In this article, you will learn:
Every small or medium enterprise intending to sell goods or services was required to obtain Tax Identification Number (TIN) under VAT or CST. This number is also sometimes known as VAT number when used for intra – state sales. Businesses had to obtain such a number under VAT along with other identification numbers.
This number was given by the commercial tax department of the respective states in order to track transactions related to VAT across the country. Furthermore, each state had its own VAT act under which TIN was applicable. After the implementation of GST, TIN number was replaced by GSTIN.
So lets understand what is TIN number, TIN Number Requirements, who needs it and how to get TIN number in India.
What is TIN Number?
The TIN full form is Tax Identification Number (TIN) which is an eleven digit number assigned to every business registered under VAT. The first two characters of the TIN represent the state code and the rest nine digits vary from state to state.
Just as PAN is used to identify individual taxpayers, TIN was issued to business enterprises in order to keep track of their financial transactions across India. Thus, the very objective with which TIN was issued was to consolidate the tax related information of a business entity. This is because business entities operate in different states and conduct both interstate and intrastate business.
Who Issues Tin Number in India?
TIN is used for both interstate and intrastate transactions. TIN is issued by the commercial tax department of each of the states to businesses who intend to register under CST or VAT. People often confuse Tax Identification Number with Tax Information Network.
Tax Information Network (TIN) is an initiative made by Income Tax Department of India to modernize the current system for collection, processing, monitoring and accounting of direct taxes using information technology.
Thus, TIN number is a part of the Tax Information Network initiative undertaken by the income tax department of India. The repository of tax related information that would be created under this initiative can be accessed by the government at any time and from anywhere in the country.
This helped in bringing transparency and accountability on the part of the taxpayers. It is because such a repository enabled the government in tracking the taxpayers and their various sources of income.
Who Needs a TIN Number?
TIN number registration was required for Manufacturers, Traders, Exporters and Dealers.
However, each state had a defined threshold limit for persons conducting business to register for VAT from the date they commenced business.
But, following dealers had to register for VAT at the commencement of business regardless of their taxable turnover. Every dealer:
- importing goods in the course of business from outside the territory of India
- residing outside the State but carrying on business within the State
- registered or liable to be registered under the Central Sales Tax Act 1956. Or any dealer making purchases or sales in the course of inter-state trade or commerce. Or dispatching any goods to a place outside the State otherwise than by way of sale
- liable to pay tax at Special rates specified in Schedule VI of the respective state VAT Act 2005
- Every commission agent, broker, del credere agent, auctioneer or any other mercantile agent by whatever name called. Provided who carries on the business of buying, selling, supplying or distributing goods on behalf of his non-resident principal
- Every person availing an industrial incentive in the form of a tax holiday or tax deferment
- executing any works contract exceeding Rs 5 lakhs for the State Govt. or a local authority. And any dealer executing works contracts and opting to pay tax by way of composition.
When new registration was undertaken under VAT or Central Sales Tax, a new TIN was allotted under registration.
What is VAT?
VAT was a multi-stage tax levied on the value added to a particular good at each step of the production process. Under VAT, the tax was incurred and paid by the end consumer as the registered dealers in the value chain were allowed to take input tax credit.
The dealers were allowed to take credit of the VAT paid on inputs or goods purchased out of VAT collected from the customer proportionately. This meant that the dealer had to pay VAT only on the incremental amount of value added to the goods by such a dealer in the value chain.
Further, each state had its own VAT act to govern the applicability and administration of tax. Thus, the VAT tax rate, registration procedure, return filing, payment due date as well as all the other aspects related to VAT varied from state to state. Therefore, it was important for the business enterprise to be aware of the VAT regulations in a particular state.
Also, the TIN number should appear on all Quotations or Orders or Invoices by both the Sending Company and Receiving Company.
How to get TIN Number in India?
Taxpayers could undertake TIN registration both online and offline.
TIN Registration Online
An eligible business entity could undertake TIN registration online with NSDL. This could be done by filling up TIN Number application form for registration on its website as per the instructions given.
Once the taxpayer submitted the application form, the NSDL dashboard displayed a unique 15 digit acknowledgement number.
The taxpayer had to save and get this acknowledgement number printed. Then he had to sign and send the same to the NSDL along with:
- Proof of fulfillment for eligibility criteria
- Due diligence certificate
- Application fee payment either through cheque or demand draft in the favor of NSDL – ERI
Along with the acknowledgement receipt, the eligible business entity also had to submit documents that are mentioned in the section below.
TIN Registration Offline
For TIN registration offline, each state had its own registration procedure. The applicant had to first download the requisite form from the website of the commercial tax department of the respective state.
Then he had to fill the form, affix photographs at the assigned places and sign the application. Following this, he had to enclose the documents mentioned in the following section along with the signed application.
All this was then sent to the facilitation centre near the location of the business entity.
Once the tax officials processed the application and verified the particulars stated in the application form, it issued a VAT registration for the business entity making such an application.
Such a registration was accompanied by the issue of an eleven digit unique number that served as VAT/TIN/CST number for the business entity.
Documents Required for TIN Registration
- Evidence of ownership over business premises or
- Self attested copy of Rent/lease agreement (Registered) if property is taken on Rent/lease. In case of unregistered agreement, you can pay Document Registration Fee at CTO office also through Challan.
- Self attested copy of latest Electricity Bill of Business premises in support of Electricity connection to business premises.
- At least One Evidence of proof of residence of Sole Proprietor, Person responsible, Directors, Partners: Self attested.
- EPIC Card, Passport, Driving License, Bank Statement, Telephone Bill, Electricity Bill, Photo Identity Card issued by Government, Public Sector, Recognized Educational Institution, Public Ltd Company.
- Copy of Bye Laws of Company, Partnership Firm, Society, Trust if applicable
- Bank Statement for proof of Bank Account Number
- Photo Copy of PAN card
Tax Identification Number India Search
If a business entity engages with a dealer for the very first time he can o verify the VAT registration status of such a dealer.
This enabled the business entity to verify whether such a dealer is active or inactive. Accordingly, one could undertake verification using the TIN search tool.
Are TIN and VAT same?
Yes. TIN is known as VAT number when it is used for intrastate transactions
Is there a difference between TIN and TAN?
Yes. TIN is an identification number given to a business entity under VAT or CST. Whereas TAN is given to people who are required to deduct or collect tax at source on behalf of the income tax department.
What are the consequences if I do not mention TIN on any invoice?
You have to pay a penalty in case you forget to mention your TIN number on any of your sales documents. And the amount of penalty charged is as per the amount prescribed by the state as per its act.
Are you required to pay any security deposit for TIN application?
No it is not mandatory as it varies from state to state. There are certain states that take security deposit for VAT registration.