Understanding Taxpayer Identification Number

Firms like Bajaj Finserv offered Ecommerce Seller Finance loans to sellers registered under e-tailer (retailers who sell goods via electronic transactions online) for business expansion purposes. To be an eligible applicant for an Ecommerce Seller Finance Loan at Bajaj Finserv, the seller had to have their products live, online at their partnered marketplaces or they had to qualify certain parameters for the loan to be granted.

Businesses applying for the loan had to meet one of the following Criteria:

• Public Limited or Private Limited Company.
• Partnership Firm.
• Proprietorship Firm.
• HUF Firm.
• Business with a TIN VAT Number.

If a business had a valid TIN, then it could apply for loans, amounting from Rupees 1 lac to Rupees 1 crore.

With the extensive initiatives of the Empowered Committee of State Finance Ministers and the commencement of the Tax Information Exchange System (TINXSYS), business owners in India could utilize the Taxpayer Identification Number to obtain verifications about their trading partners within any part of the country.

Through TIN, anyone could check and find out the details attached to the VAT TIN or CST Number of its trading partner to verify the authenticity of the partners. (Today, the equivalent check is done on the GST portal using a supplier's GSTIN.)

Applying for Taxpayer Identification Number

To make the process more accessible and easier for applicants, the government had provided the options where one could apply for TIN either online or offline. The Department of Commercial Tax of any Indian state was the authority that granted the Taxpayer Identification Number to all the enterprises that wished to register for it.

For every business, it was necessary to produce TIN during submission of VAT, which is why the Taxpayer Identification Number got automatically furnished the moment one registered for it. The TIN registration process differed depending on the state one registered in. The process was directed under the Central Sales Tax Act or CST.

To apply online for TIN in India one could visit the government’s official website at https://www.tin-nsdl.com and follow the steps directed on the website. Offline applicants had to download the form and submit it to the closest centre.

The basic way to apply for TIN in any state of India followed a common procedure:

• The first part of the procedure was to find the respective State Government’s VAT Department Website.
• In many states, the initial procedure involved creating a unique login on the VAT Portal.
• Upon creation of the login ID, the applicant had to fill up the application with all the necessary details and upload the documents that were required.
• After the application had been filed, it was verified and a provisional certification along with the TIN was issued.
• An officer from the concerned department of government would then visit the premises for verification of the location and a final certification was issued.

Documents that were Required to Apply for Taxpayer Identification Number:

• ID Proof or PAN card of the proprietor.
• 4 to 6 passport size photographs.
• Proof of address of the business establishment.
• An invoice of the first business sale, the first purchase Invoice or payment proof along with the bank statement.
• A collateral of the registering business.

The guidance and advice of a professional Chartered Accountant were highly recommended for start-up businesses, to avoid any form of glitches in the process.

What were the types of Taxpayer Identification Number?

Depending on factors like the type of business and the state where the TIN was registered, the Taxpayer Identification Number differed.

A brief example can be made of businesses involved in the trading industry or product manufacturing industry; both types of businesses required a Value Added Tax or VAT Registration which was always applicable with TIN registration.

When a trading or manufacturing company registered for VAT, a unique Identification consisting of 11 numbers served as the TIN number. Companies in these industries with a turnover of more than Rupees 5 lacs or 10 lacs in some states had to mandatorily register for VAT. Since 1 July 2017, such businesses register under GST and receive a GSTIN instead — see GST registration.

Differences in Security Deposits for Taxpayer Identification Number Registration, depending on the State where it was applied

TIN registration differed from one state to another and the security deposited while registering also differed. In many states, a fixed amount of security was deposited in terms of a bank guarantee or fixed deposit. The security amount was refundable at the time of cancelation of registration.

• There was no security deposit concept in Delhi and businesses could apply for TIN without any charges.
• In the state of Maharashtra, Rupees 25,000 was the security deposit amount.
• In the state of Rajasthan, Rupees 20,000 was the security deposit amount.
• In states like UP and Haryana, the security deposits were as high as Rupees 1,00,000.

In Maharashtra, instead of the security deposit amount, business owners could also produce a minimum of 2 registered guarantors that were registered under the same State’s VAT Law.