GST registration can be canceled voluntarily if the business is dormant or does not have the necessary business turnover. Further, a GST registration can also be cancelled by a GST officer if the business is non-compliant under GST. Once GST registration is cancelled, the person or entity is no longer required to file GST returns and is not required to pay or collect GST.

At IndiaFilings, we are committed to providing a seamless and hassle-free GST cancellation service. Our team of experienced professionals understands the complexities involved and is equipped to guide you every step of the way. From understanding the prerequisites on how to cancel GST registration to ensuring timely submissions and compliance, you can rely on us to make the journey smooth and uncomplicated.

GST Registration Cancellation

When GST registration is cancelled, the person or entity is no longer identified as a GST-registered taxpayer. This termination implies that they aren’t required to gather, submit, or pay GST. Moreover, they can’t claim input tax credits, and the responsibility of filing GST returns is also lifted from them.

The Importance of Timely GST Cancellation

If no business activity occurs after acquiring GST registration, the taxpayer must begin the GST cancellation process as outlined. If a taxpayer stops filing GST returns and allows his GST registration to lapse, he cannot apply for fresh GST registration using the same PAN.

• Further, if the government cancels a GST registration, the taxable person must first apply for the cancellation to be revoked by paying any late fees. Following the restoration, appropriately cancel the GST or continue filing GST returns.
• As a result, once a GST registration is received, the taxpayer must keep track of compliance. Hence, if there is no commercial activity, apply for GST registration cancellation as soon as possible.

Criteria for GST Cancellation: Who Can Apply?

The following types persons can apply for GST Cancellation:

By the Taxpayer:

Taxpayers who possess a GST registration can voluntarily kickstart the cancellation procedure. This might be because they deem the registration unnecessary or because they fulfill specific cancellation criteria.

By Tax Authorities:

If tax officials find any non-compliance with the rules or inconsistencies in a taxpayer’s activities or records, they have the right to cancel the GST registration. To initiate this, they can release a show-cause notice through the GST REG-17 form.

By Legal Successors:

In circumstances where a taxpayer passes away, the legal successors or heirs can put forward a request to annul the deceased’s GST registration.

Voluntary GST Cancellation

If a person or entity with GST registration wishes to cancel their GST registration, a cancellation request must be submitted to the GST Department in Form GST REG-16. After reviewing the application, if the GST Officer is satisfied, he or she will issue an order to terminate GST registration in Form GST REG-19.

Voluntarily canceling a GST registration can save the business owner from the unnecessary hassles of filing GST returns each month and payment of penalty or late-filing fee.

Cancellation by GST Officer

An officer can initiate the cancellation of a GST registration under GST if the Officer has justification to cancel the GST registration. The proceedings for GST Cancellation by Officer will begin by issuing a show-cause notice in Form GST REG-17.

In case of cancellation by the GST Officer, the Officer would notify the taxpayer whose GST registration is liable to be terminated before cancellation. The taxpayer would then be given a reasonable opportunity to be heard before their GST registration is cancelled.

The notice to the taxpayer from GST Officer would be sent in Form GST REG-17 with specific reasons why the GST registration should be cancelled. The notice would also allow the taxpayer to respond to the notice and have a date and time if a hearing is scheduled.

If the taxpayer responds to the notice and the proper authority is satisfied with the response, he or she may dismiss the case and issue an order in Form GST REG-20. If he is not satisfied, he may issue a Form GST REG-19 order cancelling the GST registration.

Cancellation of GST registration by Legal Heirs

Should a sole proprietor pass away, the legal heirs are responsible for and have the authority to request the cancellation of the business’s GST registration.

Entities Ineligible for GST Cancellation

• Tax Deductors/Collectors: Individuals or entities specifically registered to deduct or collect taxes are not eligible to request cancellation of GST registration.
• Holders of Unique Identity Number (UIN): Entities or persons, such as foreign diplomatic missions or UN organizations, who possess a UIN are barred from applying for GST registration cancellation. This UIN is allocated to them primarily to claim tax refunds on their received supplies.

Reasons for Cancellation of GST Registration

GST registration can be cancelled by the taxpayer or by the GST authorities due to various reasons. Here are the key reasons for such cancellations:

Initiated by the Taxpayer:

• Discontinuation or Closure of Business: When business operations are permanently closed or discontinued, the taxpayer can file for the cancellation of GST registration.
• Business Transfer: If the business is transferred, merged, sold, leased, or disposed of, the taxpayer may opt to cancel the GST registration.
• Change in Business Structure: When the business structure changes, such as converting a partnership firm into a corporation, the taxpayer must cancel the existing GST registration.
• No Longer Liable to Pay GST: If the taxpayer’s turnover falls below the GST threshold limit and is no longer required, the taxpayer must apply for cancellation.
• Voluntary Cancellation: A taxpayer may voluntarily cancel the GST registration for personal or business reasons.

