GST and GSTIN are two separate terms that form a part of the Indian tax structure. Although the terms look somewhat similar and often creates confusion among people, they are completely different and serve different purposes.
However, they are not unrelated which becomes very much obvious once people know their full form and the purposes they serve.
GST vs GSTIN
The main difference between GST and GSTIN is that the former refers to the overall indirect tax structure of India. While the latter is a unique identification code provided under the former. In other words, GSTIN is a part of the overall structure of the GST.
Goods and Service Tax or GST refers to the indirect tax regime introduced in July 2017 replacing the massive and complex consumption tax regime of India with a simple, manageable, uniform and centralized one.
Strictly speaking, it is a consumption tax charged on goods and services availed by 1.3 billion Indian consumers.
Although GST is charged on consumers, it reaches the government through the providers of goods and services i.e. the businesses and companies. Therefore, the businesses are required to register for GST. Once registered, they are provided with a unique identification number that is the Goods and Service Identification Number or GSTIN.
Comparison Table Between GST and GSTIN (in Tabular Form)
| Parameter of Comparison | GST | GSTIN |
|---|---|---|
| 1. Purpose | Establishes a single, uniform, simple, transparent and manageable indirect tax regime for the entire country. | It is a unique identification code that aims to bring all the taxpayers (dealers, suppliers, service providers etc.) into a single platform for a simple and practicable tax administration. |
| 2. Structure | Consists of three components: CGST (levied by the union government on intra-state sale), SGST (levied by the state governments on intra-state trade) and IGST (exacted by the union government on inter-state transactions). | Consists of 15 digits and is based on the PAN number of the taxpayers with a registration number provided by the concerned state. |
| 3. Target Groups | It is a consumption tax and is levied on the purchasers of the goods and services of the whole country. | This unique identification number is provided to the businesses or companies, dealers or suppliers and service providers registered under the GST. |
| 4. Benefits | It is considered to be the most significant tax reform in the country that not only simplifies the indirect tax regime but also prevents the cascading effects of tax that is the tax on tax. | It replaced TIN provided to the dealers or suppliers by the respective state governments and Service Tax Registration Number provided to the service providers by the union government and brought all of them into a single platform and provided them only one registration number. |
| 5. Directly managed by | There is a GST Council to determine the tax rates by dividing the goods and services into different tax slabs. | The GSTIN of the millions of taxpayers is managed and controlled by the Goods and Service Tax Network, the organization that controls the IT system of the GST portal. |
What is GST?
Goods and Service Tax (GST) is a tax levied on domestic consumption of goods and services. It is an indirect tax regime that came into force on 29 April 2017 replacing the VAT structure.
The most prominent feature of GST that distinguishes it from the older tax regime is that it establishes a uniform, centralized, transparent and manageable tax structure that prevents tax on tax (cascading effects of taxes).
It establishes one indirect tax for the whole country by incorporating within itself taxes like excise duties (central and state), additional customs and excise duties, surcharges, State VAT, service tax and sales and purchase taxes.
Under the GST Act the ibid taxes were simplified and subsumed within only three types of taxes which are also known as the components of GST:
- Central Goods and Service Tax (CGST): Levied by the union government on intra-state transactions, that is sales within a particular state, say West Bengal.
- State Goods and Service Tax (SGST): Charged by the State governments on intrastate transactions.
- Integrated Goods and Service Tax (IGST): Exacted by the Central Government on inter-state transactions, that is trading between states; say between West Bengal and Bihar. Taxes collected from IGST are divided between the union and the state government (consuming state and not the selling state) according to the rates specified by the Government of India.
To determine the GST rates, a GST council has been established by the Government of India. It consists of 34 members (mainly finance ministers of each state) and is spearheaded by the Union Finance Minister.
There are five tax slabs into which goods and services are divided- 0%, 5%, 12%, 18% and 28%. At present, most goods fall within the 18% tax range. This is in stark contrast to the previous regime in which the average tax levied on goods used to be 26.5%.
However, certain goods and services have not been incorporated within the GST regime and are taxed as per the previous tax structure by individual state governments. These include petroleum products, electricity and alcohol.
What is GSTIN?
Goods and Service Tax Identification Number (GSTIN) is a unique identification number of 15 digits that is provided to businesses or companies registered under the GST regime.
During the pre-GST regime, these businesses or dealers or suppliers had to register under the State VAT law and were given a unique PAN-based Tax Identification Number. On the other hand, a Service Tax Registration Number was allotted to the service providers by the Central Board of Excise and Custom (CBEC).
However, under the GST regime, all the ibid mentioned taxpayers have been brought into a single platform by providing them with a unique state PAN based identification number. Evidently, this makes tax administration much more simple and transparent.
The structure of the GSTIN is as follows:
- A unique state code allotted by the Indian Census, 2011 is denoted in the first two digits.
- The next ten digits denote the PAN number of the taxpayer.
- The thirteenth digit is the registration number assigned to the taxpayer by the state.
- The fourteenth digit is Z by default.
- The last digit is for check code which may be a number or an alphabet.
For GST registration, a dealer or supplier may either open the Online GST portal or visit a GST Seva Kendra set up by the union government.
According to the Government of India, the following people must apply for GST registration:
- Businesses having an income of over 40 Lakh.
- Dealers or Suppliers registered under pre-GST law.
- Companies that supply their products through e-retailers.
- All E-Retailers.
Main Differences Between GST and GSTIN
- Both the terms are related to the new indirect tax system of India, but they serve different purposes. GST refers to the new indirect tax that unites the entire county under a single tax system. While GSTIN refers to the instrument that enables such unification.
- The main difference between GST and GSTIN is that the former refers to the entire consumption tax system while the latter is one of the instruments that make the system workable.
- GST is imposed on the purchasers of goods and services. But it is exacted by the government from the suppliers, retailers and service providers with a unique identification code, which is the GSTIN.
- The GST rates of goods and services are determined by the GST Council constituted by the Government of India. While the GSTIN of the millions of taxpayers is managed by the Goods and Service Tax Network-the organization that controls the IT system of the entire GST portal.
- One of the main advantages of GST is that it has helped in reducing the cost of most of the goods and services especially by eliminating excise duty on inter-state trade and thus obliterating tax on tax. GSTIN, on the other hand, has not only made tax filing easy for businesses or companies but also helped them in availing business loans and other benefits provided under the GST regime.
Conclusion
Both GST and GSTIN are tax-related terms with different purpose and meaning. But they are interrelated insofar as, without GSTIN, implementation of GST would not be possible.
It is because of this 15 digits unique identification number of the businesses or companies that make it practicable for the government to levy this consumption tax and swell its coffer.
References
- https://ijrar.com/upload_issue/ijrar_issue_20543568.pdf
- https://archives.tpnsindia.org/index.php/sipn/article/view/8363