How to Cancel GST Registration Online?

The Goods and Services Tax (GST) is one of the most transformative tax reforms in India. It was brought in 2017 and aimed at creating a unified tax structure, eliminating cascading taxes, and promoting transparency in the business environment. Over time, it has streamlined business operations across the country. Registration of GST is only mandatory when the turnover of the business reaches and surpasses a particular threshold. But there exist certain circumstances when the businesses may need to cancel the GST registration of their business.

In this blog, we shall understand the meaning of GST registration, the need to cancel the GST Registration, and the entire process associated with it. The frequently asked questions (FAQs) at the end are drafted to take away all the confusion that may exist in your mind with respect to the cancellation of your GST Registration.

What is GST Registration?

GST is a consumption-based tax which is levied on the supply of goods and services. It is a single tax that was brought by the Government of India to replace multiple indirect tax system that included VAT, service tax, excise duty, and others, making it simpler for businesses to comply with tax regulations. The introduction of GST has significantly reduced the tax burden on the people of India by eliminating the cascading effect, where tax is levied on tax, which was common under the previous tax regime.

GST has three main components:

• Central GST (CGST): It is imposed by the central government.
• State GST (SGST): It is imposed by the state government.
• Integrated GST (IGST): It is imposed on their inter-state transactions.

GST allows businesses to claim an input tax credit (ITC) for taxes paid on inputs, which they can set off against their output tax liabilities. This provides a major advantage to businesses, particularly in reducing the overall tax burden.

Rules of GST is governed by Central Goods and Services Tax (CGST) Act, 2017, as well as the State GST Act. Additionally, the CGST Rules lays down the detailed procedure for registration, cancellation, and other related matters.

Why Do You Need to Cancel GST Registration?

Cancelling GST registration may become necessary under various circumstances. According to Section 29 of the CGST Act, 2017, a registered taxpayer can apply for cancellation of their GST registration under the following scenarios:

1. Business Closure: If the business ceases to operate (e.g., shutting down a company or discontinuing operations), cancellation is mandatory.
2. Turnover Falls Below Threshold: If a business’s turnover falls below the GST registration threshold limit (currently ₹40 lakhs for goods and ₹20 lakhs for services in most states), the taxpayer can apply for cancellation.
3. Voluntary Cancellation: A registered taxpayer may voluntarily apply for cancellation if they no longer wish to operate under the GST regime (e.g. if they stop selling goods/services that are taxable under GST).
4. Change in Business Structure: If a business undergoes a structural change such as a merger, demerger, or acquisition, its GST registration may need to be cancelled, and a new one may need to be obtained.
5. Non-compliance: If the registered GST user stays non-compliant with the statutory obligations as laid down in the provisions of the GST Act or does not file the returns for a continuous period, usually it is six months, the authorities may cancel the GST Registration of the user.

Eligibility for Cancelling GST Registration

To be eligible to cancel GST registration, a business must fall under one of the following categories:

1. Voluntary cancellation: Any business can voluntarily cancel its registration if it meets the requirements of Section 29 of the CGST Act, which are as follows:

• Business is not providing taxable goods or services.
• Cancellation by the previous owner of the business if the business is sold or transferred.

2. Businesses were originally registered under GST but now only make non-taxable or exempt supplies.

• Turnover of the business falls below the mandatory registration threshold that is ₹40 lakhs for goods or ₹20 lakhs for services, depending on the type of business and location.
• If the business is undergoing restructuring, merging, or splitting amalgamation, and the new structure doesn’t require GST registration.
• Change in the constitution of business that leads to change in the PAN.

3. Death of a sole proprietor

4. Any other reason as specified in the application that the authorities may deem fit and proper.

5. Failure to comply with GST provisions: The other reason to cancel the GST registration is when a business commits continued non-compliance with the rules and regulations, the GST authorities can initiate the cancellation process. Following non-compliance can lead to cancellation of GST registration:

• Non-submission of GST Returns for a continuous period of six months.
• Failure to pay GST in due time.

6. When you have put false and misleading information on the GST registration application.

• When the business stays non-compliant with audit/inspection requirements by the tax authorities.
• Violating the GST provisions repeatedly.

Process for Cancelling GST Registration Online

The cancellation process is online and requires careful attention to detail. Below are the steps to follow:

Step 1: Login to the GST Portal

Open the GST website at www.gst.gov.in and use the credentials log into your account. It is advisable to cross check your credentials to avoid any unnecessary errors.

