GST Verification

GST Verification: 10 Best Practices You Need to know

The GST Verification, also known as the Goods and Services Tax was introduced in India on 1st July 2017, as a comprehensive tax levied on the supply of goods and services. The GST replaced various indirect taxes like excise duty, service tax, and VAT, which were levied by the central and state governments. The GST system is designed to bring uniformity in tax laws and regulations throughout the country, simplify tax compliance, and promote ease of doing business.

GST compliance is mandatory for businesses, and failure to comply with GST regulations can result in hefty penalties and legal consequences. Therefore, it is essential for businesses to ensure that they follow the standards set under the GST Act and maintain accurate records.

One of the crucial aspects of GST compliance is the verification of GST numbers. The GST verification process confirms the correctness of the GST number, name of the taxpayer, and the business’s registered address. This helps to prevent tax evasion and fraud and ensures that businesses are dealing with genuine and registered entities.

In this article, we will discuss the best practices for GST verification and why it is important for businesses to follow these practices. By following these practices, businesses can ensure compliance with GST regulations and avoid legal and financial liabilities.

GST Verification

GST verification is a crucial process for businesses as it helps to ensure that they comply with the rules and regulations of the GST Act. It involves confirming the correctness of the GST number, name of the taxpayer, and the business’s registered address.

The GST Act mandates that businesses must register for GST if their annual turnover exceeds a specific threshold limit. Once registered, businesses are required to issue GST invoices, file GST returns, and maintain accurate records. Verification of GST numbers helps to prevent tax evasion and fraud by ensuring that businesses comply with these requirements.

Businesses can verify their GST numbers for free using the GST portal. The GST portal also provides a verification report that businesses can obtain after verifying their GST numbers. The verification report confirms the validity of the GST number and helps businesses to comply with GST regulations.

Additionally, businesses must ensure that they have the correct GST number, name of the taxpayer, and registered address on file for all their suppliers and customers. Failure to do so can result in legal and financial liabilities.

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To stay compliant with GST regulations, businesses must maintain accurate records and regularly review and monitor their vendors. Timely review and monitoring of vendors can help businesses to identify non-compliance issues and take corrective action to avoid potential legal and financial liabilities

Businesses must follow specific standards to comply with the GST Act. These standards include obtaining a GST registration number, issuing GST invoices, filing GST returns, and maintaining accurate records. Failure to comply with these standards can result in penalties and legal action.

To comply with the GST Act, businesses in India must adhere to specific standards, which are as follows:

Goods and Services Tax (GST) is a comprehensive tax levied on the supply of goods and services in India. The GST system is designed to bring uniformity in tax laws and regulations throughout the country. It was introduced on 1st July 2017, and since then, it has become mandatory for businesses to comply with the GST Act.

One of the essential aspects of GST compliance is adhering to specific standards set by the government. Businesses must obtain a GST registration number, issue GST invoices, file GST returns, and maintain accurate records. Let’s take a closer look at each of these standards:

Obtaining a GST registration number: Businesses with an annual turnover of more than Rs. 20 lakhs (Rs. 10 lakhs for northeastern states) must register for GST. This registration number is a unique identification number that is issued to the business by the GST department. The GST registration number must be displayed on all invoices and documents issued by the business.

Issuing GST invoices: GST invoices must be issued for all goods and services supplied. The invoice must contain specific details such as the name and address of the supplier, the customer’s name and address, the GST registration number of both the supplier and the customer, a description of the goods or services supplied, the quantity, and the price.

Filing GST returns: Businesses registered under GST must file monthly, quarterly, or annual GST returns, depending on the turnover of the business. The GST return contains details such as the total value of sales, purchases, and taxes paid.

Maintaining accurate records: Businesses must maintain accurate records of all transactions, including invoices, bills of supply, and credit/debit notes. These records must be kept for at least six years from the end of the financial year.

It is crucial for businesses to adhere to these standards to avoid penalties and maintain compliance with the GST Act. The penalties for non-compliance range from a minimum of Rs. 10,000 to a maximum of 10% of the tax due or Rs. 25,000, whichever is higher.

