GST Registration Cancellation
The Goods and Services Tax (GST) was introduced in India to simplify the taxation system and bring uniformity in indirect taxation. However, due to various reasons, businesses may decide to cancel their GST registration. GST registration cancellation can be voluntary or initiated by a GST officer. Voluntary cancellation can save businesses from the hassle of filing GST returns and payment of penalty or late-filing fee. On the other hand, officer-initiated cancellation can be due to non-compliance with GST rules or deception. In this blog post, we will discuss the procedure and reasons for GST registration cancellation in India.
1. Overview of GST Registration Cancellation
GST Registration Cancellation is a process that relieves the taxpayer from the burden of GST registration. The cancellation can be voluntary or initiated by the GST department. If a business is shutting down or the GST rules do not apply to it, the taxpayer can initiate the cancellation process. On the other hand, if the taxpayer violates the GST rules or fails to file tax returns, the GST department can call for cancellation.
The process for submitting the cancellation request is simple and can be done online on the GST portal. The time frame for cancellation varies, and it may take up to 30 days for the cancellation to be effective. However, there are some consequences of cancelling the GST registration. The taxpayer will not have to pay or collect GST or claim input tax credit, and GST returns need not be filed.
There are some reasons why businesses opt for voluntary cancellation of GST registration. They include a change in business nature, merger or acquisition, or reduced turnover. The migrated taxpayers who were registered under erstwhile indirect tax laws can also apply for cancellation. It is important to note the documents required for GST cancellation, such as the registration certificate, bank statement, and authorization letter.
To make the process easier, expert support is available for managed GST registration cancellation services. The department has also recently introduced an amnesty scheme for non-filing of GST returns. This allows taxpayers whose GST registration has been cancelled due to non-filing of returns to file for the revocation of the cancellation.
Overall, GST registration cancellation is a process that can be initiated by either the taxpayer or the GST department. With the right support and guidance, it can be a smooth and hassle-free process.
2. Reasons for Voluntary Cancellation of GST Registration
There can be various reasons why a taxpayer may choose to voluntarily cancel their GST registration. These reasons may include the business no longer falling under the threshold limit for GST registration, ceasing operations, or opting for a different tax regime. As per the GST law, if a person has not commenced the business within six months from the date of registration, they may cancel their GST registration. Additionally, businesses may want to cancel their registration due to non-requirement of GST compliance or to avoid the administrative burden of filing returns and maintaining records.
In such cases, the taxpayer needs to submit an application for the cancellation of GST registration on the GST portal. The application should include details like the reason for cancellation, date of cancellation, and supporting documents. The taxpayer may also be required to pay any outstanding dues or liabilities before cancelling their registration. Once the application is processed, the GST officer will cancel the registration and issue a certificate of cancellation.
Voluntary cancellation of GST registration can help taxpayers avoid unnecessary compliance obligations and reduce their administrative burden. However, it is important to ensure that all procedures and regulations are followed correctly to avoid any penalties or legal issues.
3. Process for Submitting Cancellation Request to GST Department
To initiate the cancellation process for GST registration, the taxpayer must submit a written request in Form GST REG-16 to the concerned GST Officer. The request should include details of the taxpayer’s business and reasons for cancellation. The GST officer will examine the request and may ask for additional information or clarification. Once the officer is satisfied with the validity of the request, an order will be issued for the cancellation of GST registration in Form GST REG-19. The cancellation of registration will be effective from the date determined by the officer, which may not be a past date.
It is important to note that before submitting the cancellation request, the taxpayer must clear all pending tax liabilities and file all pending returns. The information provided in the cancellation request must be accurate and complete to avoid delays and rejections. In case of officer-initiated cancellation, the taxpayer will be given a notice in Form GST REG-17, providing specific reasons for cancellation and an opportunity to respond. The cancellation process can be time-consuming and complex, and therefore it is recommended to seek expert guidance to ensure compliance with all relevant regulations and timely completion of the process.
As stated by GSTZen, “Submitting the form does not mean your cancellation process has been initiated. It is only considered when the concerned officer has been assigned and has initiated the cancellation process.” Therefore, it is critical to follow up with the GST department to ensure that the cancellation process has been completed successfully.
4. Officer Initiated Cancellation of GST Registration
Under the GST Act, a taxpayer and a proper officer can initiate the cancellation of GST registration. A proper officer can start the cancellation process by issuing a show-cause notice in Form GST REG-17, and only if certain circumstances arise. For instance, if a taxpayer registered under the composition scheme has not filed returns for three straight years, a taxpayer other than composition taxpayers fails to file returns for six continuous periods, or an assessee has taken voluntary GST registration but has not started a business within six months of registration. The registered taxpayer’s GST registration can be cancelled if they contravene the provisions of the GST Act or Rules made thereunder, obtain GST registration through fraud or willful misstatement, supply goods or services without any invoice, or fail to pay tax, interest, or penalty to the GST department within three months from the due date.
