Registering for GST is a primary first step for many suppliers of goods and services in India. While it entails various obligations and compliance requirements, becoming a registered dealer also brings a range of benefits, such as facilitating e-commerce business, enabling inter-state supplies, and providing expansion opportunities.
Voluntary registration under GST allows businesses to register for GST at their own discretion, even if they do not meet the threshold for mandatory registration
Under the provisions of GST laws, certain suppliers are mandated to register. This exclusive list comprises:
Voluntary basis meaning in GST refers to the option for businesses to register for GST at their own discretion, rather than being mandated to do so.
There are many benefits that a registered supplier can explore as compared to an unregistered dealer.
As a registered dealer under GST, you'll receive a registration certificate. This document is proof of your legal status and can help you build trust with customers and partners.
As a GST-registered business, you can claim the input tax credit on the GST you paid for purchases.
If you're planning to supply goods or services across different states, you can opt for voluntary GST registration. This way, you will be immune to the requirement of mandatory registration at a later stage.
Similarly, if you’re planning to supply goods or services online through e-commerce websites, you can voluntarily register under GST in advance.
If you have unused input credits from previous taxes like service tax or VAT, voluntary registration allows you to carry them forward and use them to pay for GST liability.
Large organisations and multinational corporations often prefer to work with registered dealers. This could lead to more opportunities for your business.
Being registered under GST demands the filing of multiple returns, such as GSTR-1, GSTR-2 and GSTR-3, every quarter. Any failure can result in late fees, loss of input credit, interest, and penalties.
Small businesses can face technological challenges that come with online GST registration, return filing, and payments where the amount exceeds ₹10,000.
It comes with the responsibility to collect tax from consumers and deposit it with the government. This can be an additional obligation for small suppliers.
Charging GST on the invoice can make it challenging for small suppliers to make higher sales. As unregistered dealers, they could otherwise charge lower prices and attract more buyers.
Compliance with all GST provisions, like issuance of valid invoices, paying tax under the reverse charge, etc., becomes mandatory, which increases cost.
Voluntary registration under GST can provide many benefits for businesses, such as gaining a competitive edge, accessing input tax credit, and expanding operations to other states or e-commerce platforms. However, it also comes with certain drawbacks, such as increased administrative burden, technical challenges, tax payment obligations, marketing challenges, and increased compliance costs. Businesses should carefully consider the pros and cons before deciding whether to opt for voluntary GST registration. Ultimately, it is important to ensure compliance with all GST regulations to avoid penalties and other consequences.
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Penalty on voluntarily paying the GST before the issuance of show cause notice shall not attract any penalty under Section 73(5) of the CGST Act. However, the person shall be liable to interest at 18% for the delayed payment under Section 50 of the same Act.
If you've opted for voluntary registration under GST, you can cancel your registration anytime after completing one year. Additionally, if you haven't started your business operations within six months of registering voluntarily, your registration will be cancelled by the relevant authority.