Is Voluntary Registration Under GST Beneficial?

Voluntary Registration

If we analyze the GST registration requirements in India, there are certain norms specified by the government as the eligibility criteria for registration under GST. One of the major criteria is threshold limit based on the aggregate turnover of any assessed.

However, along with this threshold limit, there is another list stating certain cases in which registration becomes compulsory. Few of such cases include cases where any taxpayer is involved in Inter-state supply or is supplying his goods or services or both through E-commerce operator, etc. In this article we shall discuss Voluntary registration under GST.

Eligibility for GST Registration

For GST registration, the eligibility criteria includes that the business units having turnover more than 20lakhs and 40 lakhs for SMEs[1], should complete GST registration.

What is Voluntary Registration under GST?

However, if any person is not covered under the ambit of any of these criteria then they are not mandated by law to get registration under GST. Though they are not required by law to get registered under GST, they have an option to get registered at their own initiative which can be termed as Voluntary registration.

The decision to get registered under GST is personal in nature. Any assessee has an option to get registered voluntarily based on their understanding of merits and demerits of registration under GST. Further, we will list out these advantages and shortcomings of voluntary registration.

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Advantages of Voluntary Registration under GST

The advantages of Voluntary registration under GST can be summed up as under:

Advantages of Voluntary Registration under GST
  1. Can Avail Input tax Credit: Every registered taxpayer has a right to claim input tax credit of taxes paid by him on the purchases. This will reduce their tax liability and they will be able to assess their actual tax liability that they are required to remit to the government.
  2. Gives Competitive Edge: Every taxpayer who has a valid GSTIN will have a competitive edge over their competitors in the market who are not registered under GST. The reason behind is that their customers will give preference to the one who is registered as they will be able to avail input credit on purchases made from them against the tax invoices they will receive from the registered seller.
  3. Can Access Larger Market: Any unregistered taxpayer is not allowed to get involved in Inter-State trading, thus results in limited market accessibility. However, after acquiring voluntary registration such taxpayer can get involved in the trade in different states thus increasing their market area.
  4. Allowed to sell online: In today’s economy, it is a very lucrative option for a trader to sell his goods or services online through an E-Commerce Operator or to register himself as an E-Commerce Operator. However no unregistered person is allowed to that, thus voluntary registration opens up those avenues for a taxpayer.
  5. Attracts More Customers: Any taxpayer who opts for registration can attract more customer as they can build a strong business image in the market through these factors;
  • Gains Legal recognition, thus increased accountability for business, and
  • Positive Credit Rating, as GST has provisions of credit rating for taxpayers based on their compliance history.
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Disadvantages of Voluntary Registration under GST

The disadvantages of Voluntary registration under GST can be summed up as under:

Disadvantages of Voluntary Registration under GST
  1. Tax Collection and Payment Requirement: Any taxpayer who opts for voluntary registration will be liable to collect taxes from their customers and issue tax invoices to them. This will be a done irrespective of their turnover. Every registered taxpayer is required to collect and remit taxes to the authorities.
  2. Mandatory Return Filing: If any person registers under GST, then they are required to file periodical GST Returns. Any ordinary taxpayer will be required to file 3 returns every month, and any composite dealer will be required to file returns quarterly. Along with these returns, taxpayers are also required to file yearly returns too.
  3. The penalty for Non-Compliance: Any taxpayer who registers and fails to issue proper invoices and furnish timely returns, then they will be liable to pay penalty under GST provided for such non-compliance under the Act. Further such non-compliance will result in lower credit ratings.


It may be noted that businesses that register voluntarily under GST can cancel their registration after a period. Cancellation may also be done where a business that registered itself voluntarily doesn’t commence their operations of the same business within six months. In case you have any query related to Voluntary registration under GST, contact Enterslice.

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