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GST Cancellation

Important things to note about cancelling GST registration:

- If your business has been inactive or hasn't reached the minimum turnover required, you have the option to voluntarily cancel your GST registration.

- However, if your business is not following the GST compliance guidelines, the GST officer has the power to cancel your registration.

- Once cancelled, you are no longer obligated to file GST returns or pay/collect GST.

 GST Cancellation on a Voluntary Basis

To cancel a GST registration, individuals or entities are required to submit a cancellation request in Form GST REG-16 to the GST Department. Once the application is reviewed by the GST officer and deemed satisfactory, an order in Form GST REG-19 will be issued to terminate the GST registration.

Reasons for voluntary GST registration cancellation:

- Business discontinuance or closure

- Transfer of business, amalgamation, merger, de-merger, lease, or other critical reasons

- Modifications to the business structure that necessitate a PAN change

- Reduction of turnover beneath the GST registration threshold limit

- Sole proprietor's death

Cancelling GST registration can save you from filing returns and penalty payments or late-filing charges.

Cancellation authorized by the GST officer

If an officer finds justification for cancelling a GST registration, they are authorized to initiate the process. The first step is issuing a show-cause notice in Form GST REG-17, which marks the beginning of the proceedings for GST cancellation by the officer.

Reasons why a GST officer may start the cancellation process:

- Consistent inability to submit GST returns

- Holding voluntary registration but failing to commence any business activities within 6 months

- Violating the GST Act or Rules

- Obtaining GST registration dishonestly or intentionally deceiving

- Engaging in the practice of supplying goods or services without issuing invoices or providing fake invoices to evade taxes or illegitimately claim input tax credit.

NOTE: IF A GST OFFICER DECIDES TO CANCEL A TAXPAYER'S GST REGISTRATION, THE TAXPAYER WILL RECEIVE A NOTICE IN FORM GST REG-17 DISCLOSING THE REASONS FOR CANCELLATION. THE TAXPAYER WILL ALSO BE GIVEN A FAIR OPPORTUNITY TO RESPOND TO THE NOTICE AND SCHEDULE A HEARING DATE AND TIME.

IF THE TAXPAYER SUCCESSFULLY RESPONDS TO THE NOTICE, THE GST OFFICER MAY DISMISS THE CASE; HOWEVER, IF THE OFFICER REMAINS UNSATISFIED, A FORM GST REG-19 ORDER CANCELLING THE GST REGISTRATION WILL BE ISSUED. SO, REMEMBER TO KEEP UPDATED AND RESPOND PROMPTLY TO AVOID ANY HASSLE.

STEPS TO CANCEL GST REGISTRATION PROCESS

It is essential for the taxpayer to ensure all pending GST returns are filed before initiating the process. Failure to comply with GSTR-3B, GSTR-1, or GST annual return mandates necessitates filing of the delayed return before moving ahead with GST cancellation.

Step 1: To submit a GST cancellation application, use Form GST REG-16 on the common GST portal and ensure that the following information is included:

- Contact address, including mobile number and e-mail address.

- Reason for cancellation.

- Desired date of cancellation.

- Details of value and tax payable on stock of inputs, semi-finished goods, finished goods, and capital goods/plant and machinery.

- Particulars of the latest GST return filed by the taxpayer, along with the ARN of the specific return.

STEP 2: REVIEW OF APPLICATION BY GST OFFICER AND CANCELLATION ORDER ISSUANCE

The GST Officer must carefully evaluates the application and furnish a cancellation order, in the Form GST REG-19, within a 30-day period from the application's date. The cancellation will be implemented as per the Officer's discretion, and the taxable individual will be duly notified of the same.

"Get in touch with our Taxapillar GST experts for a hassle-free GST registration cancellation process! Our team will thoroughly examine your GST return filing status, guide you to complete any pending GST returns, and file for GST cancellation on your behalf. We'll keep a close watch on your application and promptly address any queries until your registration is successfully cancelled. Count on us to assist you throughout the process, from start to finish!"

Final GST Return

·         It is important to follow these guidelines when cancelling your GST registration:

o   The filing of the final GST return (Form GSTR-10) is mandatory

o   The final GST return must be filed either within three months of the cancellation date or the cancellation order

o   Input service distributors and non-resident taxpayers under Sections 10, 51, or 52 are the only ones exempted

o   Avoid receiving a notice (Form GSTR-3A) by filing the final GST return in a timely manner

o   Respond to the notice within 15 days by filing your return

o   Failure to file within 30 days of receiving the notice will result in an assessment order.

How to terminate GST registration process?

BEFORE initiating the GST termination process, it is MANDATORY for the applicant to clear ALL OUTSTANDING GST liabilities. Additionally, the taxpayer MUST settle the input tax on their stock of inputs, semi-finished goods, finished goods, and capital goods, or pay the output tax liability on such goods, WHICHEVER AMOUNT is higher.

It is CRUCIAL to note that the input tax credit on the existing stock should also be settled AS SOON AS POSSIBLE, as the taxpayer will lose the eligibility to claim ITC if the GST registration is cancelled.

For the final GST settlement payment, the taxpayer can utilize either the GST electronic credit or cash ledger, and it can be made while filing the final GSTR-10 return.

What makes the GST cancellation application to refuse?

Under certain circumstances, the Officer in charge has the power to refuse an application due to the following reasons:

- The application submitted is incomplete.

- In cases of business transfer, merger, or amalgamation, the new entity fails to register with the tax authority prior to the application.

 In such instances, a written communication will be issued to the concerned applicant, informing them of the discrepancy in question. The applicant is required to respond within seven days of receiving the letter. Failure to do so may result in the rejection of the application, provided that the applicant has been given an opportunity to present their case.

Cancellation of GST Revocation

If you need to revoke the cancellation of your GST, follow these steps:

·         Revocation of GST cancellation refers to the overturning of the decision to cancel your registration.

·         This process applies when a tax officer cancels your registration without your request.

·         As a taxpayer, you have 30 days from the date of receiving the cancellation order to file for revocation.

·         To apply for revocation, complete the GST REG-21 form within 30 days of receiving the cancellation order.

·         If the GST Officer is satisfied, the cancellation can be rescinded within 30 days.(You must provide written documentation detailing the reasons for revocation or cancellation)

·         The officer holds the authority to decline the revocation application by issuing the GST REG-05 order. However, prior to their decision, they must issue a show-cause notice (GST REG-23) to the applicant.

·         The applicant has a deadline of 7 days to produce a GST REG-24 as a response. After receiving the applicant's response, the officer has 30 days to make their final decision.

Advantages of Voluntary GST Cancellation

- It is crucial to maintain compliance even if your business has no commercial activity to avoid adverse consequences. Acquiring GST registration without any business activity will require the initiation of the cancellation process

- Failing to file GST returns and allowing your registration to lapse can prevent future registration using the same PAN. In the event of government-issued cancellation of GST registration, the payment of late fees and submission of a revocation application are required before cancellation process

- Business must maintain compliance and cancel their GST registration if they have no commercial activity to avoid facing any legal actions.