Goods and Services Tax (GST) is a vital component of the tax system in India for the purpose of ensuring the compliance and transparent conduct in businesses. Each registered taxpayer has a unique GST ID number (GSTIN) and may be either active or inactive as per regulations, and rules. Knowing the difference between an active and an inactive GST number is essential to ensure that businesses stay out of financial issues and comply with legal requirements.
In this blog, we’ll discuss the difference between GST numbers that are active and in-active GST numbers, as well as the reasons for their change in status and the methods businesses can use to be in a position to determine the status of their GST numbers.
What is an Active GST Number?
The current GST Number represents an active GSTIN that is up-to-date and in compliance with GST guidelines. An organization that has at least one active GST number can:
- Get GST back from customers.
- Claim the Input Tax Credit (ITC) on qualified purchases.
- GST tax returns that are complete conforming to the federal rules.
- Conduct business legally, in line with GST rules.
How to Identify an Active GST Number
GST number is in effect up to the point that the company:
- Fills in GST Returns Frequently: In a consistent manner, whether annually or quarterly GST returns.
- Keeps in Compliance: Observing GST guidelines without taking any illegal or fraudulent actions.
- Answers Notices That Address: The majority of questions or concerns are asked by GST official.
The company hasn’t decided to cancel the GST registration of this business. The company has not filed a formal cancellation request in a voluntary manner or cancel tax registration.
What is an Inactive GST Number?
An inactive GST number is a GSTIN that was invalidated due to not being in compliance, or the termination or suspension. An organization who has a GSTIN that is not active includes:
- Inability to collect GST from customers.
- Do you qualify to receive Input Tax Credit (ITC).
- It’s not legal to generate GST bills.
- Could be subject to penalties if transactions are completed the use of an inactive GST number.
Reasons for a GST Number Becoming Inactive
This GST number could be invalid due to various factors, such as:
- The Failure to Submit GST Returns: Businesses who are unable to complete their GST returns during the time frame specified could have their GST registration deactivated or cancelled.
- The company can choose to cease the GST registration: Business when it ceases business or is below the GST threshold that is mandatory.
- Revocations By the Authorities of Government: The GST department may cancel registration due to failure to comply, fraud, or a false representation in the business records.
- Business Closure: If an entity shuts down activities or ceases operations and ceases to operate, the GST number will be removed.
- Merger or Transfer of a Business: If a company has a merger with another or changes its location to another location, the GST number may be substituted or canceled.
How to Verify GST Number Status
The business must Verify GST Number that they have a valid GST number before conducting transactions to make sure that they are legal. These are steps to take to determine if your GST number is not active or active
1. Using the Official GST Portal
- Visit the GST portal: https://www.gst.gov.in/.
- Enter “Search Taxpayer” and enter the GSTIN.
- The system provides specifics of the GST number and the status of active and inactive.
2. Using Third-Party Verification Tools
- An array of web-based APIs and tools provide the capability to validate GST on a large scale.
- These tools help businesses quickly verify multiple GST numbers to ensure compliance.
3. Contacting Vendors and Suppliers
- Receive confirmation from the supplier of your GST on the status of your order.
- Examine the invoice for information to stop the possibility of fraudulent transactions.
The effects of managing the GST number that is inactive
Suppliers, who have an inactive GST number may be faced with a myriad of problems:
- The loss of Input Tax Credit (ITC): ITC claims may be denied in the event that the GST number isn’t active.
- Legal Penalty: Any transaction that requires GST numbers that are not current could trigger sanctions or violations.
- Incidents that cause unexpected interruptions to business activities: If the GST number for a company is inactive, it might be subjected to restrictions on transactions and operations.
How to Reactivate an Inactive GST Number
If a business’s GST number is not active, the GST number is able to be reinstated by:
- The submission of the pending GST Returns: Complete all necessary GST return forms to be able to return the status of tax compliance.
- Responding to Notices: Responding to requests or show-cause notices sent by the GST department.
- Request for Revocation: If authorities withdraw your license, businesses are able to request cancellation on an agreed-upon date.
Conclusion
Understanding the difference between active and inactive GST numbers is crucial for businesses to be in conformity and avoid issues with their finances or legality. Continuous confirmation of GST numbers, as well as timely submission of returns and adherence to GST rules, can help prevent companies from being deactivated from their GSTIN. By keeping up-to-date with the latest information and ensuring that they’re performing the proper GST confirmation, businesses can function without issue and in compliance with the GST framework.
