An individual who is a citizen of India can register himself/herself for the voluntary registration. All the GST provisions for the person registered under the voluntary plan are similar to that of a normal taxpayer under GST. For instance, if a person’s turnover is around twelve to fifteen lakhs, he is not eligible to register under the GST. In such a case, he can register himself voluntarily under the GST to pass the benefit of input credit to his buyer. There are several businesses that do not know solely about the GST certifications, provisions and voluntary registrations, therefore, Government needs to open institutions that can train business persons, staff and employees of various industries. Let’s discuss about pros and cons of GST voluntary registration.
Pros
Though organizations can register themselves in the composition scheme of GST, due to certain disadvantages, people are more interested in registering themselves in the voluntary plan. It will mitigate the drawbacks of composition scheme and giver several benefits discussed below:
Claim Input Tax Credit: When you register under GST voluntary plan, your business is legally approved due to which you can issue taxable invoices. Consumers or buyers, on the other hand, can take the benefit of input tax credit on their purchases. This helps in building in customer relationship and making the market more competitive. Consumers are not the only one who are benefited but the sellers or taxpayers registered under voluntary action can claim input tax credit on their own purchases such as consultation and legal fees which enhances profitability.
Hassle-Free Inter-State Sales: Businesses registered under the GST voluntary action can transport the supply of goods and services from one state to another freely without any restrictions. This helps small businesses to widen up as well as opens up the online e-commerce platform for them.
Gives Higher Compliance Rating: Registration under the GST voluntary action ensures that your business is reliable, scalable and compliant which simplifies your future registration procedures. Also, the overall GST rating increases which helps in attracting potential businesses.
Cons
Despite of several advantages of getting registered under the GST voluntary plan, there are some disadvantages too. Businesses under the voluntarily action, might have to face extra compliance and working capital liquidity.
Multiple Return Filing: Businesses registered under the voluntary action will be treated as normal taxpayers and so they have to file three returns every month. These returns includes the details of all sales, purchases, and the final tax liability apart from the input tax credits. If businesses fail to do so, will have to pay the penalty and the compliance rating will be noted as negative.
Tax Liability Payment: Once registered under the GST voluntary plan, additional responsibilities of collection and deposition of taxes will be given to you as a supplier. This will add up as an extra cost for the buyer and also leverage other small businesses who aren’t registered under the GST.
Penal Provisions: when you get registered in the voluntary plan of the GST, your business will be legally bound by the penal provisions of the GST law. Therefore, if your business lacks resources, it will attract unnecessary interests and penalty to business.
The Bottom Line
Small businesses must do their math according to various schemes introduced under the GST or must consider a valid GST certification for proper handling of new things in a hassle-free way.