One of the critical aspects of GST compliance is verification. GST verification is the process of confirming the correctness of the GST number, name of the taxpayer, and the business’s registered address. Verification helps businesses to ensure that they are dealing with genuine and registered entities. It also helps to prevent tax evasion and fraud by ensuring that businesses comply with GST regulations.

To verify GST numbers, businesses can utilize the GST portal, which offers a free verification service. Before beginning the verification process, businesses must ensure that they have the correct GST number, name of the taxpayer, and the registered address. Businesses must also ensure that their records are up to date and accurate.

What Are The Benefits of Verification in GST?

Verification of GST numbers is an essential step for businesses to ensure that they are dealing with legitimate and registered entities. By verifying GST numbers, businesses can confirm that the GST identification number (GSTIN) provided by their vendors, suppliers, or customers is valid and matches with the official GST database. This helps businesses to avoid getting involved in any illegal or fraudulent activities and also ensures that they comply with the GST regulations.

The verification process involves checking the GSTIN of the supplier or customer on the GST portal. The GST portal provides a facility to verify the GSTIN by entering the GSTIN number of the supplier or customer. Once the GSTIN is entered, the portal displays the details of the entity, including the legal name, address, and registration date. By comparing these details with the ones provided by the supplier or customer, businesses can ensure that they are dealing with a genuine and registered entity.

Verification of GST numbers has several benefits for businesses, including:

Ensuring compliance with GST regulations: By verifying GST numbers, businesses  can ensure that they are dealing with genuine and registered entities, which helps to prevent tax evasion and fraud. This, in turn, helps businesses to comply with GST regulations and avoid any potential legal and financial liabilities that may arise due to non-compliance. For example, businesses can avoid getting penalized for not collecting or remitting GST to the government.

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Preventing tax evasion and fraud: GST verification helps to prevent tax evasion and fraud by ensuring that businesses are not dealing with illegal, unregistered, or fake GST numbers. By ensuring that the GST number is correct and valid, businesses can avoid getting involved in any fraudulent activities, which can result in severe penalties. Additionally, businesses can avoid reputational damage that may arise from being associated with fraudulent activities.

Building trust and credibility: GST verification helps businesses build trust and credibility with their customers, vendors, and other stakeholders. By ensuring that they are dealing with registered and compliant entities, businesses can assure their customers and vendors that they are following ethical and legal practices. This can lead to improved relationships with customers and vendors, which can ultimately translate to increased business opportunities.

Streamlining operations: GST verification helps businesses to streamline their operations by ensuring that they are dealing with the right entities. It helps to avoid delays and disruptions that may arise due to incorrect or fake GST numbers. For instance, businesses can avoid wasting time and resources dealing with suppliers who are not registered or compliant with GST regulations.

Claim Input Tax Credit (ITC): ITC is a mechanism that allows businesses to claim a credit for the GST paid on the purchase of goods and services used for business purposes. However, to claim ITC, businesses must ensure that they are dealing with registered and compliant entities. GST verification helps to ensure that the GST number of the supplier is valid, which enables businesses to claim ITC without any hassle. This can lead to significant cost savings for businesses.

Avoid penalties and interest: Non-compliance with GST regulations can result in penalties and interest. For instance, if a business deals with an unregistered supplier or fails to issue GST invoices, they may have to pay penalties or interest. GST verification helps businesses to avoid such penalties and interest by ensuring compliance with GST regulations. This can save businesses a significant amount of money in penalties and interest charges.

Prepare for audits: GST verification helps businesses to prepare for audits conducted by the GST department. During an audit, the GST department may verify the GST numbers of the suppliers and customers. By ensuring that they are dealing with registered and compliant entities, businesses can avoid any adverse findings during the audit. This can help businesses to avoid the time and expense associated with an audit, as well as the potential legal and financial liabilities that may arise from

non-compliance.

