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What is Voluntary Registration Under GSTW

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Created on
May 2, 2023


What’s Inside

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

Voluntary Registration under GST - An Overview

Under the provisions of GST laws, certain suppliers are mandated to register. This exclusive list comprises:

  • Suppliers with a turnover exceeding ₹20 lakhs,
  • Suppliers engaged in inter-state sales, and
  • Suppliers involved in online selling.

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.

Why do Suppliers Opt for Voluntary Registration?

There are many benefits that a registered supplier can explore as compared to an unregistered dealer.

To Get a Registration Certificate

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.

To Take Advantage of Input Tax Credit

As a GST-registered business, you can claim the input tax credit on the GST you paid for purchases.

To Be Ready for Inter-state Supply

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.

To Sell on E-commerce Platforms

Similarly, if you’re planning to supply goods or services online through e-commerce websites, you can voluntarily register under GST in advance.

To Claim the Unutilised Credits of VAT, Service Tax

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.

To Gain a Competitive Edge

Large organisations and multinational corporations often prefer to work with registered dealers. This could lead to more opportunities for your business.

Examining the Drawbacks of Voluntary Registration under GST

Increased Administrative Burden

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.

Technical Challenges

Small businesses can face technological challenges that come with online GST registration, return filing, and payments where the amount exceeds ₹10,000.

Tax Payment Obligations

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.

Marketing Challenges

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.

Increased Compliance Costs

Compliance with all GST provisions, like issuance of valid invoices, paying tax under the reverse charge, etc., becomes mandatory, which increases cost.

In Conclusion

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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Frequently asked questions

What is the penalty for voluntary payment of GST?

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.

Can we cancel voluntary GST registration?

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.


Fi Money is not a bank; it offers banking services through licensed partners and investment services through epiFi Wealth Pvt. Ltd. and its partners. This post is for information only and is not professional financial advice.
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