Step three of the vendor form. None of it is urgent until a bill arrives, and all of it is urgent the moment one does.
The five GST treatments
| Treatment | Means |
|---|---|
| Registered | They have a GSTIN and charge GST. Most vendors. |
| Unregistered | Below the threshold. No GSTIN, and reverse charge may apply to you. |
| Composition | Registered under the composition scheme. They issue a bill of supply, not a tax invoice, and you cannot claim input credit. |
| Overseas | Outside India. Import rules apply. |
| SEZ | A unit in a Special Economic Zone. |
Composition is the one that catches people. A composition vendor cannot charge you GST, so an invoice from one that shows GST is wrong — and claiming credit on it is your problem, not theirs.
GSTIN
Checked across all fifteen characters, including the checksum — not just the length. A typo is caught when you type it rather than when a return is filed.
The GSTIN also carries the state, which is what decides whether a purchase is inter-state (IGST) or intra-state (CGST and SGST). Getting it wrong does not just mislabel the tax; it changes what you can claim.
PAN, and the cost of not having it
This is the single most expensive empty field on the vendor record.
When a bill from a vendor with no PAN on file books its TDS, the deduction is made at the higher rate the Act requires, over any lower rate set on the vendor. The system does this automatically, and it writes the reason onto the TDS entry:
Deducted at the higher rate because no PAN is on file for this vendorSo the note is there when somebody asks. But the vendor has still been short-paid, and you will hear about it.
Collect the PAN before the first bill, not before the first payment. The TDS is booked when the bill is entered. Chasing the PAN after you have already deducted at the higher rate means reversing an entry, and possibly a revised return.
TDS
| Field | What it does |
|---|---|
| TDS applicable | Whether to deduct at all. On by default. |
| TDS section | Which section — 194C for contract work, 194J for professional fees, 194I for rent. |
| TDS rate | The rate, if you are overriding what the section gives. Left blank, the bill takes the section’s rate from your TDS sections. |
Set it once on the vendor and every bill from them books its TDS correctly without anybody thinking about it. Each bill’s deduction is recorded as its own entry against the quarter and the financial year, which is what a TDS return is assembled from.
MSME
The MSME registration number and type. Worth filling in for a reason that is not administrative: under the MSMED Act, payments to a registered micro or small enterprise carry a statutory time limit, and interest runs if you miss it. Knowing which of your vendors those are is the first step to not paying that interest.
A worked example: the missing PAN
A freelance designer invoices ₹50,000 under section 194J.
| PAN on file | No PAN on file | |
|---|---|---|
| Invoice | ₹50,000 | ₹50,000 |
| TDS rate | 10% | 20% |
| Deducted | ₹5,000 | ₹10,000 |
| They receive | ₹45,000 | ₹40,000 |
The deduction is correct in both columns, and the entry records why: “Deducted at the higher rate because no PAN is on file for this vendor”. But the designer is ₹5,000 short and will ring you, and putting it right means reversing an entry and possibly a revised return.
One field, collected before the first bill, avoids all of it.
And a worked example: composition
A composition-scheme supplier sends an invoice showing ₹1,00,000 plus ₹18,000 GST. That invoice is wrong — they are not entitled to charge it. If you pay it and claim the ₹18,000 as input credit, the credit is reversed with interest, and the department asks you, not them.
Setting their GST treatment correctly on the vendor record is what makes that obvious at the point the bill arrives rather than at assessment.
Where to go next
Something missing or wrong here? Tell us. A question that needed asking usually means a page that needed writing.