GST was introduced in 2017. It combines a number of service charges and indirect taxes under one roof. Businesses in India, whether they deal with goods or services, or both, need to register for GST if their annual turnover exceeds the limit.
But not all industries are subject to the GST regulations. Regardless of whether registration is mandatory, anyone can cancel their registration if they have valid grounds for doing so.
There are many reasons to cancel GST registration. Registrants can cancel their accounts of their own volition or at the request of the GST department. The legal heirs of a deceased person may request cancellation of the registration on their behalf. In the event that a taxpayer’s GST registration is cancelled, he or she is required to file a return known as the final return.
How to Cancel GST Registration
- For cancellation by a registered individual – Form GST REG 16
- For the issue of show cause notice for cancellation – Form GST REG 17
- For replying to a show-cause notice – Form GST REG 18
- For the purpose of an order for dissolution – Form GST REG 19
- To stop the cancellation proceedings – Form GST REG 20
- To stay in proceedings – Form GST REG 18
- To apply for revoking cancellation – Form GST REG 21
- For an order revoking the cancellation – Form GST REG 22
Common Reasons for GST Cancellation
In Section 29 of the CGST Act of 2017, you will find the rules and documents required to cancel your GST registration. In accordance with Section 29(1), the proper officer may cancel the registration at his discretion or on the application of the registered person or his legal heirs in the following circumstances:
- Discontinuance of the business
- Significant changes in the PAN card
- if the company’s constitution changes
- The business was merged with another legal entity, demerged, or otherwise disposed of
- The company was fully transferred to someone else, including after the death of the owner
- if the company’s annual turnover was below the prescribed threshold
After the amendment, even taxpayers who have voluntarily registered for GST, even if their turnover is below the threshold, can cancel their registration within one year of registration.
You cannot seek cancellation if you are a tax deductor, tax collector, or taxpayer who has an assigned UIN (Unique Identity Number).
Cancellation by the tax officer
The GST tax officer may cancel a GST registration if the taxpayer has an assigned UIN (Unique Identity Number).
- Does not operate a business in the location of the business declared.
- Issues an invoice or a bill without the supply of goods/services, in violation of GST provisions
- Violation of anti-profiteering regulations, for instance, failing to pass on ITC benefits to customers
In the following cases, the GST tax officer can cancel the GST registration under CGST Rule 21 with effect from January 2021:
- When the taxpayer uses the ITC from the electronic credit ledger to discharge more than 99 per cent of the tax liability for specified taxpayers – with a taxable value exceeding ₹50 lakh in a month.
- For taxpayers who have not filed GSTR-1 because GSTR-3B has not been filed for at least two consecutive months (one quarter for those opting into QRMP)
- Taxpayers who claim input tax credits in contravention of the provisions of section 16 of the GST Act or any of the GST rules.
The procedure for cancelling GST registration.
Visit the official GST website and login into the portal
A drop-down will appear on your dashboard under the service option. Please choose Registration and then click ‘Application for Cancellation of Registration.
Upon selecting ‘Application for Cancellation of Registration,’ you will see three subheadings:
- Basic information
- and cancellation information
Please fill out the required information and click on the ‘Save and Continue button. You should click on the ‘Same as the above’ option if the address for future correspondence and the address for your business are the same.
Explain why GST registration needs to be cancelled. When you fill out the reason for requesting the cancellation of GST registration, you will have the following options.
- Organisational change leading to a change in PAN
- This resulted in the cessation of tax obligations
- Discontinuance of business/closure of business
- Transfer of business on account of amalgamation, de-merger, sale, leased, or otherwise
- Death of sole proprietor
Information Required to Fill the Cancellation Form
- Address, email ID, and registered mobile number
- Reason for cancellation of GST registration and the most desired date to effect cancellation
- Details of the last return filed by the taxpayer
- When the existing unit is merged/de-merged/transferred, etc., the GST registration details of the new entity
- Particulars on which tax is payable: namely
- The stock of input and capital
- Input available on semi-finished and finished goods
The value of your tax liability will need to be manually entered. You will also need to fill out either an electronic cash ledger or an electronic credit ledger to offset the tax liability.
On furnishing the reasons for cancellation and the required details, a ‘verification’ option will appear.
Fill in the name of the authorised signatory and the place of making the declaration. An OTP will also be generated in this step.
Choose the relevant option to submit depending upon the signatory. For instance, in the case of a company or LLP, a DSC is mandatory for verification.
Note – The above step is valid only when an invoice has not been issued. In case a taxpayer has issued an invoice, he/she would be required to fill out GST REG-16 instead. When GST REG-16 is filed by a taxpayer, the tax officer must issue the order of cancellation of GST registration within 30 days.
Pending Tax Liability
The cancellation of your registration is not affected by any pending tax liabilities. It is still possible to discharge these obligations. If you cancel your registration, you must pay a fee that exceeds:
- One day before the cancellation, input credit was received in the form of finished or raw goods.
- The output tax was paid on the products as well.
It is necessary to pay an amount that is higher than:
- 50% of the input credit for capital goods.
- Tax-related to the transaction value of the above-mentioned products.
Revocation of GST Cancellation
is possible if filed on time. If a proper officer has issued a cancellation order, you can request that it be revoked using Form GST REG 21. You must also submit this form within 30 days of requesting cancellation. It is imperative that you clear all defaults and make sure the application is error-free before applying for revocation. Furthermore, all pending GST returns must be filed and all outstanding debts must be paid in full for GST cancellation revocation. Upon determining that all the above-mentioned conditions are met, an officer may issue Form GST REG 22 for the revocation or cancellation of GST Registration.
A revoked registration holder must file a final GST return using Form GSTR-10 within three months of the cancellation date or the cancellation order date, whichever is later. The purpose of this is to ensure that taxpayers are not held liable for any obligations that may have arisen. Furthermore, this provision does not apply to input service distributors and non-resident taxpayers who are required to pay tax under sections 10, 51, or 52.
GST matters should not be taken lightly. It is imperative to cancel your GST registration with the utmost care and diligence. So, get in touch with one of our GST experts today! With Vakilsearch, you’ll have an easy and trouble-free GST cancellation process.