Understanding GST Number: Meaning and Format Explained

Running a business across borders presents its own complexities, especially when entering a market like India. In FY 24, India recorded registrations from over 574 offshore firms under the GST framework. Nearly 50 new foreign entities joined in recent months, driven largely by digital services and cloud-based suppliers entering the Indian market. This trend highlights growing global interest in India’s consumer and enterprise sectors.

Among the first things you’ll encounter is the GST number, an essential part of operating legally and efficiently under India’s tax framework. Whether you're planning to launch in India or already have a foothold, understanding the GSTIN ensures you stay compliant and financially sound.

This guide covers the definition, benefits, format, and registration process of the GST number. By the end, you’ll know exactly what a GST no is and how to get one.

TL;DR

• A GST Number (GSTIN) is mandatory for any foreign business supplying goods or services in India. It works like an EIN in the U.S., but for India’s indirect tax system.
• The GSTIN unlocks key advantages, including legal invoicing, input tax credits, eligibility for tenders, faster customs clearance, and smoother inter-state operations.
• The 15-digit GST Number includes your state code, PAN, branch identifier, and a check digit. Each part verifies your business identity and supports compliance.

What is the GST Number?

A GST Number, or Goods and Services Tax Identification Number, is a unique identifier assigned to businesses registered under the Goods and Services Tax (GST) system in India. The GST is a comprehensive indirect tax that applies to the supply of goods and services across India, consolidating various taxes, including VAT, service tax, and excise duty, into a single unified system.

For US businesses and entrepreneurs considering entering the Indian market or engaging in cross-border trade, understanding the GST Number is essential. It functions similarly to the Employer Identification Number (EIN) in the US, but specifically for tax collection and compliance under India's GST regime.

The GST Number, also called a GSTIN (GST Identification Number), consists of 15 alphanumeric characters that encode critical information about the taxpayer, including the state code, the taxpayer’s unique registration number, and a checksum digit for validation.

So, what are the benefits of a GSTIN Number for businesses? Let us understand.

What are the Benefits of a GSTIN Number?

For US businesses entering or dealing with the Indian market, having a GSTIN offers both compliance advantages and strategic benefits. Here’s how:

1. Smooth Market Entry: A GSTIN is a prerequisite for selling products or services in India. Whether you're setting up a subsidiary, partnering with a local distributor, or operating through an e-commerce platform, GST registration enables you to legally invoice customers, collect taxes, and comply with Indian regulations from day one.
2. Access to Input Tax Credit: One of the biggest advantages of GSTIN registration is the ability to claim input tax credit on purchases and expenses related to your Indian operations. This means you can offset the GST paid on business inputs against your output tax liability, effectively lowering your total tax burden.
3. Legitimacy and Trust: Indian vendors, partners, and customers often prefer dealing with GST-registered businesses. A valid GSTIN signals transparency, compliance, and long-term commitment, factors that can help US firms build stronger relationships and negotiate better contract terms.
4. Eligibility for Indian Government Tenders: Many government projects in India require suppliers to have a GSTIN. If you plan to bid on public-sector contracts or work with government agencies, having a GST number is a non-negotiable requirement.
5. Faster Customs Clearance: For U.S. exporters shipping goods to India, quoting a GSTIN can expedite customs processing. It guarantees smoother documentation and reduces the risk of clearance delays, especially when goods are delivered to a registered Indian entity.
6. Smooth Logistics Across Indian States: If your business involves warehousing or distributing goods across multiple Indian states, a GSTIN allows you to operate without dealing with multiple local taxes or permits. This improves supply chain efficiency and lowers compliance overhead.
7. Avoidance of Penalties: Conducting taxable transactions in India without a GSTIN, when required, can result in fines or even business disruption. Registering early keeps your operations legally sound and reduces the risk of unexpected regulatory issues.

So, why do businesses require a GSTIN to ensure smoother financial workflows? Let us find out why.

Also Read: Benefits of Offshore Accounting for Business Success

Why Do Businesses Require GSTIN?

For businesses operating in India, obtaining a Goods and Services Tax Identification Number (GSTIN) is essential. Understanding why GSTIN is mandatory helps US businesses and international entrepreneurs navigate India’s complex tax landscape effectively.

1. Legal Compliance in India

GST is India’s unified indirect tax system, replacing multiple state and central taxes like VAT, service tax, and excise duty. Every business engaged in the supply of goods or services whose turnover exceeds the prescribed threshold must register for GST and obtain a GSTIN. This guarantees compliance with Indian tax laws, helping businesses avoid penalties, fines, and legal issues.

