Cancellation of GST registration simply means that the taxpayer will not be a GST registered person anymore. He will not have to pay or collect GST or claim the input tax credit and accordingly, need not file GST returns.
Cancellation of GST registration denotes that the individual or entity is no longer recognized as a registered taxpayer under GST. As a result, they are no longer obligated to collect, remit, or pay GST, nor can they claim input tax credits. Additionally, they are exempted from the requirement to file GST returns.
- The taxpayer will not pay GST anymore
- For certain businesses, registration under GST is mandatory. If the GST registration is cancelled and business is still continued, it will mean an offence under GST and heavy penalties will apply.
Forms Used for GST Registration Cancellation
- GST REG 16: This form is relevant when a taxpayer, on their own initiative, applies for the cancellation of their GST registration. This form is applicable only if there’s no other consideration for the application and at least one year has elapsed since the original GST registration.
- GST REG 17: This form is employed by an authorized GST officer to serve a show-cause notice regarding the potential cancellation of GST registration to the registered taxpayer or business entity. The officer’s process to cancel the registration commences after issuing the GST REG 17 form. The officer asks the taxpayer why the registration should not be terminated through this form.
- GST REG 18: The taxpayer or entity can reply to the show cause notice served through the GST REG 17 form using the GST REG 18 form. This reply, providing a defence or explanation against the potential cancellation, must be submitted within seven days of receiving the initial notice.
- GST REG 19: The GST officer uses this form to issue a formal order to cancel the GST registration. This order must be issued within 30 days of either the initial application date or the response received through the GST REG 18 form.
- GST REG 20: If the officer is satisfied with the response to the show cause notice, they can decide to revoke any proceedings to cancel the registration. The decision is conveyed using the GST REG 20 form in such cases.
Conditions When GST Registration Can Be Cancelled
Tax Officer – Suo Moto Cancellation
A tax officer can initiate the cancellation of GST registration in certain situations, including:
- The taxpayer isn’t conducting business from their registered place of business.
- The taxpayer is issuing tax invoices without actually selling any goods or services.
- There are violations of the provisions of the act or the rules set out by the GST Council.
- GST Registration was procured through fraudulent means or by misstating facts.
- A taxpayer under the regular scheme has yet to file returns for six consecutive months.
- A taxpayer under the Composition Scheme hasn’t filed returns for three successive tax periods.
Taxpayer – Voluntary Cancellation
As per Section 29 of the CGST Act, the taxpayer can initiate and apply for the cancelled GST registration under the following circumstances. A registered taxpayer can voluntarily seek cancellation of GST registration under these circumstances:
- The taxpayer has discontinued or closed their business operations.
- The business has been transferred because of amalgamation, merger, de-merger, sale, lease, etc.
- There’s a change in the business structure, which leads to a change in PAN (like a proprietorship being converted into a private limited company).
- The taxpayer has voluntarily registered but has yet to start business operations within a specified timeframe.
- A taxable individual isn’t required to be registered under the GST Act.
- The taxpayer is no longer liable to pay tax.
If someone has registered voluntarily, they can apply for GST cancellation online only after a year has passed since the registration date.
Legal Heirs
In the unfortunate event of the death of a sole proprietor, the legal heirs have the authority to apply for the cancellation of the GST registration for the proprietorship firm.
Process of Cancellation of GST Registration
Step 1: First, taxpayers must visit the Goods and Services Tax portal to Cancel their GST Registration.
Step 2: Click the ‘Login’ button to access the username and password page.
Step 3: Enter the correct ‘Username’ and ‘Password’ credentials along with the captcha in the required field and click ‘login’.
Step 4: Click on the Application for Cancellation of Registration link under the services tab on the home page.
Step 5: The portal displays various tabs for cancelling the registration form. There are three tabs: Basic Details, Cancellation Details, and Verification. Click on each tab to enter the details.
Step 6: The Basic Details tab displays the pre-filled information in the Basic Details and Address of Principal Place of Business sections.
Step 7: The applicant must manually fill in the address for future correspondence or check the Address option, same as the above, to copy the address in the Address of Principal Place of Business field.
Step 8: Then click on the “Save and Continue” button. A blue tick will appear on the Basic Details section indicating completing the Basic details. Now proceed with the next tab.
Step 9: After filling in all the mandatory fields under the Basic Details tab, the next tab, Cancellation Details, will become active.
Step 10: Select a suitable reason from the Reason for Cancellation drop-down list.
Step 11: The below following five reasons are available in the drop-down list for the selection:
- Change in the constitution of business leading to a change in PAN
- Ceased to be liable to pay tax
- Discontinuance of business / Closure of business
- Others
- Transfer of business on account of amalgamation, de-merger, sale, lease or otherwise.
Step 12: The next tab, Verification Details, will become active after you fill in all the mandatory fields under the Cancellation Details tab.
Step 13: Check the Verification statement box to declare that all the information provided in the form is legally correct.
Step 14: Select the name of the authorised signatory from the Name of Authorized Signatory drop-down. Note: The system auto-populates the authorised signatory’s designation or status.
Step 15: Enter the Place of making this declaration.
Step 16: Sign the form using either the Digital Signature Certificate (DSC) or the EVC option. After selecting any of these options, the registered user receives an OTP.
Step 17: GST Portal will also send a confirmation message on the registered mobile phone number and e-mail-ID.
Step 18: After this process, the concerned Tax Official will review the application and decide accordingly.
FAQs
What is Final Return?
Every person whose registration has been cancelled must file a final GST return in Form GSTR-10 within three months of the date of cancellation or the date of order of cancellation, whichever is later. This is done to ensure that the taxpayer is devoid of liabilities which could have been incurred under Section 29 of the CGST Act. The due date stipulated for the same is December 31, 2018. It may be noted that Input Service Distributors or non-resident taxpayers who are required to pay tax under section 10, section 51, or section 52 are exempted from this provision.
Final Return Not filed
If the final return isn’t filed in Form GSTR-10, the taxpayer will receive a notice in GSTR-3A prompting him/her to do so within 15 days of the notice’s issuance. If the taxpayer fails to comply with the notice, initiatives will be taken to assess the taxpayer’s liability based on the information available to the concerned officer. The assessing order will be withdrawn if the applicant files the return within 30 days of the issue of notice.
Required Information for Filing cancellation of Registration under GST?
The following information must be mandatorily specified by the applicant while applying for cancellation in Form GST REG-16:
- Contact address, which includes the mobile number and e-mail address.
- Grounds of cancellation.
- The desired date of cancellation.
- Particulars of the value and the tax payable on the stock of inputs, the inputs available in semi-finished goods, inputs available in finished goods, and the stock of capital goods/plant and machinery.
- Details of entity registration if the existing unit merged, amalgamated, or transferred.
- Particulars of the latest return filed by the taxpayer along with the ARN of the particular return.
Payment Requisites
While applying for a cancellation, the applicant must pay the input tax contained in the stock of inputs, semi-finished goods, finished goods, and capital goods or the output tax liability of such goods, whichever is higher.
- The payment can be made by debiting the electronic credit or cash ledger.
- Though considered essential, the obligation may be fulfilled when submitting the final return in GSTR-10.