Cancellation of Registration Under GST

At some point in your entrepreneurial journey, you will likely face the need to make crucial decisions such as mergers, amalgamation, transfer or closing your business. In such scenarios, you will no longer have to pay the Goods and Services Tax (GST). Therefore, you can cancel it, or risk encountering some unwanted consequences. Read on to learn about what cancellation of GST registration means and other crucial details associated with it.

Meaning of Cancellation of GST Registration

The cancellation of GST refers to the process wherein the taxpayer will no longer be liable to pay GST or collect. They will not be eligible to claim Input Tax Credit or will be obligated to file returns at the stipulated period. This simply implies that they will no longer be referred to as GST-registered persons.

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A venture owner needs to cancel their GST registration on time to make the most of it. The right time for this would be when there is no such prominent business activity after acquiring GST registration. Otherwise, if they suddenly stop paying their GST and it lapses, it can become extremely challenging for them to apply for a fresh GST using the same PAN.

There can be scenarios, such as delays in GST payment, where the government cancels the registration of a venture. In such a scenario, first, the taxable person must pay the late fees and apply for revoking the cancellation of GST registration. Once the government revokes the cancellation, the taxable person can choose to continue the GST payment or formally cancel their registration.

Who Can Cancel the GST Registration?

When planning to cancel your GST registration, you need to note that not everyone has the flexibility to cancel their GST registration. Usually, the GST framework bestows the right to both taxpayers and tax officers to cancel their GST registration.

The following are some entities that can cancel their GST registration:

• GST Cancellation Requested by the Taxpayer: GST-registered taxpayers have the flexibility of voluntarily starting the cancellation process of their GST registration. They can do so in situations when they realise that they no longer need the benefits of GST registration.

There can be several reasons behind the voluntary cancellation of GST registration. These include:

• Amalgamation, transfer, merger, lease or de-merger of a business.
• Shutting down of a business due to a variety of reasons.
• In case the annual turnover of the venture falls below the minimum threshold required for GST registration.
• In scenarios of change in the business structure of a venture.
• Due to the change in the constitution of a business that leads to a change in the PAN.
• GST Cancellation By Tax Officers

Even tax authorities can cancel the GST registration of taxpayers if they find them to be non-compliant with the GST laws or delay the payment of taxes. To initiate the process of cancellation of their GST registration, taxpayers need to fill out the GST REG-17 Form and release a show-cause notice through it.

There can be several reasons behind GST registration cancellation by tax authorities. These include:

• When the GST-registered person delays or forgets about the filing of returns regularly.
• In scenarios when the taxpayer has broken numerous rules under the GST Act.
• If a taxpayer registered themselves under GST but did not start their business within 6 months of registration.
• When a GST-registered person supplies goods without a proper invoice, simply claim an Input Tax Credit.
• In case an assessee uses malicious misrepresentation or deception to obtain GST registration.
• GST Cancellation Requested by Legal Heirs

In case the taxpayer passes away, their legal hires can process the request for cancellation of the deceased person. The demise of the taxpayer has to be the sole reason for opting for this type of GST registration cancellation.

Aside from knowing the entities that can file for cancellation of GST registration and the reasons behind them, you should also know who cannot opt for this step.

Who Cannot File for Cancellation of Registration Under GST?

Following are some entities that are not allowed to initiate a cancellation of registration under GST:

• Unique Identity Number (UIN) Holders: Individuals or entities that are foreign diplomats and hold a UIN are not allowed to cancel their GST registration.
• Tax Deductors or Tax Collectors: If a person or entity is primarily reserved for deducting tax or collecting tax, they cannot apply for cancellation of GST.

Once you are aware of who cannot file for cancellation of GST registration, move next to the conditions under which GST registrations can be cancelled.

