In India, one of the major compliances that any business must have is GST registration. Nonetheless, there are cases when GST registration should be cancelled when a particular business goes off track or is restructured. Cancelling the GST can be done on a voluntary basis or initiated by the tax authorities, but in such cases, it is clear that unless one understands how to do it, the process could result in non-compliance and, therefore, attract fines.
What is GST Registration Cancellation?
- Cancellation of GST registration is the deletion of GSTIN assigned to a taxpayer.
- When it is cancelled, the taxpayer would not be bound to charge GST and to submit GST returns under that registration.
- The government removes the name of the taxpayer from the GST database.
- Before closure, GST liability to the date of cancellation should be paid.
Who Can Cancel GST Registration?
- If the taxpayer does not need registration, they can voluntarily seek cancellation.
- In the event of non-compliance with GST regulations, the tax officer has the authority to initiate the process of cancellation.
- The closed, sold, merged, or transferred businesses have the option of cancellation.
- Those who have moved under the amount of subsidy can request voluntary deregistration.
Reasons for GST Registration Cancellation
- if you want to close or have stopped the business.
- The company has been sold or merged with another business.
- It presents a change of constitution, e.g., a change of a sole proprietorship to a partnership.
- The turnover has dropped below the stipulated threshold limit of GST.
- The GST returns have not been filed by the taxpayer in consecutive terms.
- This was registration done under the GST using false or misleading information.
- It is not operating the business in the stated position of the business.
Process of GST Registration Cancellation
- Enter your login credentials to log in to the GST portal.
- Go to Application of Cancellation of Registration under the registration tab.
- Complete Form GST REG-16 with the needed information and upload it online.
- You may add details like the reason for cancellation, the effective date, and the tax payable on closing stock.
- The tax officer will go through the application and can serve Form GST REG-19 within 30 days as a cancellation notice.
- In case the officer chooses to cancel, a show cause notice under GST REG-17 is put through.
- To avoid being cancelled at a forced exclusion, the taxpayer is to respond within seven days utilizing Form GST REG-18.
- In case the response is not satisfactory, the officer shall move on to cancel registration forms GST REG-19.
Final Return- GSTR-10
- After the cancellation of GST registration, a final payment in Form GSTR-10 has to be filed.
- The refund should be provided not later than three months of the cancellation date or the date of order, whichever comes later.
- The returns contain information about the ending stock, tax payable and the dues awaiting.
- The non-filing of GSTR-10 may lead to fines and troubles with the law.
Effects of Cancellation of GST
- The taxpayer will not be able to collect GST or issue GST invoices.
- Any pending taxes should be paid until the day of cancellation.
- The taxpayer will not be required to submit GST returns quarterly or monthly.
- There should be a closing tax liability with a final filing to formally end the tax liabilities in the cancelled GSTIN.
- The registration of GST in the future can be withheld in the event of outstanding dues or unfiled returns.
Revocation of GST Cancellation
- The revocation is allowed when the tax officer has made the cancellation.
- The tax filer has to request a reversal in form GST REG-21.
- The application should be made within a period of 30 days from the day of the cancellation order.
- Before revocation is applied, there must be clearance of all pending returns and dues.
- In case this is received, it will reinstate the GST registration and render it active once again.
- Cancellation of a voluntary nature is not permitted.
Key Points to Remember
- Submit all the pending GST returns, and then apply for cancellation.
- A GSTR-10 is compulsory during cancellation and there is a time limit in which it has to be filed.
- GSTIN cannot be revived after it has been cancelled voluntarily and new registration has to be applied.
- GSTINs associated with a particular PAN must be separately cancelled if they are no longer in use.
- Future penalties or restrictions may be imposed in cases where non-compliances involve the cancellation procedures.
Conclusion
Cancellation of GST registration is a significant milestone in the life cycle of a business. When a company is closing down or becoming GST-free, it is always advisable to follow the correct procedure to avoid penalties and ensure a smooth and legally compliant process for closing down the business. All steps, from the application to the final return, should be completed correctly and in a timely manner.
To have expert help on GST registration cancellation, final returns filing, or revision help, reach out to our GST experts now. We offer support at every stage of your compliance process, making it smooth and worry-free.
