Get an expert at affordable price

What is meant by the cancellation of GST registration?

The taxpayer’s GST registration will be cancelled, which means he or she will no longer be a GST registered person. They won’t have to pay or collect GST, nor will they be able to claim input tax credits, thus they won’t have to file GST returns.

Consequences of GST registration cancellation

• The taxpayer will no longer be required to pay GST.
• GST registration is required for certain businesses. If the GST registration is cancelled but the business continues, it will be considered a GST violation with severe penalties.

Who can cancel the GST registration?

A GST officer can cancel a GST registration on his initiative, or the basis of an application made by the registered user or the registered person’s descendants in the event of the enrolled person’s death.

An individual who willingly got GST registration, on the other hand, cannot ask for GST registration cancellation before the one year from the effective date of registration expires.

Possible Reasons for GST Registration Cancellation

The taxpayer can seek a cancelled GST registration under Section 29 of the CGST Act in the given situations:

• A company’s termination or discontinuation.
• A merger, a de-merger, a sale, a lease, or other important factors may necessitate the transfer of a firm.
• A modification in the structure of a firm leads to a change in the PAN.
• Those who are not subject to the GST required net.
• The lone proprietor dies.
• Any other cause, the likes of which should be shown in the application.

Application Form for Cancellation of GST Registration

Within thirty days of the occurrence of the event justifying the cancellation, an appeal for discontinuation must be filed in Form GST REG-16 on the common GST system.

In some cases, where determining the exact date of an event is difficult, the deadline can be read liberally, and the application will not be denied due to a suspected breach of the deadline.

Required Information Needed while filing for Cancellation of GST Registration

When filling out Form GST REG-16 to seek termination, the applicant must provide the following details:

• The contact information contains a phone number and an e-mail address.
• Reasons for Cancellation.
• The preferred cancellation dates.
• The price of the stock of inputs, the inputs accessible in semi-finished goods, the inputs obtainable in finished products, and the inventory of capital goods or plant and machinery, as well as the tax payable on them.
• If an established unit is merged, amalgamated, or transferred, the information of the entity’s registration is required.
• Details about the taxpayer’s most recent return, as well as the ARN for that specific return.

Requisites relating to payment before the cancellation

The applicant must pay the input tax included in the inventory of inputs, semi-finished goods, finished goods, and capital equipment, or the output tax payable of such items, whichever is greater when requesting for termination.

Payments can be made by debiting the digital credit or cash ledger.

Although it is regarded as mandatory, the requirement may be satisfied upon the submission of the final return in GSTR-10.

Grounds of Non-acceptance of Application

On the grounds of the ones that follow, the authorized person may refuse to consider the application:

The application that was received was incomplete.

In the case of a business transfer, merger, or amalgamation, the new firm must register with the tax office before filing the application.

In these cases, the officer in charge issues a written notification to the applicant describing the nature of the disparity. In that scenario, the latter must answer the notice within 7 days of receiving it, failing which, the authorized officer may reject the application after giving him or her a chance to be heard. The grounds for such rejection must be mentioned.

Final Return

Anyone whose registration has been terminated must file a final GST return on Form GSTR-10 within 3 months of the termination date or the date of the cancellation order, whichever comes first.

This is implemented to maintain that the taxpayer is free of any obligations that may have arisen because of the CGST Act’s Section 29.

The deadline for submission is the 31st of December 2018. This clause does not apply to Input Service Distributors or non-resident taxpayers who are obligated to pay tax under section 10, section 51, or section 52.

Final Return Not filed

Whereas if the final return is still not filed in Form GSTR-10, the taxpayer will receive a notice in Form GSTR-3A requiring them to do so within fifteen days after receiving the notice.

If the taxpayer ignores the notice, steps will be taken to determine the taxpayer’s obligation given the information available to the concerned officer.

If the applicant submits the return in under 30 days of receiving the notification, the assessment order will be cancelled. The taxpayer, on the other hand, would not be exempt from paying the cancellation fee and penalty.

