GST Registration

Should You Opt for Voluntary Registration Under GST?

Dealers must self-register in order to be listed under the GST structure, which is known as voluntary registration. It is applicable to individuals who do not meet the criteria for registration and who are exempt from the GST registration requirement. With effect from April 1, 2020, the GST has declared that business units with a turnover of less than 20 lahks (10 lahks for NE states) and Rs. 40 lakhs for small and medium enterprises can avoid GST registrations. The GST will require registrations to be strict and compliant with the rules and regulations. This time, the laws and procedures are somewhat different because the government has been requesting certain voluntary registrations. This indicates that a taxpayer whose annual revenue is not above the 20 lakhs limit may also register for GST.

Additionally, it is stated in the clause that all rules and restrictions imposed by the GST rule book would apply to all voluntary registrants in the same way as they would to regular taxpayers, and they must adhere scrupulously to the conditions imposed on everyone.

Rule of GST Registration for Businesses

Every taxpayer is already aware of the simple regulation that states that if their business does not reach the threshold limit of 20 lakh, they do not need to register. However, analysts believe that optional registrations provide those merchants with a good opportunity. Small spare parts businesses might not be going over the limit, but if they sell their products to a big dealer who is registered for GST and keeps records properly, that will fall under the opportunistic side of registrations.

Because of this, the idea of the input tax credit and invoice matching has been abandoned, and in order to take advantage of the tax credit, both business units and dealers must be registered for the Goods and Services Tax (GST). Now, doing business with members of the community who are GST-registered is a need for many company units. The spare component dealer would be persuaded to voluntarily register under the GST under the given circumstances. The merchants he works with will also benefit from this registration.

A unique GST Number, also known as a GST Identification Number, is assigned to a firm as part of the GST Registration process by the GST Department. The company that has registered for GST should:

• Obtain GST from sales of outgoing supplies.
• Redeem the GST. Input Tax Credit on Purchases of Incoming Supplies
• By submitting a payment challan on the GST Portal, pay GST to the government. 

A company will have to register for GST if:

• The Total Turnover is over the Limit for GST Registration.
• It is covered under the requirements of mandatory registration.

Who should opt for Voluntary Registration under GST?

Mandatory GST registration is needed for some businesses, such as

• Those generating more than 20 lakhs in revenue
• Selling inter-state
• Online sales

For businesses other than the mentioned above, the GST registration is not compulsory, but they can opt for GST registration due to the following reasons:

• Claim ITC on purchases – If you are a GST-registered business, you are entitled to receive an input tax credit for the GST you paid on your purchases. If you have a GST registration, you may claim an input tax credit for GST.
• Status of the registered dealer – If you are a GST-registered dealer, you will obtain a certificate of registration that serves as a legitimate document attesting to the company’s legitimacy.
• Competitive Advantage – Bigger companies and multinational corporations like doing business with GST-registered dealers. Working with these businesses can help a GST-registered dealer acquire a competitive edge.
• Sales across states – You can apply for voluntary registration under GST if you intend to sell products or services outside of your state in the future. You may prevent future mandatory GST registration by registering voluntarily now.
• E-commerce sales – To avoid having to register for GST in the future, you can apply for voluntary registration under GST if you intend to offer products or services on an e-commerce platform.
• Unused ITC from Prior Taxes – A Dealer may carry over any Unused Input Tax Credit (ITC) under Service Tax, VAT, etc. Once you have registered for GST, you can utilise this credit to pay taxes.

Conditions for Voluntary GST Registration

Before registering for GST

Make sure you are eligible for voluntary registration under GST and that you meet all the requirements listed below:

1. Before completing the registration form, the firm director, single proprietor, partner, trustee, or person responsible for preparing GST returns must have successfully completed and passed the “Overview of GST” e-learning course. This is done to make sure that before you register for GST, you fully comprehend the duties and responsibilities of a GST-registered firm.

The online course is not necessary if:

• Managing other currently operating GST-registered businesses is an experience of the company director, single owner, partner, or trustee of the firm or
• Your GST returns are prepared by an ATA or ATP, which stands for Accredited Tax Advisor or
• Under the Overseas Vendor Registration Simplified Pay-only Registration Regime, the company is requesting registration.

2. Fill out a GIRO application to pay or get a GST refund.
3. If the Comptroller asks for it, you will have to provide a guarantee.

After registration

For at least two years, you must maintain your GST registration.

