Understanding Provisional GSTIN: Can You Use It or Need a New GSTIN?

Introduction to GSTIN

GSTIN or Goods and Services Tax Identification Number is an alphanumeric code that consists of 15 digits in total. It is used as an identification tool for businesses registered in the Indian regime. Each and every person who are registered under the GST will have to generate the GSTIN.

Unpacking Provisional GSTIN

A provisional GSTIN could be considered to be a temporary form of GSTIN that businesses can easily available to operate like any other business with regular GSTIN for 30 days at least. This kind of temporary GSTIN will enable the businesses to complete the total GST registration within that span of 30 days. It is a way of easing out the companies to perform their business activities which will not be possible if they do not have any kind of GSTIN.

The provisional GSTIN has been structured just like how the regular GSTIN has been formed. However, the difference is that the 14th digit which is normally Z for regular GSTIN of business entities and it is P for entities with provisional GSTIN.

Using Provisional GSTIN

Provisional GSTIN will enable businesses to operate for 30 days and within that time the businesses will have to complete the full registration process for GST. During 30 days, the company or business will have to ensure that it can complete the entire registration process of availing the regular GSTIN. The provisional GSTIN will enable the businesses to generate tax invoices, and e-way bills, as well as file GSTR-1 returns. However, the input tax credit and GSTR-2 filing are not possible.

The steps for provisional GSTIN usage or means are here under:

Step 1: The business entities will have to obtain the provisional GSTIN which is possible if it initiates the registration process.

Step 2: The business entity can issue tax invoices to the customers using that registration.

Step 3: It will also be able to generate E-way bills when the company is trying to transport goods.

Step 4: Using the provisional GSTIN, the business entities will also be able to file the return concerning the GSTR-1.

The best practices are down here under:

• The business entity is required to submit the documents on a timely basis in order to ensure that they have been issued with the regular GSTIN.
• For the provisional GSTIN, the company will also have to meet the requirements in detail under the GST compliance requirements.
• Business entities can easily seek guidance from GST experts or Chartered Accountants so that they are able to navigate the process of registering provisional GSTIN as well as obtaining the regular one seamlessly.

Note:

• Always keep track of the status of registration on the GST portal.
• Make sure that you have received the regular GSTIN after the documents have been approved.
• Ensure that the provisional GSTIN has been transitioned to the regular one.
• Be compliant with the regulations in terms of GST.
• It is extremely important to acquire the regularity GSTIN so that one can claim the Input Tax Credit as well as the GSTR-2.

Transitioning from Provisional to Final GSTIN

Every business in India needs to move from the provisional GSTIN to the permanent and regular GSTIN. In order to transition from the provision of GSTIN, to the final one, the key points to be remembered are mentioned here:

Step 1: Keeping track of the expiry date of provisional GSTIN. Since one can only operate for 30 days using the provisional GSTIN therefore one needs to ensure that the validity still remains before the business entity has been approved for the regular GSTIN.

Step 2: Before submitting the documents each and every document required to make the provisional GSTIN to the final one needs to be reviewed and updated in order to be accurate documents. If there is any kind of outdated information, kindly update that information in order to avoid delay in approval.

Step 3: One can easily choose either for online or an offline mode of submission of the documents. Since online mode is the most convenient way of submitting the documents, therefore, one can easily see that or else go for off-line assistance from Seva Kendras.

Step 4: Since the process of converting your provisional GSTIN to the regular one needs time, therefore, one needs to ensure that the status of the transition has been tracked properly. However, you will easily get notified via email for the verification process as well as the ones of final GSTIN however one is to frequently check the email as well as seek assistance if they feel that there is a delay in approval.

Step 5: Remember transitioning from provisional to final GSTIN is a tiresome task. Therefore celebrate the progress as well as remember the benefits that you can enjoy from having the regular GSTIN which includes the ability to claim Input Tax Credit as well as filing the GSTR-2 returns.

Additional info: Provisional GSTIN vs. Final GSTIN

Legal Implications and Compliance

Legal implications:

• Limited liability: The business entity is liable to conduct its transactions for 30 days using the provision of GSTIN. However, if there is non-compliance with the GST regulations, then there could be severe penalties during the period.
• Obligations that are contractual: It must ensure that the contracts are being considered to be temporary in nature of the provision of GST. It must include clauses that address potential changes in GST upon finalisation so that future disputes can be avoided.
• Restrictions towards Input Tax Credit: The business entity will not be able to claim any Input Tax Credit on the purchases that are being made using the provisional GSTIN and this will impact the flow of cash as well as competitiveness in terms of cost-effectiveness.