Improve supply chain management: GST verification helps businesses to improve their supply chain management by ensuring that they are dealing with reliable and compliant suppliers. This helps to avoid disruptions in the supply chain, which can have a significant impact on the business operations. For example, businesses can avoid delays in receiving goods or services, which can lead to delayed shipments and unhappy customers. By ensuring that they are dealing with compliant suppliers, businesses can maintain a smooth and efficient supply chain.

Things To Remember Before Verification Process

Before businesses start verifying GST numbers, it is important to ensure that they have the correct details of the taxpayer, including their name and registered address. This is important because incorrect details can lead to failed verification attempts, and businesses may end up dealing with non-compliant entities. Additionally, businesses must ensure that their own records are up to date and accurate before initiating the verification process. This includes maintaining a record of all transactions, including GST invoices, returns, and payments.

Businesses can verify GST numbers using the GST portal, which is a free and easy-to-use online platform provided by the government of India. The GST portal allows businesses to verify the GST number of their suppliers and customers with just a few clicks. To verify the GST number, businesses can enter the 15-digit GSTIN of the supplier or customer on the GST portal. The portal will then display the details of the taxpayer, including their name, registered address, and GST registration status.

It is important to note that businesses can verify GST numbers for free using the GST portal, and there is no need to pay any fees for the same. This makes it easier and more cost-effective for businesses to ensure compliance with GST regulations.

Additionally, the GST portal is a secure platform, and all the information entered by businesses is kept confidential and secure.

Verify the GST number of suppliers and customers: It is crucial for businesses to verify the GST number of their suppliers and customers before doing business with them. This can be done easily on the GST portal by entering the GSTIN of the entity.

Verification of GSTIN will help businesses to ensure that they are dealing with registered and compliant entities, which will enable them to claim Input Tax Credit (ITC) and avoid any penalties. Additionally, it helps businesses to avoid any legal and financial liabilities that may arise due to non-compliance with GST regulations.

Keep accurate records: Accurate record keeping is essential for GST compliance. Businesses must maintain proper records of all their transactions, including GST invoices, returns, and payments. This will help them to reconcile their accounts and ensure compliance with GST regulations. Maintaining accurate records will also help businesses to avoid any compliance issues in case of a GST audit.

Ensure GST compliance: Businesses must ensure that they are GST compliant and follow all the rules and regulations of the GST Act. They must obtain a GST registration number, issue GST invoices, file GST returns, and maintain accurate records. Non-compliance with GST regulations can lead to hefty penalties, interest, and other legal implications.

Beware of fake GST numbers: Businesses must be cautious of fake GST numbers and avoid dealing with unregistered entities. This can be done by verifying the GST number of the supplier or customer on the GST portal. If a GST number is fake, it can lead to non-compliance issues and denial of ITC.

Timely review and monitoring of vendors: Regular review and monitoring of vendors is crucial to ensure GST compliance. Businesses must check the GST registration status of their vendors and verify their GSTIN periodically. This will help them to avoid any non-compliance issues and build a reliable supply chain.

Seek professional help if required: In case businesses are not sure about the GST verification process or have any doubts, they must seek professional help. They can hire a GST consultant or an accountant to help them with the verification process. Seeking professional help can save businesses time, effort, and money, and ensure compliance with GST regulations.

Ensure data privacy: Businesses must ensure that they keep the data of their customers and suppliers confidential while verifying their GST numbers. They must not disclose any sensitive information to unauthorized persons, which could lead to data theft or misuse. Businesses can ensure data privacy by using secure systems and processes for GST verification.

Maintain backup records: It is advisable for businesses to maintain backup records of all GST invoices, returns, and payments. This will help them in case of any loss or damage to their original records and will also make the verification process easier.

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Backup records also help businesses to avoid any compliance issues in case of a GST audit.

Update the GST registration status: If a business has obtained a GST registration number and later becomes exempt from GST or cancels their registration, they must update their GST registration status on the GST portal. This will help to avoid any compliance issues and confusion among the vendors and customers. Failure to update the GST registration status can lead to non-compliance issues and penalties.