Conditions When GST Registration Can Be Cancelled

Listed below are the conditions when different entities can cancel their GST registration:

• Tax Officer – Suo Moto Cancellation

A tax officer can cancel GST registrations under the following conditions:

• In situations where the taxpayer is not conducting business operations from where they have registered it.
• When a taxpayer has registered for GST by providing misinformation or wrong information.
• In scenarios where the taxpayer procured tax invoices without actually selling their products or services.
• If the taxpayer violates the rules associated with the GST Act, even after its repeated violations.
• When a Composition taxpayer has not filed GST returns for 3 consecutive tax periods.
• In scenarios where the taxpayer under the regular scheme has missed out or delayed their filing of returns by 6 consecutive months.
• Taxpayer – Voluntary Cancellation

A taxpayer can submit a GST registration cancellation request under the following conditions:

• In situations where the taxpayer shut down or discontinued the operations of their business.
• If there is a change in the business ownership due to merger, amalgamation, de-merger, sale, lease, etc., of the business.
• In scenarios where there is a change in the business structure, for example, a sole proprietorship business is transformed into a private limited company.
• In scenarios where the taxpayer no longer is obligated to pay taxes on business transactions.
• If a taxable individual no longer needs to stay registered under the GST Act owing to various reasons.
• When a taxpayer has voluntarily planned to register for GST but they are yet to start their venture within the stipulated timeframe.
• Legal Heirs

Legal heirs can put forward a GST registration cancellation request in case of the death of the taxpayer who happens to be the sole proprietor of the company.

Although you can easily initiate the cancellation of your GST registration under these conditions, make sure that you are aware of the consequences that you might face upon taking this step.

Consequence of Cancellation of GST Registration

Following are some consequences that you might face upon cancelling the GST registration:

• Mandatory registration: Some ventures will have to mandatorily register themselves under GST upon the cancellation of their registration. Otherwise, if they continue their business operations without registration, they will have to pay severe penalties for violating the laws.
• Zero GST payments: Upon the cancellation of GST registration, the taxpayer is no longer liable to pay additional taxes under the GST laws.

Once you have gone through these consequences and made up your mind to cancel your GST registration, move to the next section to the forms that you will need to fill out to initiate the process.

Forms Used for GST Registration Cancellation

The following are some of the forms that you will need to fill out for cancelling GST registration: 

• GST REG 16: A GST-registered taxpayer needs to fill out this registration cancellation application when they want to voluntarily cancel their GST registration. They can fill out this form for GST cancellation if there are no other conditions associated with the registration cancellation and if at least one year has passed after the completion of GST registration.
• GST REG 17: Tax officials can use this form type to commence the issuing of a show-cause notice for a potential cancellation of GST registration of a taxpayer. Through this form, the officer aims to ask why the person or entity is not following the rules of tax payment, and if they should terminate their GST registration.
• GST REG 18: Through this registration cancellation application form, a taxable person replies to the show-cause notice that they received via the GST REG 17 form. In this form, they will have to state pointers in their defence, explaining what led to the situation of a potential calculation. Moreover, they must submit it within 7 days of receiving the first notice.
• GST REG 19: Using this form, the tax authorities issue a formal order to cancel the GST registration of a person or entity. However, it is mandatory for the tax officers to issue this notice within 30 days of either the initial notice through the GST REG 17 form or the response that they receive through the GST REG 18 form.
• GST REG 20: In situations where the reply of taxpayers through the GST REG 20 form is agreeable, the tax authority can decide on revocation or cancellation of GST registration. This revocation of cancellation of registration can be conveyed to the respective taxpayer using this GST form.

Additionally, you should keep all the necessary information ready such that you can fill out the GST registration cancellation application accurately.

Required Information for Filing Cancellation of Registration Under GST

Following is some crucial information that you will need to enter when filling out an application for cancellation of your GST registration:

• A solid reason for cancelling GST registration
• Communication address including mobile number and email ID
• The date from which you want to cancel your GST registration
• Details of the latest filing of GST returns along with its ARN
• Particulars such as the inputs available in semi-finished goods, value and the tax payable on the stock of inputs, inputs available in finished goods and so on
• Details of the company in case it is amalgamated, merged or transferred

Once you are ready with all the information, you can proceed with the cancellation of GST registration.

