Cancellation of GST Registration
Cancellation of GST Registration can occur in two ways. You may choose to cancel voluntarily if your business ceases operations or falls below the required registration threshold. This process involves filing all pending returns and submitting an online form, usually completed within two weeks. On the other hand, the GST department may cancel your registration due to non-compliance, such as failing to file returns. If this happens, the department will notify you and give you a chance to explain your situation. If there's no response or continued non-compliance, cancellation will proceed. You can request the reinstatement of your registration within 90 days of the cancellation order.
Various Methods for Surrendering or Cancelling GST Registration:
- Voluntary Cancellation:
- Business Changes:
- Discontinuation or Closure: When a business ceases operations, cancellation is required.
- Business Transfer: The new owner must obtain a separate GST registration, allowing the previous owner to cancel theirs.
- Change in Business Constitution: A change in the structure of the business (e.g., sole proprietorship to partnership) necessitates cancellation of the original GST registration due to a new PAN.
- Impact of Turnover:
- Below the Threshold: If the business turnover falls below the prescribed limit (₹20 lakh for most businesses), voluntary cancellation is possible.
- Business Changes:
- Cancellation by Tax Authorities:
- Non-Filing of Returns:
- Composition Scheme: Failure to file returns for three consecutive periods under the composition scheme can lead to cancellation.
- Regular Scheme: For regular taxpayers, cancellation can occur if returns are not filed for six consecutive months.
- Other Non-Compliance: Activities like issuing invoices without supplying goods or services, attempting tax evasion, or violating any GST provisions can result in the cancellation of GST registration.
- Non-Filing of Returns:
- Initiated by the Taxpayer:
- Business Discontinuation or Closure: If the business is permanently closed or discontinued, the taxpayer can apply for GST registration cancellation.
- Business Transfer: In cases of business transfer, sale, merger, or lease, the taxpayer can opt to cancel the GST registration.
- Change in Business Structure: When a business undergoes structural changes, such as shifting from a partnership to a corporation, the current GST registration must be canceled.
- Out of GST Threshold: If the taxpayer’s turnover falls below the GST threshold limit and they are no longer liable, they should apply for cancellation.
- Voluntary Cancellation: A business owner may choose to voluntarily cancel the GST registration for personal or operational reasons.
- Enforced by GST Authorities:
- Non-Compliance with GST Laws: The GST authorities may cancel the registration if a regular taxpayer fails to file GST returns for six consecutive months or a composition taxpayer for three months.
- Fraudulent Registration: GST registration obtained through fraud, misrepresentation, or hiding of facts can be canceled by the authorities.
- Violation of GST Laws: Serious non-compliance with GST provisions can lead to the cancellation of registration.
- Unauthorized Activities: If the taxpayer engages in activities not authorized under GST laws, or commits fraudulent activities, the registration can be canceled.
- Non-Commencement of Business: If the registered taxpayer does not start business operations within the stipulated time from the date of registration, cancellation may occur.
- Wrongful ITC Claims: If a taxpayer wrongly claims Input Tax Credit (ITC) without actually receiving goods or services, the registration can be canceled by the authorities.
To initiate the cancellation of your GST registration, you must submit the following documents along with the application form (GST REG-16) on the GST portal:
- PAN Card
- Aadhaar Card
- Details of the Last Filed Return
- Company Authority Details (if applicable)
Additionally, provide details regarding the following tax-related information:
- Stock of Inputs (raw materials) on the date of cancellation, along with the corresponding tax liability.
- Semi-finished and Finished Goods held in stock on the cancellation date, including the relevant tax liability.
- Capital Assets (such as machinery) and any tax payable on them.
The process of GST cancellation involves several steps, whether initiated voluntarily by the taxpayer or enforced by the GST authorities. Below is a detailed guide on the procedure:
- Form GST REG-16: The taxpayer can apply for voluntary cancellation of GST registration using Form GST REG-16 on the GST portal.
- Form GST REG-17: If the cancellation is initiated by the GST authorities, they will issue a notice to the taxpayer through Form GST REG-17.
- Final Return (Form GSTR-10): After the cancellation of the GST registration, the taxpayer must file a final return in Form GSTR-10. Any outstanding GST liabilities must be settled up to the cancellation date.
Steps for GST Registration Cancellation:
- Login to the GST Portal: Navigate to the GST portal and log in using your credentials.
- Apply for Cancellation: Go to the ‘Services’ tab, select ‘Registration,’ and choose ‘Application for Cancellation of Registration.’
- Fill in the Details:
- Provide the required information, such as the reason for cancellation, the date of cancellation, and the ITC details related to inventory on the cancellation date.
- If you have multiple businesses registered in the same state, specify which business the cancellation applies to.
- Pay Liabilities and File Returns: Settle any pending dues, including taxes, interest, or penalties.
File all pending GST returns up to the date of cancellation.
- Verification and Submission: Verify the details provided in the application using a Digital Signature Certificate (DSC) or Electronic Verification Code (EVC).
Submit the application once all details are verified.