Check the GSTIN format: Businesses must ensure that the GSTIN format of their suppliers and customers is correct. A GSTIN is a 15-digit unique identification number assigned to every GST-registered dealer, and the format of the GSTIN differs for each state. If the GSTIN format is incorrect, the verification process will fail, and businesses may face compliance issues. Therefore, it is crucial to verify the GSTIN format before conducting any business transactions.

Use digital signature: Businesses must use a digital signature for the verification process to ensure data security and accuracy.

Best Practices

Here are some best practices that businesses should follow to ensure compliance with GST regulations:

Avoid illegal, unregistered GST numbers:

It is important for businesses to avoid dealing with suppliers and customers who have illegal or unregistered GST numbers as this can lead to serious compliance issues and legal action. GST registration is mandatory for businesses that meet certain criteria, such as having an annual turnover above a certain threshold.

Businesses that operate without a valid GST registration number are considered to be operating illegally and can face significant fines and penalties.

When businesses deal with suppliers or customers who have illegal or unregistered GST numbers, they risk becoming implicated in any illegal activities that these entities may be engaged in. This can lead to legal action, reputational damage, and financial loss. Additionally, businesses that transact with entities that do not have a valid GST registration number cannot claim input tax credit on the GST paid, which can lead to higher costs.

To avoid these potential risks, it is important for businesses to verify the GST number of their suppliers and customers before entering into any transaction. The GST portal is a reliable and accessible tool that businesses can use to verify the GST registration status of their suppliers and customers. The portal provides information about the entity’s legal name, address, and date of registration, which businesses can use to confirm that the GST number is genuine.

Ensure the right GST number on record:

Goods and Services Tax (GST) is a tax levied on the supply of goods and services in India. Under the GST regime, businesses are required to register for GST and comply

with various rules and regulations. One of the key compliance requirements is to ensure that the GST number of all suppliers and customers is correct and verified.

The GST number is a unique 15-digit identification number assigned to every registered business entity under the GST regime. It is a crucial element in the GST compliance process as it enables the government to track the movement of goods and services and verify the tax liability of businesses.

To be GST compliant, businesses should ensure that they have the correct GST number on record for all their suppliers and customers. This can be done by requesting the GST number from the vendors and customers and verifying it with the GST portal or other reliable sources.

Verifying the GST number is crucial as it helps businesses ensure that the supplier or customer is a genuine and registered entity. It also helps businesses avoid any compliance issues, such as incorrect tax filings or incorrect tax payment, which may result in penalties and fines.

Obtain a Verification Report:

Obtaining a verification report from the GST portal is a crucial step in ensuring compliance with GST regulations. The verification report provides businesses with an overview of their compliance status and helps them identify any areas of

non-compliance.

To obtain a verification report, businesses need to log in to the GST portal using their GST identification number (GSTIN) and password. They can then navigate to the “Services” tab and select “User Services” from the drop-down menu. From there, they can select “View/Download Certificates” and then choose “GST Compliance Verification Certificate.”

The verification report will provide a comprehensive summary of the business’s compliance with GST regulations. It will include details such as the GSTIN, legal name, and trade name of the business, as well as its registration date and the date of the report.

The report will also indicate whether the business has filed all its GST returns, paid all its GST dues, and complied with other GST requirements, such as the issuance of GST invoices and the maintenance of proper records. Any discrepancies or

non-compliance issues will be highlighted in the report, enabling the business to take corrective action.

Review and Monitor Vendors:

Timely review and monitoring of vendors is a crucial aspect of maintaining compliance standards for businesses under the GST regime. As vendors are an essential part of the supply chain, any non-compliance by them can have a significant impact on the compliance status of the businesses they supply to.

To ensure compliance, businesses should regularly review and monitor their vendors’ GST returns, invoices, and other documents. This can be done by cross-checking the details provided by the vendors with the information available on the GST portal.

Businesses should also ensure that the vendors have issued valid GST invoices and have correctly reported the transactions.

