GST Registration will be Through PAN linked Business Identification Number

The model legislation for the introduction of goods and services tax (GST) will have a provision for registration of individuals and companies which pay the tax. The registration will be done through a uniform PAN-linked business identification number. The Department of Revenue in the Ministry of Finance had recently sent a proposal to state governments for making the 10-digit permanent account number (PAN) the starting point for registering GST payees.

As per a senior official, the proposal had been sent recently to state governments in order to have uniformity, against the current practice of having multiple numbers for central excise, value-added tax, central sales tax and importer-exporter codes. Some of the state governments had earlier proposed that the tax information network (TIN) number issued by them for payment of VAT should be used for GST registration, since it was more reliable than PAN. The Centre, however, argued that the number of digits in TIN number varied across states from 12 to 14. It was necessary to have the same of digits for uniformity,” an official said.

The new business identification number was likely to be the 10-digit alphanumeric PAN, in addition to two digits for state code and one or two check numbers for disallowing fake numbers. The total number of digits in the new number was likely to be 13-14. The GST discussion paper presented by the empowered committee of state finance ministers had earlier said the format of the registration number would be worked out in consultation with the Income-Tax Department.

Explaining the advantage of having a PAN-linked number, officials said PAN had an all-India presence. Barring the North-East where residents have income tax exemption, PAN has a presence across the country. It has the single largest base of 40 million assesses as against 6-7 million that were expected to be covered under GST,” said the official. By cross-checking payments of income tax with that of GST through the number, evasion could be prevented. This (the number) would bring the GST PAN-linked system in line with the prevailing PAN-based system for I-T facilitating data exchange and tax-payer compliance,” the GST discussion paper said.

States like Maharashtra, Gujarat and Andhra Pradesh use PAN for preventing evasion through a database linked to it. Atul Gupta, senior director at consultancy firm Deloitte, said: A PAN-linked system would provide a correlation between payment of direct and indirect taxes and the authorities administering them. PAN is uniform throughout the country and other registration numbers, like those in the company laws, are also linked to PAN.” The revenue department had earlier examined a proposal to use the Unique Identification Number for the purpose, but it was dropped since UID would be issued only to citizens while the business identification number would be for all legal entities, including individuals, companies and partnership firms
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