Goods and service tax is taking India by the storm. GST will bring in “One nation one tax “to unite indirect taxes under one umbrella and facilitate Indian businesses to be globally competitive. The Indian GST case is structured for efficient tax collection, reduction in corruption, easy inter-state movement of goods etc.
GST registration is mandatory for businesses with turnover more than 20 lakhs, businesses with inter-state sales, e-commerce players etc.) Certain businesses are required to register mandatorily irrespective of their turnover. Persons with turnover less than Rs. 20lakhs can also register voluntarily under GST.
Small businesses can opt for composition levy. But they will not be able to collect any tax from their customers or avail input tax credit. Such SMEs may also opt to voluntarily register themselves under GST.
Voluntary registration under GST
A person may opt to get himself registered voluntarily under GST even if he is not liable to be registered. All the provisions of GST applicable to a registered taxable person will similarly apply to such a voluntarily registered person also, i.e., he will be treated as a normal taxable person.
Advantages of voluntary registration under GST
In spite of composition levy, many small organizations are planning for voluntarily register themselves under GST. This is because composition levy has certain drawbacks.
Voluntary registration will avoid such drawbacks and give the following advantages-
Legally recognized as supplier of goods or services– This helps in attracting more customers
Provide input tax credit to customers– As they can issue taxable invoices, they can collect GST. Their customers can take input credit on their purchases.
Become more competitive– They will be more competitive than other small business as buying from them will ensure input credit.
Take input credit– Voluntarily registered persons can take input credit on their own purchases and input services like legal fees, consultation fees etc.
Make inter-state sales without many restrictions– They can make inter-state sales without many restrictions (they will be treated as casual taxable persons). Thus, it widens the potential market for SMEs.
Register on e-commerce sites or open own e-commerce website– This will widen the scope of their market further.
Be compliant and have a good rating– Registration for GST will ensure that the business is compliant (because most returns are automated). This, in turn, will give a good GST rating and help to boost the business.
Any person who has taken voluntary registration but has not commenced business within six months from the date of registration will have his registration cancelled. Such cancellation will be done by –
- a proper officer OR
- requested by the concerned person himself *** OR
- on an application filed by his legal heirs, in case of death of such person
***However, application for cancellation of registration by the concerned person who has registered voluntarily will be only after one year from the date of registration.
Please read our in-depth article on cancellation of GST registration.
Click here to know the step-by-step process for GST registration.
Are you confused whether it will be useful for you to voluntary register under GST? We also have experts to help you to smoothly transit to GST.