Regular monitoring of vendors also helps businesses detect any discrepancies or non-compliance issues early on, allowing them to take corrective action before it’s too late. For example, if a vendor has not filed their GST returns on time or has under-reported their transactions, it can lead to issues for the business they supply to, such as incorrect input tax credit claims or incorrect tax liability calculations.

Conduct Regular Internal Audits:

Conducting regular internal audits is a crucial aspect of maintaining compliance standards for businesses under the GST regime. Internal audits can help businesses identify any compliance issues and take corrective action before they become a significant problem. Additionally, internal audits can also be used to review GST returns, invoices, and other records to ensure compliance with GST regulations.

Internal audits involve a systematic review of a business’s operations and processes to identify any weaknesses, risks, or non-compliance issues. The audit process typically involves a review of financial statements, records, and other documents related to GST compliance. Internal auditors may also conduct interviews with employees to gain a deeper understanding of the business’s operations and identify any potential areas of non-compliance.

By conducting internal audits, businesses can improve their compliance standards by identifying any areas of weakness or non-compliance. They can also use the audit findings to develop action plans to address any identified issues and improve their processes and controls to prevent future non-compliance.

Use GST-Compliant Accounting Software:

Using GST-compliant accounting software is a critical component of maintaining compliance standards for businesses under the GST regime. GST-compliant accounting software enables businesses to generate GST invoices, file GST returns, and maintain accurate records, making the verification process more manageable.

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One of the significant benefits of using GST-compliant accounting software is the ability to generate GST invoices. GST invoices are a crucial component of compliance with GST regulations, and they must include specific details, such as the GST registration number of the supplier, the customer’s GST registration number, and the applicable tax rates. By using GST-compliant accounting software, businesses can ensure that their invoices meet all the necessary requirements and avoid any compliance issues related to incorrect or incomplete invoices.

Another significant benefit of using GST-compliant accounting software is the ability to file GST returns accurately and on time. Filing GST returns is a complex and

time-consuming process, and any errors or delays can result in penalties and fines. By using GST-compliant accounting software, businesses can simplify the process of filing GST returns and ensure accuracy by automatically calculating the tax liability and input tax credit.

Keep Accurate Records:

Maintaining accurate records is a critical aspect of complying with GST regulations for businesses. Accurate records of all invoices, returns, and payments must be maintained, and it should be done in a timely manner. This will ensure that businesses can easily reconcile their accounts and file their GST returns.

Keeping accurate records also helps businesses identify any compliance issues and take corrective action. Accurate record-keeping enables businesses to track their

transactions, identify discrepancies, and take corrective action if necessary. For instance, if a business notices that it has incorrectly claimed an input tax credit, it can identify the issue and take corrective action before it’s detected by the GST authorities. This can help businesses avoid any penalties or fines related to

non-compliance.

Furthermore, accurate record-keeping can help businesses with the verification process. GST authorities may verify a business’s records to ensure compliance with GST regulations. Maintaining accurate records makes the verification process more manageable and ensures that businesses can quickly produce the required documents. Inaccurate or incomplete records can lead to compliance issues and penalties.

Accurate record-keeping also helps businesses track their cash flow and financial performance. Businesses can use the records to monitor their revenue, expenses, and tax liabilities. This information can help businesses make informed decisions about their operations and finances.

Regularly Monitor Vendors:

Regular monitoring of vendors is essential for businesses to maintain compliance with GST regulations. It is crucial to ensure that all vendors are registered under GST and are complying with the necessary regulations. This helps to ensure that the entire supply chain is GST compliant and avoids any potential compliance issues.

Monitoring vendors also helps businesses identify any compliance issues and take corrective action. For instance, if a vendor is not registered under GST, it can lead to compliance issues for the business that is purchasing goods or services from them. By monitoring vendors, businesses can identify such issues and take corrective action, such as finding an alternative vendor or insisting that the vendor registers under GST.

