Registration process under GST is always same for all category of registration, GST return filing part is critical even if you are going to file nil tax returns. The best way to decide on GST registration in the optional category is to compare benefits with and without GST registration.
Table of Contents
3 Benefits if you register GST in optional category
1. You can get benefits of Input tax credit as same as any other dealer.
2. Additional proof of business Existence.
3. Smooth dealing with the registered supplier.
5 Critical points for GST registration under the optional category.
1. All provisions and rules are applicable once you register for GST.
2. You cannot claim threshold exemption when you are registered under GST.
3. Increased customer final price, if your customer is end user it will be difficult to sell at the competitive price compared to the unregistered dealer.
4. An additional cost of periodical returns filing.
5. The requirement to maintain prescribed documents under GST.
Our other article on GST registration overview
Some of the illustrations to explain the impact of GST registration.
1. Food business operator – Optional registration for the seller of food products to the final consumer is not recommended because it will increase final price of the product, and moreover most of the inputs are non-GST or zero-rated. – Optional Registration not recommended.
2. Highest GST on inputs and Low GST rate on output – There will be some products where the raw material used will have high GST rate, compared GST on finished products in such case optional registration is recommended.
A comparative example with the same selling price for products sold to the final consumer.
To explain if total raw material cost is only 100 Rs and GST rate is 18 % so you pay 118 for purchasing raw material including GST. Your sale price is Rs. 1000 excluding GST and GST rate is 5 %.
| With GST registration | Without GST registration | |
| Selling price | 1050 (Including GST). | 1050 |
| Less Purchase cost | 118 (Including GST). | 118 |
| Net amount excluding GST Payment | 932 | 932 |
| Less GST payable (50-18) | 32 | 0 |
| (Amount remaining for-profit and other processing) | 900 | 932 |
So in this case without GST registration you will get an additional profit of Rs.32 and this can also be used to reduce selling price up to Rs 1018 so you can sell your products cheaper than the registered dealer. You can compare it with different selling price and purchase price and decide on registration advantage.
Conclusion “Optional GST registration is good for certain dealers”.
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