Enforced by GST Authorities:

• Non-Compliance with GST Laws: If a regular taxpayer fails to furnish GST returns for six consecutive months or a composition taxpayer for three months, the GST authorities may cancel the registration.
• Fraudulent GST Registration: If GST registration is obtained by fraud, willful misstatement, or suppression of facts, the GST authorities may cancel it.
• Violation of GST Rules or Act: Significant non-compliance or violations of GST law provisions can lead to cancellation by the GST authorities.
• Unauthorised Activities: If the taxpayer is engaged in activities unauthorized under GST laws or fraudulent in nature, the GST authorities may cancel the registration.
• Non-Commencement of Business: If the registered taxpayer has not started business operations within the specified timeframe from the date of registration, the GST authorities may cancel the registration.
• Wrongful Claim of Input Tax Credit (ITC): If a taxpayer avails or utilises ITC without actually receiving the goods or services, the GST authorities may cancel the registration.

Time limit for cancellation of GST registration

The time limit for cancellation of GST registration varies depending on the circumstance that prompts the cancellation.

For voluntary cancellations, a taxpayer can apply any time after registration if they believe they are no longer liable to be registered under GST. However, for cancellations initiated by the tax authorities due to non-compliance, such as not filing returns for consecutive periods (six months for regular taxpayers), the authorities start the cancellation process automatically after the stipulated period of non-compliance.

Taxpayers must file for cancellation within 30 days of becoming aware of any circumstance warranting cancellation, such as discontinuation of business or change in the business structure.

Consequences of Cancellation of GST Registration

The cancellation of GST registration has several significant implications for businesses. Here are the key consequences:

Cease to Collect GST:

Once GST registration is cancelled, a business can no longer collect GST from its customers. The business must update all billing and invoicing systems to ensure GST is not charged after the effective date of cancellation.

No Input Tax Credit (ITC):

Purchases made after the cancellation of GST registration are not eligible for ITC. Additionally, the taxpayer must pay an amount equivalent to the ITC for goods held in stock, inputs in semi-finished or finished goods, and capital goods under certain conditions as of the day immediately preceding the date of cancellation.

Filing of Final Return:

The taxpayer must file a final return using Form GSTR-10 within 3 months from the date of cancellation or the date of the cancellation order, whichever is later.

Compliance and Record-Keeping:

Even after cancellation, businesses must maintain financial records, accounts, and documents for a period of 6 years from the date of cancellation. This is necessary for any future audits, investigations, or compliance checks by tax authorities.

Legal Implications:

Failure to comply with GST law provisions after cancellation, such as not filing the final return or not paying the amount due on ITC reversal, can lead to penalties and legal action by GST authorities.

Impact on Business Operations:

GST registration cancellation can disrupt regular business operations. Reapplying for GST registration after cancellation involves a fresh application and scrutiny by tax authorities.

Refunds:

Eligible taxpayers may receive refunds for any excess GST paid after cancellation, provided they apply for a refund within the prescribed time frame.

Cancellation of All Registrations on PAN:

If a business operates in multiple states or has multiple business verticals within a state, cancellation of GST registration in one state or for one vertical may cancel all GST registrations associated with the same PAN across India.

Procedure for Cancellation of GST Registration

TheGST cancellation process involves several steps, whether initiated by the taxpayer or enforced by GST authorities. Here’s a detailed guide on how to proceed:

• Form GST REG-16: The taxpayer can apply for cancellation of GST registration voluntarily through Form GST REG-16 on the GST portal.
• Form GST REG-17: If the cancellation is initiated by the GST authorities, they issue a notice to the taxpayer through Form GST REG-17.

As mentioned above, After cancelling GST registration, the taxpayer must file a final return in Form GSTR-10.  The taxpayer is liable for the payment of any outstanding tax dues, including GST liabilities, pending until the date of cancellation.

Steps for Cancellation of GST Registration

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 necessary details such as the reason for cancellation, date of cancellation, and value/details related to the ITC of the inventory on the date of cancellation.
• If multiple businesses are registered within the same state, specify which business the cancellation is applied for.

Pay Liabilities and File Returns

• Make the payment of any pending dues, including taxes, interest, or penalties.
• File all pending returns up to the date of cancellation.

Verification and Submission

• Verify the information submitted in the application form using a Digital Signature Certificate (DSC) or Electronic Verification Code (EVC).
• Submit the completed application.

ARN Generation

After submission, an Acknowledgement Reference Number (ARN) is generated. Use the ARN to track the status of your application.

Officer’s Review

A GST officer will review the cancellation application. If additional information is needed, they may request it through the GST portal. Respond promptly to any queries.

Issue of Cancellation Order

If the officer is satisfied, a cancellation order will be issued using Form GST REG-19, specifying the effective date of cancellation.

Filing the Final Return Post GST Cancellation

After completion of GST cancellation process, the person or entity must file a final GST return on Form GSTR-10 within three months of the cancellation date or the date of the cancellation order, whichever comes first.

This is done to make sure the taxpayer has no GST dues pending. This provision does not apply to input service distributors or non-resident taxpayers who must pay tax under Sections 10, 51, or 52.

If the final GST return is not filed in Form GSTR-10, the taxpayer will receive a notice in Form GSTR-3A requiring him or her to do so within 15 days after the notice’s issuance.

If the taxpayer ignores the notice, steps will be made to determine the taxpayer’s liability using the facts available to the concerned Officer. The assessment order will be cancelled if the applicant files the return within 30 days of receiving the notice.