN for the multiple businesses, a separate application for such additional business should be filed in a required form.
- Every separate registration obtained for such businesses grants that business the status of a distinct person. This can be understood from an example:
- Sharma & Sons have three branches where two are engaged in grocery supply, and one is engaged in the supply of consumer goods. In this case, Sharma & Sons can obtain a separate registration number for all three branches.
Casual And Non-Resident Taxable Person:
A Casual Taxable Person is a person who has his business in some states in India but wants to give effect to supplies in other states where he doesn't have the permanent establishment.
However, A Non-Resident Taxable Person is a foreigner who wants to make taxable supplies in any state in India.
Both of the above persons are granted a Temporary Reference Number (TRN) for making the supply of goods and services. The period for which registration is granted is for 90 days. A further extension of 90 days may be granted.
Importance of GSTIN
In India's new indirect tax system, GSTIN is important since the previous systems have been replaced by GSTIN. Let us understand its importance as per its requirement mentioned in the GST Act.
- Availing ITC: ITC, which stands for Input Tax Credit, is the GST paid on the purchases of goods or the input service in the course of business. Therefore, to use the credit of input GST from GST payable on sales, it is necessary to have GSTIN so that ITC can be used without fail.
- Filing of GST Returns: Various GST Returns are required to be filed under the GST Act such as GSTR-1, GSTR-3, 3A, GSTR-9 and many others. To file these returns it is crucial to possess GSTIN to give the proper record of the goods and services supplied and received monthly, quarterly, and annually to the Government that will further help in the availing of ITC.
- Claiming of Refunds: Refunds can be claimed under the GST Act under various provisions such as export of services, supply to SEZ unit, etc. For claiming the refund under such provisions, it is vital to have GSTIN.
- Importance in Tax Invoice, Debit Note, and Credit Note: GSTIN of supplier and recipient must be mentioned in Tax Invoice, Debit Note, and Credit Note. It will help the receiver of the goods and services business to avail the input credit of such GST paid.
- General Requirement: GSTIN is the mandatory registration number required under the GST law. Therefore, it is essential to obtain GSTIN after taking registration under the GST Act.
Also Read: GSTN Know about the Goods and Service Tax Network in India
GSTIN Number Format
After understanding the applicability of GSTIN, let us find out its structure, GST number format in India, and application procedures for numerous persons.
The GSTIN number length is 15-digits which is unique to every person who takes the registration. The format of the GST number does not include any digit from the aadhar card.
Below is the GST number Example:
The above 15-digit GSTIN number format consists of various elements:
- The first 2-digits in GSTIN format represent the State Code of the State from which the taxpayer conducts his business operations and has a permanent place of establishment.
- The next 10-digits are based on the PAN (Permanent Account Number) of the Taxpayer provided under the Income Tax Act, 1961.
- The 13th-digit present in the above GST format is based on the number of registrations in the state.
- The 14th-digit is Z which is default by value.
- The 15th-digit is the check code which can be an alphabet or a number.
Another GST number format example is 08AAAAA3456A7Z9
In the above GST registration number format, 08 is the state code of Rajasthan, AAAAA3456A is the PAN of the registered person, 7 is the number of registrations in Rajasthan, Z is the default value, and 9 is the check code.
After analyzing the structure of the GST No. format, let us understand the application procedure of GSTIN:
How To Make an Application for a GST Registration Number?
A person needs to get registered on the GST online portal to obtain the GSTIN. The procedure for registration is as follows:
- Filling of Form on GST Common Portal: Whether an individual, HUF or a Company, every person seeking the registration, even if voluntarily, must declare his PAN, mobile number, E-mail Address, State/UT in Part A of Form GST REG-01 on GST Common Portal.
- PAN of the applicant is validated online by the common portal from CBDT Database collected for Income Tax Act, 1961.
- Mobile Number and E-mail address is verified through one-time password (OTP) generated after feeding them in the GST portal.
- Granting of TRN: After the above declaration, the Temporary Reference Number (TRN) is generated and communicated to the applicant through the validated mobile number and E-mail address.
- Filling of Part B of the form: Part B can proceed after the above verification. Part B of the application consists of various details such as,
- Constitution of business, which refers to the type of business such as a sole proprietor, partnership, company etc.
- Jurisdiction, the local area under which it falls
- Option to avail the composition scheme, if the turnover is within the prescribed limit,
- Date of Commencement of business or starting date of business.
- Reason to obtain the registration,
- Address of PPoB (Primary Place of Business) and nature of Activity carried out therein,
- Details of APoB (Additional Place of Business)
- Details of Authorized Signatory, etc.
- Specified Documents: Part B of the application can only be filled after obtaining TRN since it is used for the providing of the above details in Part B along with specified documents that include,
- PAN Card of the applicant,
- Aadhar Card of the applicant,
- Bank Details,
- Address Proof,
- MSME Registration Document,
- Shops and Establishment Act License.