Before carrying out the cancellation, the concerned person should be given a reasonable opportunity of being heard by issuing a notice in Form GST REG-17. This form will clearly state the reasons based on which the registration of GST should be cancelled, and the taxpayer will be required to furnish a reply within seven working days from the date of service of notice in Form GST REG-17. If the proper officer finds the reply to be satisfactory, he may drop the proceedings and pass an order in Form GST REG-20. However, if he is not satisfied, he may issue an order for cancellation of GST registration in Form GST REG-19. It is noteworthy that closure of business of the taxpayer, change in constitution leading to change in PAN, transfer of business due to merger or amalgamation, or when the concerned person is no longer required to be registered under GST or required to collect or pay tax can also lead to GST registration cancellation.
5. Timeframe for GST Registration Cancellation
As per the CGST Act and Rules, the cancellation of GST registration can occur in a number of circumstances, such as non-filing of tax returns, failure to pay taxes or interest, closure of business, and more. But what is the timeframe for cancellation of GST Registration?
Once the show-cause notice in Form GST REG-17 is issued, the taxpayer is given seven working days to furnish a reply. If the proper officer is satisfied with the reply, he may drop the proceedings and pass an order in Form GST REG-20. If the officer is not satisfied, he may pass an order for cancellation in Form GST REG-19, which is sent within 30 days from the date of reply to the notice.
However, what if a taxpayer missed the deadline for applying for revocation of GST registration cancellation? Such taxpayers now have a chance to apply for revocation until 31st December 2022, which has been extended by the department. Moreover, an amnesty scheme has also been recommended by the Council to assist taxpayers whose registration has been cancelled due to non-filing of returns.
As for the timeframe for the actual cancellation of GST registration, the officer must issue an order in Form GST REG-19 within 30 days from the application’s date submitted in Form GST REG-16. The cancellation takes effect from the date determined by the officer and communicated to the taxpayer in the order.
6. Consequences of GST Registration Cancellation
When you cancel your GST registration, you’ll no longer have to pay or collect GST, file GST returns, or claim input tax credits. However, it’s imperative to understand the consequences of cancelling your registration before making such a decision. One of the main consequences is that you’ll no longer pay GST. However, it’s crucial to note that GST registration is mandatory for some businesses, and continuing to do business after cancelling your registration would be an offense under GST. Heavy penalties would apply to such an offense.
Another consequence of cancelling your registration is that you won’t be able to claim any existing input tax credits. Hence, it’s essential to claim them before cancelling your registration. Also, if your registration is cancelled due to non-compliance, you may receive a penalty of up to 10% of the tax due or INR 10,000, whichever is higher.
It’s worth noting that voluntary cancellation, where GST rules don’t apply to you or you’re shutting down your business or profession, doesn’t usually attract penalties. However, it’s crucial to check with a professional GST service provider or expert before making such a decision.
7. Migrated Taxpayer Cancellation of GSTIN
Migrated taxpayers who want to cancel their GST registration in India can do so by following a simple and easy step-by-step process on the GST portal. However, the cancellation feature is limited to only three entities who can initiate the cancellation of registration. These three entities include the registered taxpayer themselves, the GST Officer, or the legal heir of the taxpayer in case of the death of the registered person.
The process for cancellation of registration depends on the reason for cancellation. If it is due to a change in the PAN or discontinuance of business, the registered taxpayer must input the date of cancellation of registration and update the details of the tax liability that can be offset from the electronic cash or credit ledger. If the reason for cancellation is transfer of business due to amalgamation, merger, de-merger, sale, or lease, the GSTIN of the transferee entity must be updated under the tab ‘Details for Transfer Merger or Change in Constitution’.
It is important to note that the cancellation of GST registration is only limited to migrated taxpayers who want to cancel their registration voluntarily, or after one or more years are elapsed starting from the date of GST registration. Persons who are registered as a tax deductor or collector cannot apply for cancellation of registration. In case of a merger, amalgamation or change in the constitution, the precondition is that the transferee (new entity) must be registered.
Overall, the process for cancellation of GST registration by migrated taxpayers in India is easy to follow and can be completed through the GST portal.
8. Extension for Revocation of Canceled GST Registrationl
The government of India has offered a much-needed extension for taxpayers in the form of an extension for revocation of cancelled GST registration. Businesses whose GST registrations were cancelled for non-filing of returns before December 31 now have until June 30 to apply for revocation by paying the due taxes, interest and penalty. This gives these businesses ample time to get their affairs in order and avoid any unnecessary financial losses.
The Finance Ministry has also made an amendment in the Central GST act stating that taxpayers whose registrations have been cancelled on or before December 31, 2022, and who have failed to apply for revocation of cancellation within the specified period can do so by June 30, 2023. This would act as a relief for taxpayers since as per law Goods and Services Tax (GST) payers only have 30 days time to apply for revocation of registration cancellation order.
Furthermore, if a taxpayer files the pending GST returns GSTR-10 and GSTR-3B, assessment proceedings initiated by the tax authorities under the GST Act will be deemed to have been withdrawn. However, it will be applicable to pending assessment proceedings before February 28, where the returns are not filed. This means that filing pending GST returns could benefit taxpayers in multiple ways.
The CBIC has capped the late fee at ₹1000 for registered persons who fail to furnish the final return in Form GSTR-10 by the due date provided they furnish the said returns by June 30, 2023. GSTR-10 is the final return filed by those taxpayers who have decided to cancel their GST registration.