- ARN Generation: After submission, an Acknowledgement Reference Number (ARN) will be generated. This ARN can be used to track the status of the application.
- Officer’s Review: A GST officer will review the cancellation application. If additional information is required, the officer may request it via the GST portal. Ensure prompt responses to any inquiries.
- Issuance of Cancellation Order: If the officer is satisfied with the application, a cancellation order will be issued in Form GST REG-19, specifying the effective date of cancellation.
- No GST Payment: Once GST registration is canceled, the taxpayer will no longer be liable to pay GST.
- Mandatory Registration for Certain Businesses: For specific businesses, GST registration is compulsory. If the registration is canceled and the business continues to operate without re-registration, it will be deemed a violation of GST laws, attracting penalties and legal consequences.
What is Revocation of Cancellation?
Revocation refers to the official reversal of a previously made decision or promise. In the context of GST, revocation of cancellation of registration means that the decision to cancel the GST registration has been undone, and the registration is reinstated as valid.
When is Revocation of Cancellation Applicable?
Revocation applies when the tax officer has canceled the GST registration of a taxable person on their own initiative (suo motu). The taxpayer can apply to the officer for revocation of the cancellation within 30 days from the date of the cancellation order.
Procedure for Revocation of GST Registration Cancellation:
- Submission of Application: The taxpayer must submit an application for the revocation of cancellation in Form GST REG-21 if their registration was canceled suo motu by the proper officer. The application must be filed within 30 days from the date of the cancellation order on the GST Common Portal.
- Officer's Review: If the proper officer is satisfied with the application, they may revoke the cancellation by issuing an order in Form GST REG-22 within 30 days of receiving the application. The officer must record the reasons for the revocation in writing.
- Rejection of Application: If the officer decides to reject the application, they must issue an order in Form GST REG-05 and communicate the rejection to the applicant.
- Show-Cause Notice: Before rejecting the application, the officer must issue a show-cause notice in Form GST REG-23, asking the applicant to explain why the application should not be rejected. The applicant must respond to the notice in Form GST REG-24 within 7 working days from the date of service.
- Final Decision: The proper officer will make a final decision within 30 days from receiving the applicant’s response (Form GST REG-24).
Filing the Final Return Post GST Cancellation:
After the GST registration cancellation, the taxpayer must file a final return in Form GSTR-10 within three months from the cancellation date or the date of the cancellation order, whichever is earlier. This ensures there are no outstanding GST dues.
(Note: This provision does not apply to input service distributors or non-resident taxpayers under Sections 10, 51, or 52.)
- If the final return is not filed within the specified time, the taxpayer will receive a notice in Form GSTR-3A, requiring the return to be filed within 15 days of the notice’s issuance.
- If the taxpayer fails to respond, the concerned officer may assess the taxpayer’s liability based on available information.
- If the return is filed within 30 days of receiving the notice, the assessment order will be canceled
Time Limits for GST Cancellation:
The time limit for GST cancellation depends on the nature of the cancellation request:
- Voluntary Cancellation: There is no set deadline, but all pending GST returns (including the final return) must be filed before submitting the cancellation request.
- Department-Initiated Cancellation: You must respond to the show-cause notice within seven working days to avoid automatic cancellation.
- Our team of seasoned legal professionals specializes in GST laws and regulations, ensuring your GST cancellation is managed with accuracy and efficiency. We’ll take care of all required documentation, allowing you to save time and avoid unnecessary stress.
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Frequently Asked Questions in India
What is GST cancellation?
GST cancellation refers to the process of formally terminating the registration of a Goods and Services Tax (GST) taxpayer, which can be initiated for various reasons, including business closure or non-compliance.
Who can apply for GST cancellation?
Any registered taxpayer can apply for GST cancellation. This includes individuals, partnerships, companies, and organizations that no longer wish to maintain their GST registration.
What are the reasons for GST cancellation?
Common reasons include business closure, failure to comply with GST regulations, change in business structure, or if the taxpayer is no longer required to be registered under GST.
How do I initiate the GST cancellation process?
You can initiate the cancellation process by submitting a cancellation application through the GST portal, providing the necessary details and documentation.
What documents are required for GST cancellation?
Required documents typically include your GST registration certificate, a declaration of cancellation, and any relevant financial statements or compliance documents.
How long does the GST cancellation process take?
The processing time for GST cancellation can vary, but it typically takes about 15 to 30 days from the date of application, depending on the complexity of the case.
Will I receive a confirmation after my GST is canceled?
Yes, once your GST registration is successfully canceled, you will receive an official cancellation order through the GST portal.
What happens to my input tax credit after cancellation?
Upon cancellation, you may need to reverse any input tax credit claimed prior to cancellation. It’s essential to consult with a tax professional to ensure compliance.
Can I re-register for GST after cancellation?
Yes, you can re-register for GST after cancellation. However, you must ensure that you meet the eligibility criteria and comply with the registration process.
What should I do if I disagree with the cancellation decision?
If you disagree with the cancellation decision, you can file an appeal with the relevant tax authority within the specified time frame, providing reasons and supporting documents for your case.