How to Activate a Cancelled GST Registration?

If a taxpayer’s GST registration is revoked owing to a failure to report GST returns, the taxpayer only can apply for GST revoking after filing the GST returns and paying the applicable tax amount, as well as any interest, fine, or processing charge.

After filing the late GST returns and paying the penalty, a taxpayer can request the suspension or cancellation of their registration.

The GST Officer would next examine the basis for reversal of termination of registration, and if convinced, he would rescind the termination of registration.

 

Steps to Cancel GST Registration

1. Go to https://www.gst.gov.in and type in the URL.
2. Enter your user ID and password to access the GST Portal.
3. Select Services > Registration > Application for Cancellation of Registration from the drop-down menu.
4. There are 3 tabs on the Application for Cancellation of the Registration form. By default, the Basic Details tab should be chosen.
5. Either manually put in your Address for Future Correspondence or select Address same as above to paste the same information as the Address of Principal Place of Business column.
6. Select SAVE & CONTINUE from the drop-down menu.
7. In the Reason for Cancellation drop-down list, choose an appropriate reason.

Notes: Selection is possible for the following five reasons:

1. a) A change in the business’s structure causes a change in the PAN.
2. b) When you stopped being liable to pay taxes
3. c) When you stopped doing business / when you stopped doing business
4. d) others
5. e) Business transfer because of a merger, demerger, sale, lease, or other means

PAN changes because of a change in the business’s structure:

1. a) Indicate the start date for the cancellation.
2. b) In case of Transfer, Merger, or Changes in Constitution section, just provide GSTIN of the transferee entity. The software will verify the information and generate the Trade Name depending on the Legal Name of the Company.

Tax liability ceased to exist:

1. a) Indicate the date on which your registration will be terminated.
2. b) Input the stock’s worth as well as the tax liability associated with it.
3. c) Input the value to offset the obligation (tax due) that you intend to offset from either the Electronic Cash Ledger, the Electronic Credit Ledger, or both, based on the submitted stock information.
4. d) When the form is submitted, the money will be debited from the Electronic Cash Ledger, Electronic Credit Ledger, or both, and debit entries will be recorded.

Discontinuation of a business or shutdown of a company

1. a) Indicate the date on which your registration will be discontinued.
2. b) Input the stock’s worth as well as the tax liability associated with it.
3. c) Input the value to offset the obligation (tax payable) that you intend to offset from either the Electronic Cash Ledger, the Electronic Credit Ledger, or both, based on the entered stock details.
4. d) When the form is submitted, the amount will be debited from the Electronic Cash Ledger, Electronic Credit Ledger, or both, and debit entries will be made.

Others:

1. a) Explain why the reservation was cancelled.
2. b) Input the stock’s worth as well as the tax liability associated with it.
3. c) Input the value to offset the liability (tax due) that you intend to offset from either the Electronic Cash Ledger or the Electronic Credit Ledger, or both, based on the given stock information.
4. d) When the form is submitted, the amount will be debited from the Electronic Cash Ledger, Electronic Credit Ledger, or both, and debit entries will be recorded.

Transfer of a business because of a merger, de-merger, sale, leasing, or other means:

1. a) Indicate the date on which your registration will be revoked.
2. a) In the Details for Transfer, Merger, or Change in the Constitution section, enter the GSTIN of the transferee entity. The system will verify the information and generate the Trade Name depending on the Legal Name of the Company.
3. Select SAVE & CONTINUE from the drop-down menu.
4. Tick the Verification statement box to certify that the information provided in this form is accurate and factual and that no data has been withheld.
5. From the Name of Authorized Signatory drop-down, choose the name of the authorised person.
6. Specify the location where this declaration will be made.
7. Use your Digital Signature Certificate or the EVC option to sign the form.
8. Enter the one-time password.
9. Go to the Services > Registration > Track Application Status option to see the ARN.
10. Click the radio button for the Submission Period.
11. Fill in the From and to dates on which you submitted for registration cancellation.
12. Select SEARCH from the drop-down menu.