Also Read: The GST Amendment Act 2018 Explained
- Generation of Acknowledgement: Upon completing the filing of such an application, an acknowledgement receipt is issued to the applicant electronically as application proof. The application is forwarded to the officer who is authorized for processing of registration application.
- Granting of Registration: After verifying the application and documents submitted by the proper officer or authorized officer, the proper officer can grant the registration certificate in Form GST REG-06. It is to be done within three working days from the date of submission of application as per the prescribed rules. However, there may be delays in case of technical problems.
- Application and Documents not as per order: However, if the documents and application are not in order, then the Proper Officer will issue a notice electronically to the applicant within three working days from the date of submission. He can demand any further clarification from the applicant regarding documents or information submitted in the application.
The Proper Officer has a time limit of 21 days to issue a notice for seeking clarification from the applicant, where the applicant has failed to undergo the Aadhar authentication process or has not opted for Aadhar authentication on the GST portal.
- Furnishing of further details: In the above case of further clarification, the applicant must furnish the required information or documents within seven working days from receiving the notice. If the clarification is submitted within seven working days and the proper officer is satisfied, then he will grant the registration within seven working days from the date of receiving clarification from the applicant.
Clarification can be obtained regarding modification or correction in the particulars declared in the application filed for seeking registration, other than PAN, State, Mobile Number, and E-mail address. However, if the Proper Officer is not satisfied with the applicant's further details, he may reject the application for the reasons to be recorded in writing.
- Certificate of Registration: As per Rule 10 of the CGST Rules, 2017, after the grant of registration, a certificate of registration that is duly signed or verified by the Electronic Verification Code (EVC) by the Authorized Proper in the Form GST Reg-06 reflecting the PPoB (Primary Place of Business) and APoB (Additional Place of Business) will be available on the Common GST Portal.
- GSTIN in Form GST REG-06: Finally, GST Registration Number or GSTIN is communicated to the applicant within three days after the grant of registration.
Special Considerations for CTP, NRTP and TDS/TCS Collector:
There are some considerations for CTP (Casual Taxable Person), NRTP (Non-Resident Taxable Person), TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) collectors.
Registration for NRTP/CTP:
NRTP/CTP is required to apply for registration at least 5 days in advance before making any supply of goods and services. The registration is granted to NRTP/CTP only after making the advance deposit of the estimated tax liability.
The requirement of PAN is mandatory for GSTIN, but in the case of NRTP, it is difficult for them to possess PAN. Therefore NRTP will be required to submit other specified documents.
NRTP is required to submit a self-attested copy of their valid passport along with the application form that the authorized signatory duly signs. In the NRTP case, the authorized signatory is an Indian Resident possessing a valid PAN.
If the NRTP is any business entity that is incorporated or established outside India, Tax Identification Number (TIN) or Unique Number recognized by the Government of that particular country or PAN, if present, shall also be submitted together with the application form on the Common Portal.
For CTP, the application procedure is the same as the normal resident person. The application of CTP is PAN-based.
TDS/TCS Collector are required to issue a TDS/TCS certificate. TDS/TCS certificate should possess the GSTIN issued by the Government. It should have the GSTIN of both the deductor and deductee to assure the validity of the certificate.
GSTIN helps easy identification of the business entity or supplier to get the details of such business entity or supplier over the GST Common portal. The portal provides information on the recipient's credibility or the supplier in depositing the GST collected from the recipient. If the deposit is not made on time, the ITC cannot be availed by the recipient. Therefore, it is necessary to check the supplier credibility on the portal before purchasing the goods or availing the services from such a supplier.
GST has completely changed the Indirect Tax regime in India. Therefore, the application process has also undergone various changes. Properly following the GST system will help you to conduct smooth business operations. GSTIN will enable the government to track and stop any wrongdoing in the indirect tax collection and payments.
Also Read: GST FAQ – Search Your GST Queries | GST Frequently Asked Questions
Is it necessary to procure GSTIN to avail ITC paid on input goods and services?
Yes, It is necessary since a non-registered person cannot avail of ITC.
Within how much period the person should take registration after having crossed the threshold limit?
The person should take the registration within 30 days or 1 month after crossing the threshold limit in order to issue a revised invoice to the recipient inclusive of GST.
What is the threshold limit for the composition scheme under GST?
The threshold limit for special category states is Rs. 75 lakhs and Rs. 1.50 crore for other states to get registration under the composition scheme of GST.
Can the provisional GSTIN be used till the issue of fresh GSTIN?
Yes, it can be used, however, the provisional GSTIN should be converted into permanent GSTIN within 90 days of issue of provisional GST.
Is the GSTIN used for forward charge used for payment of GST on reverse charge basis?
Yes, the same GSTIN is used for payment of the GST under the both, forward and reverse charge basis.