Voluntary Registration Under GST

Voluntary registration provides option to a person to take GST registration even though he is not liable for GST registration under section 22 or section 24 of CGST Act, 2017 or SGST/UTGST Act, 2017.

Section 22 allows certain specified limit of turnover i.e. threshold limit (limit of Rs.40 lakh or 20 lakh as the case may applicable in case of supply of goods and Rs.20 lakh or 10 lakh in case applicable in case of supply of services) , upto which supplier of goods or service as the case may be,  is not required to take GST registration and once this threshold limit gets crossed then such person is required to take GST registration.

Section 24 provides certain situation in which person is required to take GST registration irrespective of the turnover.

Mandatory registration in certain cases (as mentioned in section 24 of CGST Act, 2017 or SGST/UTGST Act, 2017)

Registration in cases where you will not get turnover threshold limit i.e. if you are making supplies mentioned below even of Rs.1 then you have to take GST registration and from such date you will not get benefit of threshold limit

• Person making inter-state supply of taxable goods
• casual taxable persons making taxable supply
• Person who are required to pay tax under reverse charge
• Person who are required to pay tax under sub-section (5) of section 9
• Non-resident taxable person
• Persons who are required to deduct tax under section 51, whether or not separately registered under this Act
• Persons who make taxable supply of goods or services or both on behalf of other taxable persons whether as an agent or otherwise
• Input Service Distributor(ISD), whether or not separately registered under this Act
• Person who supply goods or services or both other than supplies specified under sub-section (5) of section 9, through such electronic commerce operator who is required to collect tax at source under section 52
• Every electronic commerce operator
• Every person supplying online information and data base access retrieval service from a place outside India to a person in India, other than a registered person

There may be case where a supplier is not covered by section 22 or section 24 then in such case supplier can go for voluntary registration under section 25(3) of CGST Act, 2017 and SGST/UTGST Act, 2017.

For instance to give you clear picture let’s assume there is person desirous of selling computer hardware and laptops in Delhi and he will open shop in any market from there he is going to sell mentioned items, since these items carry certain warranty of one year (e.g. laptop, keyboard and mouse etc.) or 2 year or 3 year as the case may be, so in this case shopkeeper will take GST registration on voluntary basis from the very first day of starting of business so that he can issue tax invoice and take ITC (assuming he is not going to opt for composition scheme).

Let’s take one more example where supplier started business of interior decoration and for first 2 months he did some work in small office (having no GST registration)and home and in third month he gets work of Rs.5 lakh from a company till now he is not registered in GST  now this company is saying that you have to issue GST bill now in this case interior decorator will have to go for GST registration on voluntary basis because his customer is asking for GST paid bill. So you can see how this interior decorator went for voluntary registration because his customer is registered under GST. This B2B supply pushed him to go for GST registration.

There is misconception amongst some persons that if I have taken voluntary registration under GST registration then also I will get benefit of threshold limit upto which I need not to charge GST but this is not true once you gets registered even voluntary basis then you have to collect GST on your outward supplies irrespective of turnover.

Because charging section of CGST/SGST/UTGST/IGST Act, 2017 casts responsibility on taxable person to pay tax (where ultimately GST is collected from consumer or end customer and registered person will take benefit of ITC and after setting off ITC, net payment (tax on outward supply – tax paid or payable on input, input service and capital goods) and once you take registration on voluntary basis you become taxable person.

Section 25(3) allows for voluntary registration under GST – text of section 25(3) of CGST Act, 2017

A person, though not liable to be registered under section 22 or section 24 may get himself registered voluntarily, and all provisions of this Act, as are applicable to a registered person, shall apply to such person.

Initially there was proviso in rule 20 of CGST Rule, 2017 which used to put restriction on persons who have taken GST registration on voluntary basis that voluntary GST registrant cannot go for cancellation of his GST registration before expiry of one year from the effective date of registration i.e. LOCK IN PERIOD FOR VOLUNTARY GST REGISTRANTS. But w.e.f. 23^rd January 2018 (vide Notification No.3/2018 – Central tax) this proviso has been omitted and therefore allowed voluntary GST registrant to go for GST cancellation at any time even before expiry of one year from the effective date of registration.

Text of proviso to rule 20 of CGST Rule, 2017

Provided that no application for the cancellation of registration shall be considered in case of a taxable person, who has registered voluntarily, before the expiry of a period of one year from the effective date of registration.

Now you can analyse that voluntary registration provision remove hardship for a business (who is not covered under section 22 or 24 can go for GST registration) and for Government it will results into increased tax revenue that’s why voluntary registration has found place in GST law.

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Disclaimer – Author has exercised utmost care while writing this article, but still this article may contain some error or mistake and no part of this article/writing should be construed or considered as any advice or consultancy whether professional or otherwise.

Author may be reached at carahulkunwar@gmail.com