GST verification: Ensuring authenticity and compliance with GSTIN

Goods and Services Tax, popularly known as GST, was introduced in India in July 2017 to streamline the indirect tax system across the country. GST was launched to enhance transparency, eliminate cascading tax (tax on tax), and facilitate ease of doing business. Businesses and individuals registered under GST are allotted a 15-digit PAN-based unique identification number known as GSTIN. GST verification is a must to ensure the integrity and authenticity of the quoted GST number. GST verification is important for consumers, businesses, and individuals as it ensures transparency, prevents fraud, and promotes wider compliance with GST regulations.

We will explore the concept of GST verification, its significance, and the methods employed for verification in this article. 

Understanding GSTIN and its format

Goods and Services Tax Identification Number (GSTIN) is a unique identifier granted to firms and professionals registered under the Goods and Services Tax (GST) regime in India. 

GSTIN is a 15-digit alphanumeric code used for several GST-related procedures, including submitting returns, obtaining input tax credits, and making payments. The GSTIN identifies the taxpayer and allows the GST system to track their transactions.

The first two digits of the GSTIN denote the state code, the next 10 digits signify the PAN number of the business or the professional, followed by the entity code and the digit check. 

All businesses and professionals operating in India are required to obtain GSTIN to comply with India’s taxation laws. Since the introduction of GST in India in 2017, obtaining a GSTIN has been made mandatory. 

Decoding the GSTIN structure

Let us understand the GSTIN structure with the help of an example. For instance, the GSTIN number of a business is 07AAECM9636P1ZP. The table below will break down the alphanumeric GSTIN number for you.  

Here: 

Character	Meaning
First two digits i.e. 07	State Code
Next 10 digits i.e. AAECM9636P	PAN allotted to the business
13th digiti.e. 1	The number of registrations in a state
14th digiti.e. Z	Default character
15th digiti.e. P	Checksum digit or number

1. The 13th digit denotes the registrations in the state. It’s a combination numeric/alphabetic code, with digits 0 through 9 preceding the letters A through Z.
2. The 14th digit is a default determined by the type of company. The letter Z is used to indicate a typical taxpayer.
3. The GST department grants a GST Number to an NRTP (non-resident taxable person) who doesn’t have a Permanent Account Number. Therefore, the following 10 digits of GSTIN would be the foreign government’s tax identification number.

The GSTIN format will help you identify the state in which the business is registered and the type of business, and will also help you with GST verification. This reduces your chances of getting involved in a fraudulent transaction. 

Importance of GST verification

GST registration is a must for all businesses or professionals functioning in India. However, some businesses or professionals quote a legitimate-looking GSTIN in their invoices to avoid paying taxes without actual GST registration. Quoting a false GSTIN number is a case of tax evasion and is akin to theft. 

GST verification comes into play here as it will help you verify the legitimacy of the GSTIN quoted in the invoice or on the shop front. 

Additionally, GST verification is mandatory for businesses. Professionals and business owners are required to verify the GST numbers of their suppliers and customers before making any transactions with them. 

GST verification will ensure that businesses are dealing with registered taxpayers and they can claim input tax credits on their purchases. 

Steps for GST verification

The GST verification process is 100% online, which makes the process simple and easy. The verification process plays an important role in preventing GST-related frauds and errors right at the beginning. Verification also helps to ensure that the business is legitimate. In the absence of proper GST verification, fraudsters can easily bypass the system, causing huge losses to the exchequer.

Here is a step-by-step guide for online GST verification: 

1. Visit the GST website at: https://services.gst.gov.in/services/searchtp

2. The entity’s GSTIN will be required on the next page when you click the link. Simply type in the GSTIN and hit the “Search” button.

3. Enter the correct captcha code and hit the search button.

4. You will be directed to a page that contains the organization’s legal information. If prompted to enter a legitimate GSTIN, understand that you are dealing with a fraudulent GSTIN. Ineligible entities include those whose “Taxpayer Type” indicates “Composition.” Otherwise, the GSTIN is legitimate and can be used.

5. Use the following step to verify the accuracy of the displayed GST rates. A business may charge you more than the legal amount of GST. If you are unfamiliar with the rates, you can view a confirmed list of GST rates at https://cbic-gst.gov.in/ 

Ensuring compliance after GST registration

After GST registration, businesses and professionals must follow certain procedures and guidelines to be fully compliant with GST. We have listed the guidelines below for you to be fully compliant with GST registration. 

• Display your GST number on your company’s nameplate.
• Make your GST registration certificate available to your clients at your company location.
• Display your GST number at your business location.
• Give your GST number to your supplier. Insist on his uploading the invoice to his GSTR-1. You will lose the input tax credit if your supplier fails to upload the invoice to GSTR-1.
• Select the appropriate invoice copy for your outside supply.
• Maintain duplicates of all Debit Notes, Credit Notes, Receipts, and Payment Vouchers, as well as any Outward Supply information. You must keep the stock register too.
• Do not forget to pay any purchase bills, asset purchase bills, or spending payments. You will lose the input tax credit you paid during inward supply.
• Determine the correct HSN code or SAC, collect output tax, and deposit it with the government.
• Determine the right point of supply for charging CGST/SGST/IGST.
• Creating an E-way bill if your shipment is worth more than Rs 50,000.
• Determine if you’re inside supplies are susceptible to the reverse charge mechanism.
• File GST returns by the deadlines.
• Inform your staff about the requirements. Educate them about workplace ethics.
• Review GSTR-2A frequently to ensure that your supplier is posting your invoice to the GST portal.
• Respond to departmental notices as soon as possible.
• If the situation demands, make the required changes to your GST registration.
• Remain in contact with your consultant.
• After the conclusion of the fiscal year, you must complete the GSTR Annual Return and, if required, have your GST records audited.
• Generate an e-invoice if your turnover exceeds the set limit.

Conclusion

GST verification is an essential step to ensure GST compliance, authenticity, and credibility within the GST system. GST verification of suppliers and vendors can help businesses prevent tax evasion and tax fraud and enhance their ability to claim input tax credits. 

An online GST verification tool is provided by the GST Authority of India to facilitate GST verification. This tool is accurate and free to use. 

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