To streamline the nation’s tax structure, the Indian government passed the GST Act in 2017. Creating a country tax was the primary goal behind introducing the GST. The GST Act mandates businesses with a turnover of over Rs. 20 Lakh to register.
A 15-digit unique alphanumeric code known as a GST number is assigned to each person registering under the GST Act. You must search GST No. Download a GST Certificate to protect yourself from fraud and mistakes. Let’s explore the significance of online GST verification.
How to do GST No. Search and Verification?
There are three simple steps involved in completing the online GST no. search, which includes:
- To confirm the legitimacy of the business, type the business entity’s 15-digit GST number into the search bar of the website where you chose to search your GST number.
- When you enter the number, the website will provide information about the entity, including its legal name, type of business, taxpayer type, GST number status, registration date, official address, and the products and services it offers.
- You can see additional information by selecting other tabs, such as the entity’s tax filing records and the filings table.
Is GST No. Search mandatory for businesses?
No, searching for a GST number isn’t mandatory for businesses in India. However, it’s highly recommended and offers significant advantages, making it an important practice for most businesses. The government doesn’t mandate businesses to actively search for the GST numbers of their suppliers or customers.
Why It’s Strongly Recommended?
- Verifying Legitimacy: A GST search allows you to confirm if the supplier you’re dealing with is registered under GST. This helps identify potential fake or non-compliant businesses.
- Claiming Input Tax Credit (ITC): The supplier’s GST registration is mandatory to claim ITC on purchases (tax paid on goods/services you buy). A valid GST search ensures you have the correct details for claiming this credit.
- Compliant Invoicing: If you’re a registered GST business, you need to include your customer’s valid GST number on all invoices. A search helps ensure you have the right information.
- Mitigating Risks: Dealing with unregistered businesses can lead to penalties and tax implications later on. Regular searches help avoid these risks.
A GST no. search is like an insurance policy for business transactions. It safeguards you from fraudulent activities, ensures you claim eligible tax benefits and maintains compliance with GST regulations.
What happens if you use an unverified GST number?
Using an unverified GST number can lead to financial and legal troubles for your business.
- Firstly, you’ll likely be denied the opportunity to claim an Input Tax Credit (ITC) on purchases made from that supplier. ITC allows you to offset the GST you’ve paid on purchases against the GST you collect on sales, reducing your overall tax burden. Without a verified GST number, this crucial tax benefit becomes unavailable.
- Secondly, the consequences escalate to potential penalties and interest charges. If authorities discover you’ve claimed ITC based on an invalid GST number, you might be liable to repay the claimed credit, interest, and penalties. In severe cases involving deliberate attempts to mislead, you could even face legal repercussions for fraud and tax evasion.
The Penalty for Not Verifying a GST Number
There’s no separate penalty specifically for not verifying a GST number. However, the consequences of using an unverified or invalid number can be significant. You could be held liable for a penalty of up to 10% of the total tax liability on the transaction. This can be a substantial sum, especially for high-value purchases.
Additionally, interest will accrue on the tax liability from the transaction date until the tax is paid or the supplier’s GST registration is cancelled. This further adds to the financial burden of not verifying the GST number.
Conclusion
It’s important to verify the GST number before downloading a GST certificate. This ensures you deal with a legitimate business, not a potential imposter. Remember, a downloaded GST certificate can be easily forged. Verification through official government channels provides security and confirms the supplier’s GST registration status.
