GST: Should you register or not?

CA Vibhor Agarwal
CA Vibhor Agarwal

All the Indirect taxes were subsumed in a single tax called the Goods and Services Tax (GST) which is levied on the supply of goods or services or both at each stage of supply chain starting from the manufacture and till the last retail level. So basically, any tax that was being levied by the Central or State Government on the supply of goods or services is now subsumed into GST.

Any person who is a supplier of goods having a turnover of Rs 40 Lac or Rs 20 Lac (in special category states) or more is mandatorily required to register in GST.

Any person who is a supplier of service having a turnover of Rs 20 Lac or Rs 10 Lac (in special category states) or more is mandatorily required to register in GST. 

The Special Category States are – Arunachal Pradesh, Assam, Jammu & Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh, Uttarakhand.

Any person whose turnover is less than the above-mentioned limit is not mandatorily required to get himself registered in GST, but the question is should he register voluntarily?

In my opinion, the benefits of GST registration outweighs its non-advantages. The same has been explained with an example below.

Let’s say there is a Kirana (general) store dealer who has an annual turnover of Rs 25 Lacs, he is confused about whether he should take GST registration or not. His confusion can be solved with the explanation given below.

BENEFITS

GST REGISTRATION TAKEN GST REGISTRATION NOT TAKEN
Legal recognition as supplier of goods. Yes No
Ease of purchase from GST Registered dealers as most of the manufacturers and wholesalers have a turnover greater than Rs. 40 Lacs. Yes No
Increase in cost of goods purchased as no Input tax credit will be allowed. No Yes
Reduced profit margins as the burden of tax will be borne by the kirana store dealer.

No

Yes
More working capital as a tax credit of the tax paid on a purchase will be available. Yes

No

From the above example, it is evident that if the store dealer registers himself in GST than he would not only be able to increase his profit margins but also reduce his working capital blockage, as a result, he would enjoy more liquidity and an increased purchasing capacity.

So, any businessman or a service provider having taxable turnover below the threshold limit should also register himself in GST.

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