The GST or Goods and Services Tax was introduced by the Government of India in 2017. Under this law, the main objective is to get service charges and indirect taxes under a single law. Getting a GST Registration requires a lot of paperwork but what about the cancellation of your GST Registration? Well, we are going to discuss the same in detail.
Since its implementation on 1st July 2017, the Service Tax or GST continues to be a work in progress.
GST brings several indirect taxes and service charges under one bracket. It is a destination-based tax and is applicable on every supplier with 20 Lakh and above annual income should register under GST. However, certain sectors have to comply with the GST Regulations irrespective of their gross annual turnover. Moreover, the cancellation of GST registration in India is possible only on providing the right reasons. Although, the cancellation is sometimes initiated on the death of the taxpayer itself.
Even with a detailed procedure laid down by the authority, many people are unable to cancel their GST Registration.
Section 29(1) of the CGST Act 2017 explains the rules and documents related to cancel your registration under the GST law. Below are the acceptable reasons for GST Registration Cancellation:
- If the business is closed down or has been stopped.
- If the market or company was transferred to someone else, then that individual needs to register it under him or herself.
- In case an individual has an income less than the turnover threshold and is not liable for GST Registration.
- Change in PAN.
- For voluntary registration undertaken even if income was less than the compulsory limit, then cancellation is possible only after a period of one year.
Who Cannot File Cancellation?
- Tax Deductors
- Tax Collectors
- Taxpayers having an allotted UIN
An officer may cancel the registration if there are faults in the application. They summon you and give you a chance to rectify the errors before revoking a claim for the following reasons:
- If you are unable to comply with the rules mentioned in the Act
- If you cannot file IT returns for three consecutive years
- If you as an ordinary taxpayer are unable to file IT returns for six months
- Post voluntary registration, there is no business conducted within six months of submitting the application.
- The filing was obtained by illegal or unlawful methods.
Procedure for the Cancellation of GST Registration
1. Visit Official GST Website and login to your GST Portal
2. Choose Registration under Service option on your dashboard, and then select Application for Cancellation of Registration. On selecting Application for Cancellation of Registration the portal shows three options mentioned below:
- Basic Details
- Cancellation details
3. Fill your Basic Details and click on Save and Continue Button. In case of same Address for the place of business and future correspondence, click on the same as the above option
4. Provide a reason for cancellation. Choose from 6 options mentioned below:
- Change in PAN due to alteration in the constitution of business.
- Ceased to be liable to pay tax
- Discontinuance of business / Closure of business
- Transfer of business on account of amalgamation, de-merger, sale, leased or otherwise
- Death of Sole Proprietor
What are the Information required for filling the cancellation form?
- Address, Email-id and Registered Mobile Number
- Reason for cancellation and the desired date to Cancel
- Particulars on which tax is payable: input available on semi-finished and finished goods, Stock of input and stock of capital. The value should be entered manually for filing tax liability.
- You would be required to fill in either Electronic Cash ledger or Electronic Credit ledger to set off the tax liability
- Details of the last return filed by the Taxpayer. In case of a merger, demerger or transfer, etc. of an entity the details of the registration of the entity, i.e. GSTIN on the transferee entity.
5. The verification option will appear on filling the required information.
Provide the name of the authorized signatory, place of declaration, etc. Depending on the signatory, fill in the details to choose the relevant option to submit.
DSC is mandatory for a company or LLP. An OTP will be generated for the same.
If a taxpayer has issued an invoice, he/she would be required to fill GST REG-16.
On GST REG-16 Filing by the Taxpayer, the officials issue the cancellation order within 30 days.
Pending Tax Liability
During the cancellation of your GST registration pending tax liabilities and obligations of that sort don’t affect the process. Such bonds can be easily discharged. At the time of cancellation of your GST Registration, an individual has to pay an amount higher than:
- Input credit such as finished or raw goods stocked one day before cancellation of Registration
- Output Tax for the above-mentioned products.
In the case of Capital and Machinery costs, an amount has to be paid which should be higher than:
- Lesser percentage of the input credit of capital goods
- Tax filed on the transaction value of mentioned products
Below are the forms required for the cancellation of GST Registration:
- Form GST REG 16 Cancellation by a registered individual
- Form GST REG 17 Issue show cause notice for cancellation
- Form GST REG 18 Reply to show cause notice
- Form GST REG 19 Order for dissolution
- Form GST REG 20 To stop the cancellation proceedings
- Form GST REG 18 Explanation form to stay proceedings
- Form GST REG 21 Application for revoking the cancellation
- Form GST REG 22 Order revoking the cancellation
Revocation of Cancellation
Form GST REG-21 is used to apply for revoking the cancellation on an order passed by a Proper Officer. This form must be filed within 30 days of the request for cancellation. All defaults must be cleared before applying for revoking and also make sure the application is without any errors. Moreover, all the pending returns should be filed; all the dues should be paid in full. On satisfaction, an officer might issue Form GST REG-22 to revoke the cancellation.
Below are the three people who can initiate the cancellation of registration:
- GST Officer
- A legal heir of the taxpayer
The final returns must include all the details related to taxable good and services. In case you choose to keep assets either private or commercial after GST Registration Cancellation make the appropriate changes in the final GST Return. In the final filing assets kept for private use shall not be mentioned.
GST Registration cancellation could have many reasons. It could be due to business closure, business transfer to other person, PAN change or other related reasons. However, a Tax Deductor, Tax Collector or a Taxpayer with an allotted UIN (Unique Identification Number) cannot file for cancellation of GST Registration.