Legal compliance with GSTIN:

• Submitting documents timely: The business entity should be able to submit the required documents within 30 days to be able to register under the final GST. In order to avoid any kind of legal consequences as well as cancellation of registration and penalties, the business entity should be mindful of the 30 days.
• Issue of accurate invoice: Accuracy must be maintained to ensure that the invoices issued during the provisional period and thereby reflect the provisional GSTIN if there is any kind of discrepancies in those invoices, then that could lead to fines and other penalties.
• Generating E-way bill: The business entity that transports goods must generate the bills using the provisional GSTIN. If the business is not able to comply with such provisions, then it can attract some kind of penalties or fees as well as hamper, the movement of goods smoothly.
• Filing the GSTR-1: The business entity is obligated to file the GSTR-1 returns even though it has only the provisional GSTIN. If the business is not able to do so, then it will attract fees and penalties.

Impact on Business Operations

There are several implications on business operations which are both positive as well as negative via the use of provision used subject breakdown of those putting potential impacts are laid down here under:

Positive impact:

• The business entities will have temporary access to the ecosystem of GST. The provisional GSTIN will grant the business entities to enter the GST ecosystem thereby allowing them to issue tax invoices, file the GSTR-1 and generate the E-way bill. Therefore it will allow the business entities to avoid any kind of penalties or problems faced during business transactions before they obtain their regular GSTIN.
• It will also reduce the burden of compliance for the business entities. Provisional GSTIN will assist businesses to operate for 30 days just like the businesses that have the regular GSTIN with minimal restrictions.
• Being able to issue tax invoices one might be able to move into a new sphere of opportunities in terms of businesses where there is a requirement for provisional GSTIN

Negative impacts:

• Provisional GSTIN will not be able to provide the business entities with full advantage of the GST regime. The business entity will not be able to file the GSTR-2 as well as claim the Input Tax Credit. Hence, it will restrict the optimisation of cost as well as the management of cash flow.
• Since the provisional GSTIN is temporary in nature, therefore, it might delay certain business operations. There could be some business operations that require complete and regular GSTIN and those operation operations might be hinder due to the business of provisional GSTIN.
• The pressure for compliance is huge as the business necessary required to comply to the requirements of provisional GSTIN and as well as ensure that proper documentation has been done in order to fetch the regular GSTIN.

Benefits and Drawbacks

Benefits:

• The businesses will be able to operate like other businesses that have obtained the regular GSTIN with minimal restrictions. Not only businesses will be able to issue tax invoices but also be able to file GSTR-1 as well as E-way bills.
• It will be easier for companies to operate using the provisional GSTIN, unlike the ones that do not have any GSTIN as such.
• Issuance of tax invoices will help the businesses to find new opportunities during the 30-day period.
• Provisional GSTIN helps businesses to fetch the final GSTIN and there is a waiting period for the businesses to have a continuity of operation.

Drawback:

• The business will not be able to claim any Input Tax Credit and well not be able to file the GSTR-2 returns.
• Since the businesses will not have the final GSTIN and therefore the businesses will not be able to function where there is the requirement of the final GSTIN.
• Since temporary GSTIN enables business entities to operate for 30 days, therefore, the pressure to comply in order to which it might create issues with business operations
• The companies will have to maintain separate records in order to manage the transition to final GSTIN which will add up to administration problems that might be imposed upon the business operations.

Conclusion

The provisional of GSTIN although a temporary means to operate, facilitates businesses to just operate like regular businesses with small restrictions. Since the process of issuing the final GSTIN is long and tiresome therefore, a provisional GSTIN is immensely helpful for businesses to operate for 30 days till it is able to transition into finance GST which facilitates smooth operations.

Also Read: GST: Everything You Need To Know

FAQs

• What is the provisional GST?

Provisional GSTIN or temporary GSTIN will allow businesses to operate like a normal business for 30 days within which they will have to complete the full registration process.

• How do I get a provisional GST?

You can fetch a provisional GSTIN by starting the registration process for the regular GSTIN in the government portal.

• What business operations can I perform using the provisional GSTIN?

You can generate tax invoices, generate e-way bills, and file the GSTR-1 returns.

• How can I transition from provisional GSTIN into the regular one?

Within the 30 day provisional period, the businesses will have to complete the document documentation process which will be the regular GSTIN.

• What are the restrictions under provisional GSTIN?

The businesses will not be able to avail of input tax credit as well as not being able to file the GSTR-2.

Arghyadeep Bose Equity Research Associate

I am a passionate writer with a deep understanding of the financial world. I believe in making complex financial concepts accessible and engaging for everyone. With my corporate experience and love for storytelling, I craft compelling narratives that educate and inspire. I am always looking for ways to bridge the gap between finance and creativity, and I am excited to share my insights with the world.

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Finance GST