The Goods and Services Tax (GST) regime has become the backbone of India’s taxation system. One of the critical concepts that entrepreneurs, especially new businesses, need to be aware of is the Provisional GST Number. Whether you are a small startup, an established company, or even an importer/exporter, obtaining a Provisional GST Number is one of the first steps toward GST compliance.
In this blog, we will take a deep dive into what a Provisional GST Number is, its significance, how to obtain it, and the differences between a Provisional GST Number and a Final GST Number.
What is a Provisional GST Number?
A Provisional GST Number is a temporary registration issued by the Goods and Services Tax (GST) portal, allowing businesses to operate like an ordinary registered business user for 30 days until they complete the process of obtaining their final GST registration number. Within this duration, enterprises must ensure that they can complete the GST number registration process. This provisional registration is granted to taxpayers who were previously registered under the Central Excise, Service Tax, or Value Added Tax (VAT) regimes, enabling them to continue their business operations. In contrast, their final GST registration is being processed.
- A provisional GST Number does not allow the business to file the GSTR-2 return and claim Input Tax Credit (ITC).
Who Needs a Provisional GST Number?
A Provisional GST Number is primarily required for businesses that are:
- Existing Registered Taxpayers: If your business was already registered under Service Tax, Excise Duty, or VAT laws before the introduction of GST, you will be assigned a Provisional GST Number.
- Migrating from Old Tax Regimes: If you are migrating from any of the pre-GST tax laws (like VAT or Service Tax), the Provisional GST Number will act as a bridge until your final GSTIN is issued.
- New Businesses under GST: New businesses that are required to be registered under GST but are not part of the old tax systems may also apply for a Provisional GST Number.
- Businesses in Transition: A business that has been newly created or has undergone a change in its operations and needs to comply with GST regulations will also receive a provisional registration as part of the migration process.
How to Obtain a Provisional ID for GST?
Obtaining a Provisional GST Number is a step in the GST registration process. Follow the steps below to apply for provisional GST
Step 1: Visit the GST Portal
Go to the official GST portal at https://www.gst.gov.in to initiate the process and click on the LOGIN button. If you are the first user, click on ‘click here to log in.’
. Step 2: Provide Valid GSTIN (if applicable)
If you were previously registered under VAT, Service Tax, or Excise Duty, you will be required to provide your existing GSTIN or VAT/Service Tax registration number to start the process.
Step 3: Fill in the GST Registration Form
After providing the necessary information, fill out the GST registration form, Form GST REG-01, which is available on the portal. Provide the following details in the form:
- Business Name
- Type of Business
- Business Address
- Principal Place of Business
- Additional Place of Business (if exists)
- Goods and Services provided by the business
- Bank Account
- Details of promoters/partners
- Verification
Step 4: Verification and Documentation
Select the Verification checkbox. Select the name of the authorized signatory, enter the details, and add DSC.
In Case of Electronic Verification Code:
- Click the “SUBMIT WITH EVC” button.
- In the Declaration box, click the AGREE button.
- Click the “CONTINUE” button.
You will receive the acknowledgement in the next 15 minutes at your registered e-mail address and mobile phone number. The Application Reference Number (ARN) receipt will also be sent to your email address and mobile phone number.
Step 5: Obtain Provisional GST Number
Once your documents are verified, you will be issued a Provisional GST Number, which will be valid until your final GST registration is confirmed.
Why is a Provisional GST Number Important?
The Provisional GST Number is crucial for businesses transitioning to the GST regime, as it ensures a seamless transition in business activities during the migration process. Here are the key reasons why it is important:
- Continuation of Business: The provisional registration ensures that businesses can continue operations without any hindrance while waiting for their final GSTIN. This helps in maintaining business continuity.
- GST Filing Compliance: Even though it is temporary, a Provisional GST Number allows businesses to file their GST returns for the period, ensuring that the business remains compliant with GST regulations.
- Avoid Penalties: Having a provisional registration ensures that businesses comply with the law and avoid penalties for not being registered under GST, even if the final registration is pending.
- Input Tax Credit: With a Provisional GST Number, businesses can begin claiming Input Tax Credit (ITC) on purchases made for business purposes, which is crucial for reducing the overall tax burden.
- Time to Complete Documentation: The provisional number provides businesses time to gather all the necessary documents for full registration while continuing their business without interruptions.
What Happens After Receiving the Provisional GST Number?
Once you receive your Provisional GST Number, you will need to complete the following steps to migrate to the final GST number:
- Complete the Final Registration: After receiving the provisional number, you must complete the formal GST registration process within the specified timeframe (typically 6 months).
- Submit Necessary Documents: You will need to provide additional documentation and information required by the GST portal for verification and approval of your final registration.
- Receive Your Final GST Number: Once your application is approved and the documents are verified, the final GSTIN will be issued, replacing the provisional number.
- File Final GST Returns: You will be able to file regular GST returns (like GSTR-1, GSTR-3B, etc.) using the final GSTIN and also claim input tax credits on all eligible purchases.
Conclusion
The Provisional GST Number is an essential part of the GST registration process, especially for businesses that previously registered under VAT, Service Tax, or Excise Duty laws. It acts as a bridge for companies transitioning to the GST system, ensuring they continue operating smoothly without any disruptions. If you are transitioning from an older tax system or registering as a new business, make sure you understand the steps, requirements, and timeline involved in obtaining your Provisional GST Number. Once you have it, the next step is to complete the migration process and get your final GST number for full compliance.