Moreover, monitoring vendors can help businesses ensure that they are receiving correct and complete invoices. Vendors may make errors or omissions in their invoices, which can lead to compliance issues for the businesses that are purchasing goods or services from them. By monitoring vendors, businesses can identify any

errors or omissions in the invoices and take corrective action, such as requesting corrected invoices or notifying the vendor of the issue.

Goods and Services Tax (GST) is an indirect tax system that was implemented in India on July 1, 2017. It is an important tax reform that has brought a significant change in the Indian taxation system. GST has replaced several taxes like VAT, service tax, excise duty, etc., making the taxation system simpler and uniform across the country.

However, implementing and complying with GST can be challenging for businesses. There are several rules, regulations, and procedures that businesses need to follow, failing which may result in penalties and legal actions. This is where GST training can help businesses to stay compliant.

Attending GST training can provide businesses with a better understanding of the tax system, its rules and regulations, and how to comply with them. Businesses can learn about the GST registration process, filing returns, claiming input tax credit, maintaining records, and invoicing under GST.

Apart from compliance, attending GST training can also help businesses to save costs and improve efficiency. By understanding the tax system better, businesses can identify opportunities to claim input tax credit, optimize cash flow, and reduce tax liabilities. They can also streamline their invoicing and record-keeping processes, which can save time and improve accuracy.

Use GST-Compliant Software:

Goods and Services Tax (GST) compliance can be a complex process, involving various steps like generating GST invoices, filing GST returns, and reconciling input tax credit. This process can be time-consuming and error-prone, especially for businesses that rely on manual processes.

To simplify the GST compliance process, businesses can use GST-compliant software. GST-compliant software is designed to automate the various steps of the GST compliance process, making it more efficient and accurate.

One of the primary advantages of using GST-compliant software is the automation of the invoice generation process. GST-compliant software can generate GST-compliant invoices that include all the necessary details required under the GST regime, such as the GSTIN of the supplier and the recipient, HSN/SAC codes, tax rates, and amounts. This can reduce the chances of errors and ensure that the invoices are compliant with GST regulations.

Moreover, GST-compliant software can also automate the process of GST return filing. The software can prepare GST returns by automatically fetching data from the invoices generated and reconciling input tax credit. This can save businesses a significant amount of time and effort in preparing and filing their GST returns.

Conduct Periodic Internal Audits:

Conducting periodic internal audits is an important part of maintaining a strong compliance program for any business. Internal audits help businesses to identify potential compliance issues and take corrective action before they become larger problems.

Internal audits can also help businesses identify process inefficiencies and make improvements to their operations. This can result in increased efficiency, reduced costs, and better compliance with regulations.

During an internal audit, a business can review its policies, procedures, and controls to ensure that they are compliant with relevant regulations and standards. The audit can also review the effectiveness of these policies and procedures in achieving the desired compliance outcomes.

By conducting internal audits periodically, businesses can stay updated with any changes in regulations and adjust their compliance program accordingly. This helps to ensure that the business remains compliant and avoids any potential legal or financial repercussions.

Internal audits can also provide businesses with valuable insights into their operations. The audit can identify areas where improvements can be made to increase efficiency and reduce costs. This can lead to a more streamlined operation, increased productivity, and a better overall performance.

Takeaway

In order to be GST compliant, businesses must ensure that they have the correct GST number on file for all their suppliers and customers. This is because GST registration is mandatory for businesses that meet certain criteria, such as having an annual turnover above a certain threshold. Failing to obtain and maintain the correct GST number for a supplier or customer can result in compliance issues and potential legal and financial liabilities.

To ensure that the GST number on file for a supplier or customer is correct, businesses can verify the GST number on the GST portal. The GST portal is an online platform that allows businesses to verify the GST registration status of their suppliers and customers. The portal provides information about the entity’s legal name, address, and date of registration, which businesses can use to confirm that the GST number is genuine.

By verifying GST numbers and maintaining accurate records, businesses can ensure that they comply with GST regulations and avoid potential legal and financial liabilities. This not only protects the business’s reputation but also contributes to a healthy and transparent business environment.

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