The following requirements must be met in order for your GST registration to remain active.

1. Keep a GIRO account open for GST payments and refunds.
2. If you haven’t begun generating taxable supplies at the time you apply for GST registration, you must do so within two years (or another permitted longer term).
3. Completely uphold your obligations as a GST-registered firm.
4. Any additional requirements that IRAS may impose at any time during your registration.

The Comptroller may require a guarantee before registration for companies requesting voluntary registration under the Overseas Vendor Registration Simplified Pay-only Regime. You must maintain your GST registration for at least two years after registering. To continue to be registered for GST, you must furthermore adhere to the following requirements:

1. Completely uphold your obligations as a GST-registered firm.
2. Any additional requirements that IRAS may impose at any moment during your registration.

Advantages of Voluntary Registration under GST

The benefits of voluntarily registering for the Goods and Services Tax include the following:

• Transferring Input Tax Credit: Companies that are formally recognised under GST may issue Taxable Invoices. As a consequence, when customers buy from these companies, they can claim an input tax credit. The firm may then grow its clientele, which finally makes it more competitive.
• Interstate sales can be conducted more freely: After registering under the new system, firms may conduct interstate sales more easily. As a result, the market’s potential is expanded, particularly for small and medium-sized firms. These companies can also decide to use e-commerce platforms to conduct online sales, which will increase their consumer base.
• Utilising input tax credit: Individuals who voluntarily register under the Goods and Services Tax have the choice to utilise input tax credit on their purchases as well as input services such as consultation fees, legal fees, etc., which will ultimately increase their profitability and profit margin.
• Better standing: Companies who are registered for the Goods and Services Tax would benefit from better access to renting space, obtaining bank loans, and other types of company financing, thanks to a high compliance rating.
• Good score: Companies that are registered for the Goods and Services Tax will be scalable and compliant. Additionally, the firm will benefit from the compliance grade that is upheld under the new system since it will draw in additional clients.

Disadvantages of Voluntary Registration under GST

Consequences of voluntarily registering for the Goods and Services Tax include the following:

• Technology: The absence of technology is one of the key issues that small businesses have to deal with under the new tax system.¹ The majority of small firms manage their accounts manually, but the GST requires them to use the Internet to make payments and file returns for amounts more than Rs. 10,000.
• Tax liability: Once suppliers register for the Goods and Services Tax, they will have an additional obligation to deposit and collect taxes. The cost to the customer would go up as a result, and comparable providers who have not finished their GST registration will also be taken advantage of.
• Multiple return filings: Businesses that have registered for GST are required to submit three returns each quarter. Information on all of the sales and purchases made by the firms is included in GSTR-1, GSTR-2, and GSTR-3, along with the total amount of Tax due after the input tax credit has been applied. If you submit these returns after the deadline or don’t submit them at all, the buyer won’t be able to use your input tax credit. Additionally, you will be required to pay fines, late fees, and interest. Additionally, your compliance rating will suffer as a result.
• Compliance: Organisations that have registered for the Goods and Services Tax are expected to abide by each and every stipulation of the laws and guidelines governing the GST. Given the quantity of requirements, compliance could be challenging for certain firms.
• Loss of clients: Companies who sign up for the Goods and Services Tax are required to charge their clients the Tax. As a result, dealers who have not registered themselves under the new tax regime can sell comparable goods to registered enterprises at lower prices, which might harm registered businesses by reducing their client base.

Is a Voluntary Registration Permanent?

No, after a year has passed, you can terminate your voluntary registration under GST at any time. The registration will be terminated if a person provides voluntary registration for his business but fails to do business within six months of the date of registration. Then, the registration will be terminated in case of any of the following:

• A proper authority or official,
• If the concerned makes a request himself
• In the event of the death of the individual, a request or application is made by the individual’s legal heirs.

It should be mentioned that the voluntary registration under GST application for cancellation of registration will only be taken into consideration after one year has passed from the registration date.

Conclusion

Obtaining voluntary registration under GST depends upon various factors that vary from business to business. Moreover, the businesses opting for voluntary GST registration will be considered in the same manner as the other businesses registered under GST. After properly evaluating the factors, advantages, and disadvantages of voluntary GST registration, you can contact Enterslice for further process.

Frequently asked questions

1. https://www.startupindia.gov.in/content/sih/en/international/go-to-market-guide/tax-system-india.html