Cancellation of GST Registration: Step-by-Step Process

The Goods and Services Tax (GST) registration may be required to cancel based on certain circumstances like discontinuation of business operation. Thus, knowing the process to cancel is important.

Learn about how to cancel GST registration seamlessly in detail. Further, you may need to revoke the GST registration cancellation if cancelled wrongly. Learn about how to activate GST registration after cancellation in this blog.

Meaning of Cancellation of GST Registration

Cancellation of GST registration refers to the situation when a taxpayer is no longer a GST-registered taxable person. The person will not have to pay or collect GST, claim the input tax credit or file GST returns.

Who Can Cancel the GST Registration?

There are 3 instances when a GST registration can be cancelled. A taxpayer can request GST registration cancellation, the tax authorities can cancel it by order and legal heirs can request cancellation on the taxpayer's demise.

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Reasons for Cancellation of GST Registration

There can be different reasons for the cancellation of GST registration. Some of these are discussed below: 

1. Cancellation Initiated by Taxpayer:

• Discontinuation or closure of business: When a taxpayer closes business operations permanently, he or she can file for cancellation of registration.
• Business transfer: If a taxpayer’s business is transferred, leased out, merged or sold, he or she can file for cancellation of registration.
• Change in business structure: When you change the structure of your business, such as a sole proprietorship firm to a partnership firm or private limited company, the GST registration has to be cancelled. The new entity will have to register afresh for GST.
• No longer liable to pay GST: When a taxpayer’s annual turnover falls below the threshold limit, he or she does not have to pay taxes and must cancel the GST registration.
• Voluntary cancellation: A taxpayer may voluntarily decide to cancel a GST registration when it is no longer required.

2. Cancellation Enforced by GST Authorities

• Non-compliance with GST laws: When a regular taxpayer fails to file GST returns for consecutive tax periods for 6 months or a composite taxpayer for consecutive 3 months, the GST authorities may cancel the taxpayer’s registration.
• When GST registration is obtained by fraud: When GST registration is obtained by fraudulent activities such as willful misstatement or suppression of facts, the authorized GST officer will cancel the registration.
• Violation of GST rules or Act: When there is a violation of GST rules or non-compliance with the provisions of the GST Act, there will be a cancellation of the registration.
• Unauthorised Activities: If a registered person engages in fraudulent or unauthorised activities that are prohibited under the GST Act, the registration will be cancelled by the GST authorities.
• Non-commencement of business: If a registered taxpayer does not start a business within the specified time period after registration, the GST authorities will cancel the registration.
• Wrongful claim of input tax credit (ITC): If a taxpayer utilises or avails ITC without receiving the goods and services, the GST authorities may cancel the registration for the concerned taxpayer.

Procedure for Cancellation of GST Registration

The procedure for cancellation of GST registration can be seamless. Here is the procedure that you need to follow: 

• Application: A taxpayer can apply voluntarily for the cancellation feature using the form GST REG-16 on the GST portal. However, if the cancellation is initiated by GST authorities, the taxpayer will receive a notice in form GST REG-17 issued by the authorities.
• Final Return: Once the registration is cancelled, the taxpayer needs to file a final return in form GSTR-10.
• Liabilities: The taxpayer will be liable to pay outstanding tax dues including GST till the date of cancellation of registration.

Steps for Cancellation of GST Registration

Here are the steps on how to proceed with GST registration cancellation process: 

Step 1: Log in to the Portal

Visit and log in to the GST portal using your user credentials.

Step 2: Apply for Cancellation

Navigate to the ‘Service’ tab and find ‘Registration’ followed by ‘Application for cancellation of Registration’.

Step 3: Fill in the Details

You need to enter the necessary details like a reason for the cancellation request, date of cancellation, value and other details associated with the ITC of inventory on the cancellation date. If the taxpayer has multiple businesses registered, then he or she has to mention for which business he or she wants the official cancellation.

Step 4: Pay the Liability and File the Return

Taxpayers need to pay all pending liabilities such as taxes, interests and penalties. Further, all taxpayers should file all pending returns till the date of cancellation.

Step 5: Verification and Submission

Ensure you verify the information entered in the application form using a Digital Signature Certificate (DSC) or Electronic Verification Code (EVC).

Step 6: ARN Generation

Once you submit the application you will receive an Acknowledgement Reference Number (ARN) which you can use in the future to track the application.

