Why Your Business Needs a GSTIN Number in India

The Goods and Services Tax (GST) was established in the year July 2017 and henceforth India’s taxation system has changed drastically. In addition, it has consolidated various indirect tax systems into a single and streamlined tax structure. Under the GST, all businesses must register and get a Goods and Services Tax Identification Number (GSTIN). However, having a GSTIN not just ensures tax compliance, but also provides tax benefits, improves operational efficiency, and credibility of the business.

The importance of GST can’t be overstated. Let’s explore GSTIN meaning, the importance of GSTIN for businesses in India, how to verify GSTIN, and eligibility criteria. 

What is the GSTIN number? 

Goods and Services Tax Identification Number or GSTIN is a 15-digit alphanumeric code given to every registered business in India. GSTIN is crucial for the business to carry out GST activities, such as, tax compliance, invoicing, and tax filing. 

Example of GSTIN number

• First two digits- Signifies the state code
• Next ten digits- PAN details of the business or proprietor
• 13th digit- Number of business registrations in a state
• 14th digit- A default digit
• 15th digit- Check code to detect errors; it can be either an alphabet or a number

GSTIN can be easily verified on the GST portal, thereby ensuring safe and compliant transactions.

Who Needs a GSTIN?

Any businesses with an annual turnover beyond 20 lakhs or 10 lakhs for special category states require a GSTIN. In addition, interstate suppliers, e-commerce operators, and taxable persons also need to register.

Why Does Your Business Need a GSTIN Number?

• Boosts Credibility and Trust

GSTIN improves your business trustworthiness amongst clients and customers. Also, it develops a strong rapport and reliability for further business partnerships and financial transactions. Moreover, a GSTIN indicates that your business is tax-compliant and legitimate. 

• Tax Benefits 

A business with GSTIN can easily claim Input Tax Credit (ITC), simplifies the tax filing process and reduces overall tax burden. So, without a GSTIN, businesses may find it challenging to access these benefits. 

• Avoids Paying Penalties

Acquiring a GSTIN is required to avoid fines related to non-compliance with GST. 

If a business fails to register under GST, it may need to pay a penalty of 10% of the due tax amount or 10,000 rs, whichever is higher.  In addition, if a person or business collects GST from the customers but fails to deposit it to the government, obviously, a penalty of 100% of the entire tax amount is imposed. 

• Easy Involvement in Tenders and Contracts 

To participate in government tenders and contracts, it’s mandatory to have a GSTIN. And, businesses operating without a GSTIN are not qualified to leverage such opportunities. 

• Expanding Business

Businesses that have acquired a GSTIN can expand their business across the states without restrictions of tax complications and others. Gradually, this opens up opportunities for wholesale service providers and e-commerce providers to expand their business beyond the traditional markets. 

• Essential for Tax Compliance 

In India, businesses exceeding a limit of 40 lakhs for goods, 20 lakhs for services, and 10 lakhs in special category states, must register their business under GST and get a GSTIN, else businesses legally can’t collect or pay GST to the government. 

Moreover, having a GSTIN provides legal recognition to businesses as official taxpayers to the government. 

How to get a GSTIN Number?

Businesses can apply for GSTIN via GST portal by following a simplified process:

1. Visit the GST portal- www.gst.gov.in
2. Click on services->Registration-> New registration 
3. Provide your business details, i.e., business name, type, business location 
4. Upload essential documents, such as PAN, Aadhaar, photographs of the business owner, bank details, and address proof.
5. All the submitted details will be verified either through OTP or digital signature.
6. Once all the details are verified, the GSTIN will be generated in 2-7 business days. 

How to Verify GSTIN?

1. Visit GST portal- www.gst.gov.in
2. Click on-> Search Taxpayer ->Search by GSTIN/UIN
3. Enter the business/tax payer’s GSTIN and then click on search button
4. If the GSTIN is genuine and valid, the portal displays tax payer’s details, such as name, business name, location, registration status, and tax liability.
5. In case, if the GSTIN is invalid, then you will witness an error message displaying no records found. 

Cost Associated with Getting a GSTIN

Registering your business for GST in India and obtaining a GSTIN is available at free of cost. In fact, there are no government fees associated with this process and can be obtained through the GST portal. However, if you choose to consider assistance from professional consultants, you will incur a service fee. 

Conclusion

Ultimately, obtaining a GSTIN for your business is more than any legal requirement, it’s a gateway to attain business credibility, growth, and expansion. Regardless of your business type, be it small business, service provider, and large-scale business corporation, having a GSTIN ensures tax compliance, provides robust financial stability, and results in transparent transactions. 

Have you registered your business and applied for GSTIN? If not, take a confident step ahead and grow your business efficiently and legally.