What is GST Verification?
Goods and Services Tax (GST) is an indirect tax used in India that replaced several cascading taxes levied by the federal and state governments. It’s governed by the GST Council and is divided into five tax slabs for the collection of tax – 0%, 5%, 12%, 18%, and 28%. An essential component of GST is the Goods and Services Tax Identification Number (GSTIN), a unique 15-digit number assigned to every registered business.
What Does GST Verification Involve?
GST Verification is the process of validating the GSTIN to confirm the authenticity of a business or a service provider. In essence, this means checking whether the GSTIN mentioned on the invoice or a business portal is accurate and belongs to the vendor you’re dealing with. You can either verify the GSTIN manually through the government’s portal or use specialized GST verification tools for quicker and more detailed analysis.
Types of GST Verification
- Online Verification: Checking the GST number on the official government website or third-party tools.
- Offline Verification: Contacting the concerned tax department or checking physical documents for verification.
Why is it Necessary to Verify the GST Number?
Verifying a GST number is indispensable for several compelling reasons. First and foremost, it fulfils your legal obligations under Indian tax laws, making you a compliant business that reduces its risk of facing penalties.
Secondly, GST verification is a cornerstone for maintaining transactional authenticity and ensuring you’re not dealing with a fraudulent entity. It essentially acts as a filter, helping you weed out any business or vendor involved in the circulation of fake invoices or other illegal activities.
Thirdly, it enhances your business credibility and builds trust among vendors, partners, and customers.
Last but not least, a verified GSTIN ensures that you can claim your Input Tax Credit (ITC) without hiccups. Failing to verify could mean you risk losing out on the ITC, which could cost you both money and peace of mind.
In summary, GST number verification is not merely a compliance requirement but also a best practice that ensures smooth, transparent, and lawful business operations.
Know your GST number format
The GST Identification Number (GSTIN) follows a specific format that can tell you a lot about the business entity you’re dealing with. A GSTIN is a unique 15-character alphanumeric code assigned to each taxpayer. Here’s a breakdown of its format:
First 2 Digits: These represent the State code as per the Indian Census 2011. For example, ’27’ stands for Maharashtra.
Next 10 Characters: This part is the Permanent Account Number (PAN) of the taxpayer.
13th Digit: Indicates the number of registrations within a state for the same PAN. It can be an alphanumeric number.
14th Digit: Currently, it is ‘Z’ by default for all taxpayers.
15th Digit: This is a check code used for error detection, and it can be an alphanumeric character.
Understanding this format provides several advantages. First, you can immediately know the state in which the business is registered, which is important for inter-state transactions. Second, by matching the PAN, you can ensure the business’s credibility to some extent. And third, it helps in verifying the GST number, as a mismatch in any of these segments indicates a possible error or fraud.
IDfy GST Number verification tool
IDfy offers an automated solution for businesses, tax professionals, and individuals to validate GSTINs efficiently and accurately. With a user-friendly interface and robust backend, the tool minimizes manual errors and enhances compliance.
How to Use:
- User Interface: Access the tool through a web portal or mobile app.
- Input: Enter the GSTIN you want to verify in the designated field.
- Submit: Click on the ‘Verify’ button.
- Results: The tool fetches data from the GST Network to confirm the validity and details of the GSTIN.
Features:
- Bulk Verification: Upload a list of GSTINs to verify multiple entries in one go.
- Real-time Data: It pulls real-time data from government servers for the most accurate verification.
- Detailed Reports: Get comprehensive reports that include the business name, state code, and PAN among other details.
- Error Detection: Highlights any inconsistencies or errors in the GSTIN.
- Integration: API support for easy integration into your existing business tools.