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Vendor invoices arrive with GSTINs that are mistyped, belong to another state registration of the buyer, or belong to a cancelled registration, and the credit never reaches the buyer's GSTR-2B.
A GSTIN has five parts: state code, PAN, entity number, the letter Z by default, and a check character. Each part can be read against what you expect for the vendor and for your own receiving registration.
Vendor master holding the verified GSTIN and state; a rule that the recipient GSTIN on each invoice must match the state of the receiving location; a Search Taxpayer check at onboarding.
Invoices with a wrong recipient or supplier GSTIN are caught before booking and sent back for correction, so credit lands in the right registration.
A GSTIN (Goods and Services Tax Identification Number) is the 15-character number given to every registered business. It is built from a two-digit state code, the business’s 10-character PAN, a counter for how many registrations that PAN has in the state, the letter Z, and a final check character. Once you know the pattern, you can spot most wrong GSTINs on an invoice in seconds.
What does each part of a GSTIN tell you?
Take a made-up GSTIN: 27ABCDE1234F1Z5.
| Position | Example | Meaning |
|---|---|---|
| 1 to 2 | 27 | State code (27 is Maharashtra) |
| 3 to 12 | ABCDE1234F | PAN of the business |
| 13 | 1 | Entity number: the first registration of this PAN in this state |
| 14 | Z | Default letter, Z for most taxpayers |
| 15 | 5 | Check character, calculated from the first 14 |
Common state codes you will see often: 07 Delhi, 24 Gujarat, 27 Maharashtra, 29 Karnataka, 33 Tamil Nadu, 36 Telangana. The PAN in the middle should match the PAN of the business you are dealing with. Inside the PAN, the fourth character shows the type of holder: C for a company, P for an individual, F for a firm.
Why does a wrong GSTIN on an invoice stop the buyer’s ITC?
The supplier reports each invoice in GSTR-1 against the buyer GSTIN printed on it. The portal then copies that invoice into the GSTR-2B of that GSTIN, and only that GSTIN. Under Section 16(2)(aa) of the CGST Act, 2017, you can claim input tax credit (ITC) only on invoices that appear in your GSTR-2B. So if the GSTIN is wrong, the credit goes to someone else, or nowhere.
Three typical errors:
- Typo: one character changed, which the check character usually catches, so the portal rejects it.
- Wrong registration of the same buyer: your Bengaluru GSTIN on an invoice meant for Pune.
- Old or cancelled GSTIN: a vendor reusing a registration that is no longer active.
The second error is the hardest to spot, because the GSTIN is valid and the PAN is yours.
Worked example: right company, wrong state
A company has two registrations: Pune (27…) and Bengaluru (29…). A vendor in Pune supplies goods to the Pune plant and raises an invoice for ₹2,36,000: ₹2,00,000 value plus ₹36,000 GST at 18%. By mistake, the invoice carries the Bengaluru GSTIN.
- The vendor files GSTR-1. The ₹36,000 shows up in the Bengaluru GSTR-2B.
- The Pune books show the purchase, but the Pune GSTR-2B does not. Pune cannot claim the ₹36,000.
- Bengaluru sees a credit for goods it never received, and should not claim it either.
The fix is for the vendor to amend the invoice in a later GSTR-1 so it moves to the Pune GSTIN. Until then, ₹36,000 of Pune’s credit is stuck. If it is not fixed in time, Pune pays that ₹36,000 in cash, and if the correction slips past the Section 16(4) deadline of 30 November after the financial year, the credit is lost for good. If Pune had wrongly claimed it anyway, the department could ask for it back with interest at 18% a year under Section 50 and a penalty under Section 73 or Section 74.
How do you check a GSTIN before booking a vendor invoice?
- Your own GSTIN: check the first two digits match the state where the goods or services were received.
- The vendor’s GSTIN: compare with the one in your vendor master. If new, look it up on the portal’s Search Taxpayer page and confirm the legal name and status are Active.
- The PAN inside: it should match the vendor’s PAN on their other papers.
- The tax type: a vendor in the same state should charge CGST and SGST; a vendor in another state should charge IGST. A mismatch here often points to a wrong GSTIN or place of supply.
Do these checks at the point of booking, not at month end, when the vendor has already filed.
What to read next
A valid GSTIN is only half the story; the vendor must also be filing. Read how to check whether a vendor’s GSTIN is active and their returns are filed. Keep the GST reconciliation glossary handy, and if you run more than one registration, see why two GSTINs can show different ITC amounts.
GST inward matching (GSTR-2B, ITC, IMS) is on the TransactIG roadmap. See the GST reconciliation page.