2. Facilitates Smooth Business Operations

GSTIN acts as a digital identity for businesses in India. It allows them to invoice customers legally, claim input tax credits, and file returns electronically. This simplifies tax compliance and reduces paperwork, enabling smoother operations, particularly for US companies entering the Indian market or local businesses expanding their operations.

3. Access to the Indian Market

India is one of the fastest-growing economies, with a vast consumer base and expanding digital infrastructure. US entrepreneurs and companies from other countries increasingly look to India for growth opportunities. Having a GSTIN is mandatory for any business that wants to sell products or services in India, whether through physical stores, e-commerce platforms, or business-to-business channels.

4. Enables Inter-State Trade

Before GST, trading across states in India involved complex tax systems and multiple registrations. GSTIN standardizes this process, allowing businesses to operate across states with a single registration. This benefit is especially valuable for US companies establishing pan-India operations or for international businesses expanding into different Indian states.

5. Boosts Credibility and Trust

GST registration signifies that a business adheres to government regulations, thereby building trust among customers, suppliers, and financial institutions. For foreign companies entering India, including those from the US, UK, UAE, and China, obtaining a GSTIN is crucial for establishing credibility in the local market.

6. Facilitates Export and Import Activities

Many U.S. and international businesses establish subsidiaries or joint ventures in India to capitalize on global trade opportunities. The GSTIN enables these companies to benefit from tax exemptions and refunds related to exports and imports, thereby enhancing their competitiveness in global markets.

7. Helps Track Financial Transactions and Avoid Tax Evasion

The GSTIN enables the Indian government to track sales and purchases electronically, thereby reducing tax evasion and ensuring transparency. This transparency benefits compliant businesses by creating a level playing field and improving the overall ease of doing business in India.

India’s strong economic growth and investor-friendly policies have attracted businesses from around the world. Countries such as the United States, the United Arab Emirates, China, and the United Kingdom are among the leading sources of foreign direct investment (FDI) in India. Many companies from these nations register for GSTIN to establish local operations, whether in manufacturing, IT services, e-commerce, or retail sectors.

Now, let us understand what each of the 15 digits of a GST number indicates in detail below.

Format of GST Number

Each GSTIN is carefully structured to convey important information about the taxpayer and their registration details. Here's a detailed breakdown of the GST Number format:

Here’s a GST number example to make it clearer:

27AACCS1234F1Z5

• “27” indicates the business is registered in Maharashtra
• “AACCS1234F” is the company’s PAN
• “1” marks it as the first registration on that PAN within Maharashtra
• “Z” is by default
• “5” is the checksum digit

This format applies to every business registered under GST across India.

Now, we come to an essential part of how to read a GST file, which is a crucial aspect of business to ensure smooth financial reporting.

Suggested Read: How to Set Up a Business in India and Taiwan

How to Read a GST File?

If you're doing business in India or planning to enter the market, it’s essential to understand the Goods and Services Tax (GST) framework, especially how to interpret GST files. These files are core to compliance and financial reporting for companies operating in India.

A GST file typically refers to the documents or data submitted during GST return filings. These include outward supply details (GSTR-1), inward supply reconciliations (GSTR-2A/2B), and summaries of tax liabilities and input tax credits (GSTR-3B). For entrepreneurs and accounting teams used to the US tax system, the format may seem unfamiliar at first.

Here's a quick breakdown of how to read one:

If your company is expanding into India, ensure that your finance team or outsourced partner is familiar with accessing and interpreting GST data through the GSTN portal or compatible accounting software. Misreading or overlooking these files can lead to missed credits or regulatory scrutiny.

As a business looking to establish a company in India, you must obtain a GST Number to conduct business properly. Let's discuss how to get a GST number in India.

Step-by-Step Process to Get a GST Number in India

Expanding into India’s booming economy requires more than just market research; it demands regulatory compliance from day one. Whether you're setting up a branch office, exporting digital services, or entering a joint venture, registering for GST ensures you're ready to do business the right way. Below is a step-by-step guide to help you explore the GST registration process with clarity and confidence.