Step 2: Open Cancellation Application

After logging in, click on the “Services” tab, and then select Registration option. At the dropdown window, click on the option “Application for Cancellation of Registration.”

Step 3: Fill in the Necessary Details

The next step is to fill in the necessary following details:

1. Select the reason for your cancellation request. From the list of reasons, pick the one that best fits your needs.
2. Business Information: Enter your company’s legal name, GSTIN, and address information.
3. Date of Cancellation: Fill out the day when you stopped conducting business, halted the supply of taxable goods, or decided to terminate the registration of GST for your business.
4. Tax Liabilities: Before you apply for cancellation, you have to clear your outstanding GST obligations, clear the debt of the business and if the business has any outstanding liabilities, you must include them with your application.
5. Liabilities and Assets: Put down all the GST-liable assets, such as inventory, equipment, etc., as well as any debts that have to be paid off prior to the cancellation.

Step 4: Submit the Application

• Double-check all the information to ensure that there are no errors.
• After reviewing, click on the Submit button to send your application for processing.

Step 5: Application Reference Number (ARN)

When the application is submitted online, an Application Reference Number is then generated from the site. The refence number is essential to keep track on the status of your cancellation request. You will receive an email and SMS that will ask for your confirmation for  submitting of your cancelation request after submitting the application.

Step 6: GST Officer Review

Your cancellation application along with supporting documents like final tax returns (GSTR-10) or a no-objection certificate from the tax authorities. shall be checked by the GST officer. If any additional documents are needed, it shall be intimated to you by GST officer.

Step 7: Final Approval and Cancellation Certificate

Once the officer reviews and approves the application, your GST registration will be cancelled. You will receive a GST Cancellation Certificate confirming the cancellation.

• GSTR-10: You must file your final return (GSTR-10) within 30 days from the date of cancellation approval. This return settles any final liabilities, if any, and declares stock on hand at the time of cancellation.

Step 8: Post-Cancellation Compliance

Businesses have to continue to monitor and document their GST transactions for at least six years following cancellation. Before requesting cancellation, the company must also make sure that all outstanding returns have been filed and all outstanding debts have been paid.

Revocation of GST Registration Cancellation

After applying for cancellation of GST registration, the cancellation of the GST registration can be revoked under the following circumstances:

1. It can only be revoked only by the GST authorities. If you have applied for voluntary cancellation, then revocation is not allowed.
2. You can apply for the revocation of the cancellation within 30 days when the sate of cancellation order is issued by the GST authorities.

Impact of Cancellation of GST Registration

1. Without GST, the businesses cannot reclaim tax paid on inputs which can lead to rise in the operational costs.
2. GST-registered users have a strong reputation in the market. Sellers and Suppliers might think twice about working with a non-registered business.
3. Cancelled GST registration due to non-compliance can attract unwanted attention from tax authorities, which can lead to investigations. The unnecessary attention has the potential to create nuances in the flow of business.

Conclusion

Registration of GST gives numerous benefits to taxpayers and businessmen. The cancellation of GST registration online is a long process for businesses. By understanding the requirements of cancellation, following the online process on the official GST portal, and ensuring compliance with the necessary tax laws, businesses can avoid complications.

Whether you are an individual or looking to cancel your GST registration number, our expert team is here to help you at every step!

FAQs

1. Can I cancel my GST registration if I no longer meet the turnover threshold?

Yes, if your turnover falls below the prescribed GST threshold, you can apply for voluntary cancellation.

2. How long does it take for GST registration cancellation to be processed?

The cancellation process typically takes about 7-10 working days, subject to verification by the GST officer.

3. What documents are required to cancel GST registration?

You may need documents like GST returns (GSTR-3B, GSTR-10), proof of business closure, and financial statements.

4. Is there a penalty for cancelling GST registration?

No, as long as all taxes are paid, returns are filed, and the cancellation is done voluntarily or as per the law, there is no penalty.

5. Can I reapply for GST registration after cancellation?

Yes, if you restart your business, you can apply for a fresh GST registration, provided you meet the eligibility criteria.

6. What happens if I don’t file GSTR-10 after cancellation?

Failure to file GSTR-10 after cancellation can attract penalties and interest, and the cancellation process may be invalidated.

7. What if I have pending GST liabilities after cancellation?

You must clear all pending dues before submitting the cancellation request. Any outstanding liabilities should be settled through the final return (GSTR-10).