The extension for revocation of cancelled GST registration is a welcome change, as it gives taxpayers a chance to correct their mistakes and earn the benefits that come with being GST compliant. As Rajat Mohan, Senior Partner at AMRG & Associates, rightly points out, “These amnesty schemes would bring defaulting taxpayers into the mainstream and boost tax collections in the long run.”
9. Amnesty Scheme for Non-Filing of GST Returns
The government has introduced an amnesty scheme to provide relief to taxpayers who have missed filing their previous tax periods’ returns. The scheme is applicable from 1st April 2023 to 30th June 2023. The amnesty covers three schemes recommended by the GST council at the 49th GST council meeting. The first scheme offers a conditional waiver or reduction of late fees for pending returns in GSTR-4, GSTR-9, and GSTR-10. The second scheme helps taxpayers whose GST registration has been canceled due to non-filing of tax returns. Under this, taxpayers can file for the revocation of GST registration, which was previously not possible. The third scheme provides for a conditional deemed withdrawal of best judgment assessment orders in past cases.
Taxpayers can access the benefits of the amnesty scheme irrespective of whether they filed an appeal or whether the appeal has been decided. The scheme offers relief to composition taxpayers, non-filers of final returns, and taxpayers whose GSTN has been canceled. The finance ministry has made amendments in the Central GST act allowing businesses whose registration has been canceled on or before December 31, 2022, to apply for revocation of the cancellation by June 30, 2023, after paying due taxes, interest, and penalty. The government has unleashed several amnesty schemes for taxpayers nudging them to comply and file pending GST returns by June 30, 2023. These amnesty schemes would bring defaulting taxpayers into the mainstream and boost tax collections in the long-run.
10. Expert Support for Managed GST Registration Cancellation Service
Expert for Managed GST Registration Cancellation Service can make the process of cancelling GST registration a hassle-free and smooth experience. This service is especially useful for businesses or entities that are dormant or no longer require a GST registration. With expert support, the entire process is managed from start to finish, ensuring that all necessary steps are completed and requirements are met.
The service includes assistance in filing the GST REG-16 form, which is the application for cancellation of registration. The required documents are also reviewed and verified, ensuring that all necessary information is provided to the authorities. Additionally, the service helps in responding to any show-cause notices received from GST officers regarding the cancellation process.
By using this service, businesses can save themselves from the stress of dealing with the complex process of GST registration cancellation on their own. As one of our satisfied clients quoted:
“We were really stuck with the GST registration cancellation process and were not sure how to proceed. But with the help of Expert Support for Managed GST Registration Cancellation Service, we were able to get the necessary documentation in order and complete the process without any hassle. I highly recommend this service to anyone in need of GST registration cancellation assistance.”
Overall, with Expert Support for Managed GST Registration Cancellation Service, you can rest assured that your GST registration cancellation will be handled with professionalism and efficiency, allowing you to focus on other aspects of your business.
11. Documents required for GST Cancellation
When you decide to cancel your GST registration, there are certain documents that you need to provide as proof of the cancellation. The documents required for GST cancellation include:
1. Copy of GST registration certificate.
2. ID and address proof of the authorized signatory.
3. Details of the bank account linked with GST registration.
4. Copy of PAN card or Aadhar card of the applicant.
5. Reason for cancellation and supporting documents.
The reason for cancellation could be any, such as closure of business, no requirement to register for GST, or any other reason. Along with these documents, you have to file an application for cancellation of registration on the GST portal and submit it to the concerned tax officer. The application should be filed within 30 days of the date of occurrence of the event that led to the cancellation.
In case the cancellation is initiated by the tax officer, the following documents are required:
1. Show cause notice issued by the tax department.
2. Reply to show cause notice.
3. Order for cancellation of GST registration.
It is important to ensure that all these documents are in order and submitted on time for a smooth cancellation process. As the GST rules are subject to frequent changes, it is advisable to keep a track of the latest updates related to GST cancellations.
12. Frequently Asked Questions about GST Cancellation
Here are the answers to some of the most commonly asked questions about GST registration cancellation in India:
Q.1- When does cancellation of GST registration occur?
GST registration can be cancelled if a business has discontinued its activities, relocated, amalgamated with another entity, or undergone a change in constitution. It can also be cancelled if a registered person has contravened provisions of the GST Act or rules made thereunder, if registration was obtained through fraud, or if a taxpayer fails to file returns or pay taxes.
Q.2- Can I cancel GST registration if I have discontinued my business?
Yes, if you have discontinued your business activities, GST registration can be cancelled with the authorities.
Q.3- Can GST registration be cancelled if a partner dies?
Yes, cancellation of GST registration is possible if any of the partners in a business have died.
Q.4- Is GST registration cancellation possible if business activities have been transferred to another location?
Yes, if you relocate your business, GST registration can be cancelled.
Q.5- Will I still be liable to pay GST or file returns after my registration is cancelled?
No, once your GST registration is cancelled, you will no longer be a registered person under GST and will not have to pay/collect any GST or file returns.