1. Determine Eligibility: Foreign entities planning to conduct business in India must first confirm if they meet the criteria for GST registration. Generally, businesses with an aggregate turnover exceeding ₹40 lakhs (approximately $48,000 USD) or ₹20 lakhs (around $24,000 USD) (for certain special states) in a financial year are required to register. For interstate supplies, registration is mandatory regardless of turnover.
2. Obtain Required Documents: Essential documents include:
   • Proof of business registration or incorporation (Certificate of Incorporation)
   • PAN card of the business entity or its authorized signatory
   • Valid proof of address of the business premises in India
   • Identity and address proof of promoters or directors (passport, voter ID, or Aadhaar for Indian nationals)
   • Bank account details and a canceled cheque
   Note: U.S. businesses must also provide documentation showing the cross-border nature of their operations and relevant authorization letters if applying through a local representative.
3. Create an Account on the GST Portal: Visit the official GST portal and create a user account by entering a valid email address and mobile number.
4. Fill Out the GST Registration Application (Form GST REG-01): Complete the online form with accurate details about your business, promoters, and operations. For foreign companies, details about your business model, place of business in India, and type of goods or services supplied must be clearly stated.
5. Submit the Application with Documents: Upload the scanned copies of all required documents. Ensure all files are clear and legible to avoid delays.
6. Verification by GST Authorities: After submission, GST officials will review the application and may request additional information or clarification as needed. Foreign entities may be required to provide additional proof of their business activities or presence in India.
7. Receive GSTIN: Once approved, a 15-digit GSTIN is issued. This number must be quoted on all invoices, tax returns, and correspondence related to your business activities in India.

Now that we understand everything about the GST Number in India and why foreign companies coming to India require a GST Number, let's explore how VJM Global assists foreign companies with GST compliance.

How VJM Global Supports Businesses with GST Compliance in India

Knowing the meaning and format of a GST Number is vital for any business operating or planning to operate in India. A GST Number, or GSTIN, uniquely identifies a taxpayer registered under India’s Goods and Services Tax system. This 15-digit number encodes key business information such as state location and PAN details, ensuring accurate tax reporting and compliance.

Understanding how this number works helps businesses maintain smooth operations and meet statutory requirements without delays or penalties.

GST compliance in India can be complex, particularly for foreign companies unfamiliar with the local tax system. VJM Global offers expert offshore accounting solutions designed to support U.S. CPA firms and their clients in mastering GST registration and management:

• Complete GST Number Registration Support: We manage the entire GSTIN application process, ensuring all documents meet Indian regulatory standards and registrations are completed efficiently.
• Accurate GST Data Management: Our offshore accounting team helps maintain precise GST records, ensuring the GSTIN’s format and details are correctly reflected in all filings.
• Regulatory Compliance Assurance: VJM Global keeps your firm informed about changes to GST rules and GSTIN-related requirements, thereby reducing the risk of non-compliance.
• Cost-Effective Offshore Expertise: Reduce staffing costs by up to 50% while accessing a pool of highly skilled professionals knowledgeable in Indian GST law and procedures.
• Secure and Confidential Handling: We employ strong security protocols to safeguard sensitive financial and tax information at all times.
• Tailored Solutions for Multi-State Operations: VJM Global advises on GSTIN registrations across various states, helping clients optimize their tax footprint and comply with regional rules.

With increasing complexities in cross-border taxation, many U.S. CPA firms rely on VJM Global’s offshore accounting services to provide smooth GST compliance and improve their advisory offerings.

Take control of your India GST compliance with confidence. Contact VJM Global today and let our experts help you decode the GST Number and simplify your tax processes.

FAQs

Q. What is a GST Number, and why is it important?

Ans. A GST Number, also known as a GSTIN (Goods and Services Tax Identification Number), is a unique 15-digit identifier assigned to businesses registered under the GST. It is essential for legally conducting business in India, filing GST returns, and availing input tax credits.

Q. Who needs to obtain a GST Number in India?

Ans. Any business with an annual turnover exceeding ₹40 lakhs (₹20 lakhs for special category states) must register and obtain a GST Number. Additionally, businesses involved in interstate supplies or e-commerce operators also need GST registration, regardless of turnover.

Q. Can a foreign company get a GST Number in India?

Ans. Yes, foreign companies supplying goods or services in India must register for GST if they meet the prescribed criteria, such as making taxable supplies or crossing the turnover threshold. This allows them to comply with Indian tax laws.

Q. How can I check the validity of a GST Number?

Ans. You can verify a GST Number by visiting the official GST portal (www.gst.gov.in) and using the “Search Taxpayer” feature. Enter the GSTIN to confirm the registration status, business details, and filing history.

‍