A Goods and Services Tax Identification Number (GSTIN) is a 15-digit number where the first two digits identify the state of registration. These are called GST state codes and are used for invoicing, return filing, and determining the applicable Goods and Services Tax (GST) treatment.
For businesses in central India, code 22 represents Chhattisgarh and code 23 represents Madhya Pradesh. Using the correct code helps verify GSTINs, issue accurate invoices and apply the correct GST treatment for transactions.
Why are GST state codes important?
GST state codes identify the state where a business is registered, ensuring transactions are reported correctly. Businesses use these codes in several ways:
- Identifying the registration state: The first two digits indicate the GST registration state.
- Determining the type of tax: Codes indicate whether Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST) apply for intra-state transactions or Integrated Goods and Services Tax (IGST) for inter-state transactions.
- Reporting transactions in GST returns: Correct codes ensure sales and purchases are recorded under the right state.
- Preparing accurate invoices: Using the right code ensures proper place-of-supply details and avoids mismatches in GST returns.
- Avoiding compliance errors: Accurate codes prevent incorrect tax calculations and credit issues.
What is the structure of GSTIN
Every GSTIN has a defined structure, and each part provides specific information about the taxpayer:
- First two digits: GST state code identifying the state or union territory of registration.
- Next 10 characters: Permanent account number (PAN) of the business.
- 13th character: Entity number for the same PAN in that state.
- 14th character: Default value, usually the letter Z.
- 15th character: Check the code used to verify the GSTIN.
Madhya Pradesh: State code 23
Businesses registered under GST in Madhya Pradesh are assigned the state code 23.
For example, in GSTIN 23ABCDE1234F1Z5, the first two digits, 23, indicate Madhya Pradesh, while the remaining characters identify the taxpayer and verify the GSTIN.
This code helps businesses transact accurately with suppliers, service providers or customers in cities such as Bhopal, Indore, Gwalior and Jabalpur.
Chhattisgarh: State Code 22
All businesses registered under GST in Chhattisgarh receive the state code 22.
For instance, in GSTIN 22ABCDE1234F1Z5, the first two digits, 22, represent Chhattisgarh and the remaining characters show the registration sequence and verification code.
This code enables businesses to correctly identify their GST registration and manage transactions with suppliers, customers or service providers in cities such as Raipur, Bilaspur and Durg.
How to use GST state codes
GST state codes indicate whether a transaction is intra-state or inter-state, which directly affects the type of GST applied on the invoice.
The first two digits of a GSTIN identify the state where the supplier and buyer are registered, helping determine the correct tax treatment.
If both GSTINs have the same state code, the transaction is considered intra-state. In this case, the tax is split into CGST and SGST. For example, if a supplier in Indore, Madhya Pradesh (state code 23) sells goods to a buyer also in Madhya Pradesh, both GSTINs start with 23 and the invoice includes CGST and SGST.
If the GSTINs have different state codes, the transaction is inter-state and IGST (Integrated GST) applies. For instance, if the same supplier in Indore sells to a buyer in Raipur, Chhattisgarh, the GSTINs start with 23 and 22, respectively and the invoice will include IGST.
If you need the entire list of GST state codes, check out GST State Code Finder.
Final remarks
GST state codes ensure transactions are correctly taxed and classified, with the first two digits of the GSTIN indicating the state of registration. Using the correct state code helps businesses issue accurate invoices and file GST returns without errors.
Consistently organising GST data, generating reports and managing transactions can simplify compliance. Software like TallyPrime make it easier to maintain accurate GST records and stay on top of reporting requirements. Take control of your GST processes to reduce errors and improve efficiency.
