The Goods and Services Tax, introduced in 2017, aims to help small businesses avoid complex centre and state taxation systems. The addition of Goods and Service Tax has improved the taxation infrastructure of the Indian Government, curbed financial frauds, and made it convenient to pay taxes at every stage of Point of Sales (POS). There are many indirect taxes like central sales tax, VAT, additional customs, and excise duties which GSTIN has replaced. The GSTIN number, also known as GST, came into effect on 1 July 2017. Businesses that ask for help registering for the GSTIN often do so for taxation purposes.
Did You Know? Under GST, small businesses can benefit as it gives the option of lower taxes by utilising the composition scheme.
What is a GSTIN Number (GST)?
A GST (GSTIN) number is a unique 15-digit code that businesses must register online to engage in the sales and transaction of goods and services in India and abroad. The Indian Government first introduced it to register business entities under the VAT system.
Here is the basic format of a GSTIN:
- The first two digits of the GSTIN represent the state code or union territory. In this example, 22 stands for Chhattisgarh.
- The next ten digits after the state code represent the PAN number of the business.
- The 13th digit represents the entity number of the same PAN holder in a given state.
- GSTIN's 14th digit, 'Z', is considered a default.
The last digit of the GSTIN identification number is used to check for errors and is called the checksum digit or check code.
Why Do You Need a GST Number?
You need the GST number to avail of various tax benefits which are offered by the GST scheme under the Indian Government. The law has mandated that businesses with an annual turnover of ₹20 lakhs or above are liable to file GST returns and have their own unique GSTIN number. The GSTIN code is used to claim refunds as well and if you are looking for a business loan to fund your ventures, banks will often request it. A recent amendment was made on 1 April 2019 which raised the annual turnover limit for registering for GSTIN up to ₹40 lakhs. Business owners that operate without registering for a GSTIN are held accountable by the law and may face criminal charges.
Who Needs a GST Identification Number?
The following businesses and individuals must register for a GST number:
- Inter-state suppliers of goods and services
- Supplier agents, input service distributors, and e-commerce aggregators
- A business which comes under the regulation of the Central and State Governments
- Businesses that are registered under old taxation services such as VAT, excise duty, and service tax
- Business merchants or dealers that sell products online, provide intellectual services, drop ship, or anyone engaging in any other form of online business.
Benefits of GSTIN for Businesses
- GSTIN encourages transparency and establishes credibility among businesses. All procedures related to various processes, such as business registration, paying taxes, claiming refunds, and applying for filing returns, are done through the GSTIN.
- GSTIN eliminates the tax on tax by collecting tax at every stage of a process when goods and services are transported between locations. It allows for the cross-utilisation of input tax credits and makes the whole supply chain level neutral.
- GSTIN makes businesses depend less on tax experts and CAs since the tax filing process is simplified. The portal encourages a DIY approach to tax filing, has quarterly filing options for taxpayers making over ₹1.5 crores, and is easy to use.
- Small businesses can benefit from lower taxes by taking advantage of the composition scheme under GSTIN. This reduces the tax burden and streamlines compliance for many businesses.
- Unlike other tax acts, GSTIN requires only one unified form to be filed and submitted. There are 11 returns under GST, of which only 4 are taxable. GSTR-2 and GSTR-3 forms are auto-populated by the online system, meaning only the GSTR-1 form needs to be filled in manually by the user.
Also Read: GST Frequently Asked Questions
How to Get a GSTIN Number?
Getting a GSTIN number for your business is easy and involves following a few simple steps. Here is what you need to do to register for your GSTIN:
1. Visit this website and log in to the portal. Click on 'New Registration' on the Services tab.
2. A form will appear, and you'll need to fill in your details carefully. Make sure not to miss the fields marked with a red dot or star since they are mandatory. Enter your email ID and phone number. Click on Proceed. You will receive an OTP for verification.
3. A Temporary Reference Number (TRN) will be sent to your email once you enter the OTP. Remember that you have only 10 minutes until the OTP window times out, so verify quickly.
4. Hover back to the Services tab under Registration and click New Registration again. However, type in your Temporary Reference Number (TRN) this time and a CAPTCHA code is shown. Fill in the CAPTCHA, and the system will generate a new OTP. Enter that, and you will be redirected to the 'My Saved Application' page.
5. On the 'My Saved Application' page, there is a form that you need to fill in and submit within 15 days. It has 10 sections. After you're done filling them out, make sure to attach and upload scanned copies of your bank account details, Aadhar number, PAN card, IFSC code, and proof of business corporation.
6. Continue to the next page and fill in the enrollment form. Don't leave any fields blank. Fill in all the fields. Click on 'Save and Continue.' Details will be shown under the 'Business' and 'Promoters or Partners' tabs which are used to prove your business. You will need to fill that in as well.
7. A final form must be filled in under the 'Authorized Signatory' section. You can sign the form using DSC, EVC, or other e-signing methods. To complete GSTIN registration, companies, LLPs, and authorized entities' signatures are required. You can proceed to submit your application after this.
8. A GST officer will then review and approve your application. You will be given a unique GST code for your business only after that. Check your SMS and email notifications to view your unique GST number. A temporary username and passcode will also be sent to you for logging into the portal. Use those details to set your new username and password online.
9. Wait for 3 to 5 business days, and you can download your GST registration certificate. Go to the 'Services' tab to do this and click on 'View or Download Certificates' to collect yours.
GSTIN verification is a two-step process for businesses, and once the GSTIN officer approves your forms, you'll be assigned the GSTIN number. You can download the certificate in a few days for your business.
Getting a GSTIN number for your business is easy and takes just a few simple steps. If you plan to run a business in India or start any international ventures from the country, you will need a GSTIN number to operate. The government aims to smoothen the road through GST as it is crucial to take a leaf from global economies. Under the GST regime, each registered taxpayer is consolidated on a single platform for administration purposes.
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