What is GSTIN? Its Meaning, Structure, Application, Verification

Introduction

GSTIN (Goods and Services Tax Identification Number) is a unique identification number assigned to individuals and businesses that are registered under the Goods and Services Tax (GST). This number is essential for conducting business and is used for tracking and paying taxes. GSTIN helps in the smooth functioning of the tax system by allowing businesses to claim tax credits, file returns, and maintain compliance with GST laws. In this article, we will explain the meaning of GSTIN, its structure, how to apply for it, the verification process, and the benefits of having a GSTIN.

What is GSTIN Meaning, Format and Structure?

GSTIN is a unique identification number issued by the GST Department to businesses and individuals registered under GST. The GSTIN allows the government to track the tax obligations and compliance of businesses under the Goods and Services Tax regime.

GSTIN Format:

The GSTIN is a 15-digit number, and its structure is as follows:

1. First two digits: Represent the state code (for example, 27 for Maharashtra).

2. Next ten digits: Represent the Permanent Account Number (PAN) of the taxpayer.

3. 13th digit: Is assigned as a entity number (this number is used if a person has multiple registrations in one state).

4. 14th digit: Is Z by default.

5. 15th digit: Is a check code for validity.

For example, a GSTIN like 27AAAAA1234A1Z5 is broken down as follows:

• 27: Maharashtra state code
• AAAAA1234A: PAN number of the business
• 1: Entity number
• Z: Default character
• 5: Check code

GST Number Example

Let’s take an example of a GSTIN: 27AAACC1234A1Z6.

• 27: Represents the state code (Maharashtra).

• AAACC1234A: Represents the PAN number of the business owner.

• 1: Entity number indicating it’s the first registration for that PAN.

• Z: Default character.

• 6: Check digit to ensure the validity of the GSTIN.

This GSTIN is a unique identification that allows businesses to carry out operations under GST, file returns, and claim tax credits.

How to Apply for GSTIN?

To apply for a GSTIN, businesses must first complete the GST registration process. Here’s how you can apply for GSTIN:

Through GST Portal:

1. Visit the GST Portal: Go to the official GST registration portal (www.gst.gov.in) and create a login ID.

2. Fill in the GST Application: Complete the GST REG-01 form, providing basic details about your business such as name, PAN number, business address, and the type of business.

3. Submit Required Documents: Upload the necessary documents (explained below).

4. Verification: After submitting the form, the GST department will verify your details. If everything is in order, your GSTIN will be assigned.

5. GSTIN Issued: After verification, you will receive a GSTIN on your registered email address. The GSTIN will also be available for download from the portal.

Documents Required for GSTIN Registration:

• PAN Card of the business owner.

• Aadhaar card (for individuals or sole proprietors).

• Proof of business address (like a rent agreement, utility bill, etc.).

• Bank account details (with a canceled cheque).

• Photograph of the business owner or authorized signatory.

Through GST Seva Kendra:

You can also visit a GST Seva Kendra (a government-authorized center) to help you with the registration process. They will assist you in filling out the form, submitting documents, and receiving your GSTIN.

What is the Cost of Obtaining GSTIN?

The cost of obtaining GSTIN is free in most cases. There are no direct charges for GST registration. However, businesses may need to bear some indirect costs like:

1. Professional Fees: If you hire a tax consultant or CA (Chartered Accountant) to help you with the GST registration process, they may charge a fee for their services.

2. Cost of Documents: You may need to pay for notarizing documents or obtaining official certifications required for registration.

3. Compliance Costs: Post-registration, you may need to spend money on GST returns and accounting software to ensure proper GST compliance.

While the registration itself is free, these costs are associated with the process of obtaining and managing your GSTIN.

How to Verify GSTIN?

To verify the validity of a GSTIN, you can follow these simple steps:

1. Visit the GST Portal: Go to the official GST portal (www.gst.gov.in).

2. Go to the GSTIN Verification Section: On the homepage, you will find the option for “Search Taxpayer” or “GSTIN Search”.

3. Enter GSTIN: Enter the GSTIN number you want to verify.

4. Check Details: After entering the GSTIN, the portal will display information about the business, including its status, state, legal name, and the GSTIN validity.

This helps ensure that the GSTIN is legitimate and active. Businesses can use this verification to confirm that the supplier or customer is properly registered under GST.

Why is GSTIN Required?

A GSTIN is required for several important reasons:

1. Tax Compliance: It helps businesses comply with GST laws and pay taxes to the government.

2. Claiming Tax Credit: Businesses registered under GST can claim input tax credit (ITC) for taxes paid on purchases, which reduces their tax burden.

3. Invoice and Payments: A valid GSTIN is required to issue GST-compliant invoices, making it easier for businesses to receive payments and for buyers to claim credits.

4. Official Recognition: Having a GSTIN establishes the legitimacy of the business and builds trust with customers, vendors, and the government.

5. Interstate Business: A GSTIN is required for conducting interstate business and collecting interstate taxes on sales.

Without a GSTIN, businesses cannot operate or engage in any commercial activity in line with the GST Act.

Benefits of Getting a GSTIN

There are several benefits to obtaining a GSTIN:

1. Tax Credits: With a GSTIN, businesses can claim input tax credit (ITC) on goods and services purchased, reducing the overall cost of goods sold.

2. Legitimate Business: GSTIN validates your business and makes you eligible for operating legally in the marketplace.

3. Wider Customer Base: A GSTIN enables you to work with larger companies or businesses that only deal with GST-registered vendors.

4. Interstate Sales: GSTIN is essential for interstate trade and helps you comply with cross-border tax laws.

5. Government Recognition: Having a GSTIN ensures that your business is recognized and respected by the government and other institutions.

Spotting Fake GSTIN

Fake GSTINs can be a major problem for businesses and consumers alike. Here are some ways to spot a fake GSTIN:

1. GSTIN Verification: The first step is to verify the GSTIN on the official GST portal. If the number does not match any registered business, it may be fake.

2. Check for Details: Genuine GSTINs are associated with correct business names, addresses, and other details. Ensure all information matches the GST certificate.

3. Check for Inconsistent Invoices: Fraudulent businesses often issue invoices that lack proper GST details or show incorrect GST numbers.

4. Look for Suspicious Offers: If a business offers too-good-to-be-true deals, they may be hiding a fake GSTIN.

It’s important to verify GSTINs of suppliers and customers to avoid potential tax fraud.

Difference Between GSTIN and GSTN

Feature

GSTIN

GSTN

Full Form

Goods and Services Tax Identification Number

Goods and Services Tax Network

Purpose

Unique number for businesses or taxpayers to file GST

The network or platform that supports GST operations

Usage

Issued to businesses for filing GST returns

A technology platform for GST transactions and compliance

Issued by

The government to individual taxpayers

The central government for handling GST services online

Components

15-digit number unique to the taxpayer

Online platform that manages the whole GST process

Conclusion

GSTIN is an essential identification number for businesses registered under GST, helping to ensure legal operations, compliance, and tax efficiency. It allows businesses to claim input tax credits, issue GST-compliant invoices, and expand their reach in the market. Understanding how to apply for a GSTIN, verify it, and recognize its importance is crucial for businesses and taxpayers alike. By staying compliant with GST regulations, businesses can enjoy various benefits and avoid potential penalties.