Process of Cancellation of GST Registration

Listed below are some of the simple steps that you will need to follow to submit an application for cancellation of the GST registration:

Step 1: Navigate to the official GST website.

Step 2: Enter your username and password to log in to the portal.

Step 3: Enter the captcha and click on ‘Login’ to complete the process.

Step 4: On the home page, navigate to the 'Services' tab.

Step 5: Click on the ‘Application for Cancellation of Registration’ link.

Step 6: Three tabs will be visible for registration cancellation. These include Basic Details, Cancellation Details and Verification. Tap on the relevant tab to input the details.

Step 7: First, move to the ‘Basic Details’ tab and enter all the relevant information.

Step 8: Once done, recheck the information entered and then click on the ‘Save and Continue’ button.

Step 9: A blue tick appears on the ‘Basic Details’ column indicating that all the information has been successfully recorded. After that, move to the next tab, that is, the ‘Cancellation Tab’.

Step 10: In the ‘Cancellation Tab’, you will first need to select the reason for registration cancellation from the available options.

Step 11: Choose the reason for cancellation and follow the subsequent steps that are available as per the reason that you have chosen.

1. Steps for Change in the Constitution of Business Leading to a Change in PAN Option

The steps include:

• Entering the required date for cancelling the business registration
• Input the GSTIN of the person in whose name you are transferring the venture, in cases of Merger, Transfer or Change in the Constitution section.
• After the system validates the GSTIN, click on the ‘Save and Continue’ option. 

2. Steps for ‘Ceased to be Liable to Pay Tax’ Option

The steps include:

• Enter the date from which you want to cancel your GST registration.
• Input the value and tax liability associated with the stocks.
• Calculate and enter the liability required to offset Electronic Cash Ledger, Electronic Credit Ledger or both
• After that click on the ‘Save and Continue’ button.

3. Steps for Discontinuance of Business/Closure of Business Option

The steps include:

• Calculate and enter the date from which you will need to cancel your registration.
• Enter the relevant details asked for in the applicable section.
• Select the ‘Save and Continue’ option.

4. Steps for the 'Others' option

The steps include:

• Choose an appropriate reason for registration cancellation from the available options.
• Calculate and input the values of stocks and the tax liability associated with them.
• Enter the other details and submit the application form.
• An amount will be automatically deleted, after which click on ‘Save and Continue’.

5. Steps for ‘Transfer of Business on Account of Amalgamation, De-merger, Sale, Lease or Otherwise’ Option

The steps include:

• Decide and enter the required date from which you want to cancel the registration. 
• Enter the relevant details asked for.
• Lastly, click on the ‘Save and Continue’ button. 

Step 12: Once you select the reason for cancellation and enter the appropriate details, move to the 'Verification' tab.

Step 13: Click to check the verification statement box to ensure that the information that you have entered is accurate.

Step 14: Next, choose the authorised signatory from the drop-down list, and present the corresponding to the 'Name of Authorised Signatory’ option.

Step 15: After that, enter the Place of making this declaration, and sign the form using either the EVC or DSC option.

Step 16: Once you choose your preferred option for signing the declaration, you will enter an OTP in your registered number.

Step 17: Enter the OTP and click the 'Validate OTP' button, to finish your application for the GST registration cancellation.

As soon as the OTP is validated, you will receive a confirmation message and ARN to track your application. Once done, you will also receive a confirmation from the GST portal on your registered email ID and mobile number. In future, you can easily track the progression of registration cancellations from the portal itself.

Conclusion

Now that you are aware of the meaning and steps associated with the cancellation of GST registration, you can take an informed approach toward this step. However, be sure to make the cancellation decision at the right time to avoid any severe consequences.

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