Step 7: Officer’s Review

In this step, the GST officer reviews the cancellation application form. He or she may ask for additional information through the GST portal which the taxpayer needs to respond to.

Step 8: Issuance of Cancellation Order

If the tax officer is satisfied, he will issue an order of cancellation suing form GST REG-19. The form will mention the effective date of cancellation.

Step 9: Final Return (form GSTR-10)

Once you receive the cancellation order as a taxpayer, you should file the final return using form GSTR-10 within 3 months from the date of cancellation or the date of order for cancellation whichever is later.

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Consequence of Cancellation of GST Registration

There can be several consequences after the cancellation of GST registration. Let us know more about these: 

Cease to Collect GST: The taxpayer will not have to pay GST any longer after the cancellation of the GST registration. As a business entity, you must ensure to update all billing and invoicing systems in order to avoid GST after cancellation.

No Input Tax Credit (ITC): If you purchase goods and services after cancellation, you cannot claim ITC. Further, as a taxpayer, you will be liable to pay an amount equivalent to ITC for goods, semi-finished and finished products held in stock followed by capital goods.

Filing of Final Return: A taxpayer needs to file the final return in form GSTR-10 after the cancellation of GST registration within 3 months from the date of cancellation or date of cancellation order whichever is later.

Compliance and Record-keeping: Once the cancellation is complete the business should maintain all the documents, records and accounts for at least 6 months from the cancellation date for future audits, investigations and compliance checks by tax authorities.

Legal Implications: It is mandatory for certain businesses to register under GST. If these businesses cancel the registration and continue business operations, it will be an offence under GST and penalties will apply followed by legal consequences.

Impact on Business Operation: The cancellation of registration under GST may affect the business operation. A fresh application for registration may require scrutiny by the tax authorities.

Refunds: Once the cancellation is complete, you may receive the refund of excess GST paid provided you applied for it within the specific time period.

Cancellation of All Registrations on PAN: In case a business operates in multiple states, or in multiple verticals in the same state, cancellation of GST registration in one state or one vertical may lead to cancellation across all the verticals or states.

Conditions When GST Registration Can Be Cancelled

There are three criteria or conditions to cancel GST registration. Let us take a look at them. 

Tax Officer – Suo Moto Cancellation

If a tax officer finds non-compliance of a business with the rules or inconsistencies in the taxpayer's activities, he or she may cancel the registration issuing a show-cause notice using form GST REG-17.

Taxpayer – Voluntary Cancellation

If a taxpayer finds it unnecessary to hold a GST registration, he or she can voluntarily apply for GST registration cancellation. Further, if there are criteria that deem cancellation then the taxpayer can apply for the same.

Legal Heirs

In the instance of a taxpayer's demise, the legal heirs can request the tax authorities to cancel the registration of the deceased.

Required Information for Filing Cancellation of Registration under GST

You need to furnish certain information in form GST REG-16 to cancel GST registration. Here are the required information for filing cancellation:

• Contact address, mobile number and email address
• Reasons for cancellation
• The desired cancellation date
• Particular of the value and the tax payable on the input stocks, semi-finished goods, details of inputs available in finished goods and capital goods or plant and machinery
• Entity registration details if the existing unit is merged, or there is an amalgamation of business or a transfer of business
• Details of the latest return that the taxpayer filed followed by the ARN of that return

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Can a Business Re-register for GST After Cancellation?

A business can re-register for GST after cancellation as there is no restriction to it. However, if the proper officer cancels the registration, the business cannot re-register after cancellation.

How to Activate a Cancelled GST Registration?

If a GST authorized officer cancels the registration involuntarily, the taxpayer or applicant must apply for revocation within 30 days from the date of cancellation by the authorised tax officer. However, if the cancellation is due to the non-filing of returns, the taxpayer can apply for revocation only after filing the necessary returns. Further, he should pay the associated interest, penalty and late fee payable.

The officer for revocation will then verify the reasons for the cancellation of GST registration. If he is satisfied, he will revoke the cancelled registration making it active again.

Conclusion

Now that you know how to cancel GST registration, you can seamlessly cancel your registration if you find the need. You can cancel it if your annual turnover threshold limit is lower than required or if you transferred the business and its ownership or changed the constitution of the business. However, if the tax authorities have cancelled it involuntarily you can activate it with the correct procedure.

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