If you are a businessman or a trader who carries a spread out business, then it is mandatory to register for GST and get a GSTIN (GST Identification Number). Any registered company in India must possess a GSTIN and should file the GST responsibly. However, there are times businesses need to cancel the GST for one or more goods.
This article charts out the details of the cancellation of the GST registration. A detailed step-by-step process will assist you in carrying out the cancellation of your GST.
In this article, we see:
- What is the meaning of the Cancellation of GST?
- Who Can Cancel the GST Registration?
- How to Cancel GST Registration?
- Reasons for Cancellation
- Final Returns
- What are the Effects or Consequences of GST Cancelation?
- Revocation of GST Cancellation- Meaning and Procedure
- Important Updates and Notes on GST Cancellation
So, let’s dive in.
What is the Meaning of the Cancellation of GST?
The meaning of the cancellation of GST registration implies that the registered taxpayer will no longer be registered and will not have to pay GST any longer. He will not have to collect or pay GST, or even claim any input tax credit or file GST returns.
Who Can Cancel the GST Registration?
GST registration can be canceled in any of the three cases listed below:
- Requested by Taxpayer
- Ordered by the tax officer
- Migrated Taxpayers (registered with the earlier tax systems)
- Request made by the legal heirs in case of death of the taxpayer
How to Cancel GST Registration?
In this section, we shall learn about the cancellation of GSTIN or the GST registration in different scenarios.
Cancellation in case of Migrated Taxpayers
Since the implementation of GST on July 1, 2017, the taxpayers who were registered with the earlier tax systems had to mandatorily migrate to the GST system. There were many taxpayers who were not liable to get themselves registered under GST. However, they had to ensure that they did not conduct interstate supplies as the registration was compulsorily required for an interstate supply, barring the service providers.
For cancellation, this category of taxpayers has to electronically submit an application through Form GST REG-29 on the GST website. After a thorough evaluation of the application, the office can approve the cancellation of such migrated taxpayers.
Process of GST Cancellation for Migrated Taxpayers
Process of GST Cancellation for Taxpayers Other Than Migrated Taxpayers
Process of Cancellation Initiated by the Tax Officer
Reasons for Cancellation
There could be various reasons to cancel the GST registration. We shall see some of the reasons in this section. The GST cancellation can be done if:
- If a person is not liable to be registered under GST Act because the individual is already registered under existing law; in such a case, the GST registration needs to be canceled.
- The GST can be canceled if the business gets discontinued for some reason or is transferred entirely due to the death of the sole proprietor or business owner, or the merger with other businesses.
- If the constitution of the business changes, the GST cancellation needs to be done.
- If a person who is taxable is not liable to be registered any longer.
- If an infringement of the existing GST laws has occurred.
- If the registered person/business under Composition Levy has not filed the GST returns for a continuous period of 3 months.
- If a registered person, other than the one paying tax under Composition Levy, has not filed returns for six consecutive months.
- If a person who takes voluntary registration under Section 25 (subsection 3), and has not commenced business till six months, may cancel the registration.
- Finally, the GST registration can be canceled if the registration was done fraudulently or by suppressing the facts.
In case of cancellation or surrender of GST registration, a final filing of GSTR-10 is required. This filing includes the details of all the stock that was held by the person/taxpayer immediately after the date of cancellation.
GSTR-10 is a final return that has to be done one single time and it must be filed within 3 months from the date of cancellation or the order of the date of cancellation. Whichever happens earlier.
What are the Effects of GST Cancellation?
Following are the consequences or effects of cancelation of GST:
- The taxpayer will not have to file GST returns and pay tax (GST) any longer.
- Certain businesses require a GST mandatorily. If such companies continue to conduct business despite canceling the GST registration, it would be considered as an offense under GST and will call for action and penalties from the authorities.
Revocation of GST Cancellation
In certain cases, the revocation of the registration of GST is required. We will learn about the concept and related aspects in this section.
What is Revocation of GST Cancellation?
Revocation of GST cancellation means revoking or reversing the process of cancellation of GST. It implies that the GST registration is still valid.
When is Revocation applied?
Revocation is only in the case where a tax officer has canceled the GST registration of a taxable registered person. Now, this taxpayer can send an application to the office for revoking the cancellation. The taxable person can accomplish this within 30 days from the date the cancellation was ordered.
Procedure for Revocation
Here’s the procedure for revocation of the cancellation of the GST registration:
- Through the Form GST REG-21, the taxpayer can submit an application to revoke cancellation. This is applicable when the tax officer has canceled the registration suo moto.
- This application must be sent within 30 days from the order of cancellation date on the GST portal.
- The revocation takes place if the officer is satisfied with the application and can revoke it by an order in the form GST REG-22 within 30 days of receiving the application. The reasons for the revocation have to be submitted in writing.
- Also, the revocation of cancellation can be rejected by the officer through Form Reg-05, which will be intimidated to the applicant.
- Before passing the order for rejection, the officer will issue a show-cause notice in the Form GST REG-23. This form will require the applicant to provide reasons why the revocation should not be rejected. A reply Form called GST REG-24 must be shared by the applicant within 7 days from the date of the show-cause notice.
- Once the officer receives the clarification in the form GST REG-24 from the applicant, a decision will be taken within 30 days of receiving this form.
NOTE: A revocation application cannot be filed if the registration was canceled owing to failure in filing returns.
Important Updates and Notes on GST Cancellation
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Based on observations in this article, here are the important notes we can take down:
- The cancellation of GST registration implies that the registered taxpayer will no longer be registered and will not have to pay GST any longer.
- Taxpayers, Tax officers, migrated taxpayers, and legal heirs are the people who can initiate a cancellation of GST.
- There could be numerous reasons for canceling the GSTIN, such as a change of business or a business is discontinued.
- Cancellation for migrated taxpayers has to be done by logging in to the GST portal. Other taxpayers have to file an application through the form GST REG-16 to initiate cancellation. A Tax officer can initiate cancellation by issuing the form GST REG-17.
- GSTR-10 is a final return that has to be done one single time and it must be filed within 3 months from the date of cancellation or the order of the date of cancellation.
- The taxpayer will not have to file GST returns and pay tax (GST) after the cancellation of his GSTIN.
- Revocation of GST cancellation means revoking or reversing the process of cancellation of GST.
- Through the Form GST REG-21, the taxpayer can submit an application to revoke cancellation.
- A revocation application cannot be filed if the registration was canceled owing to failure in filing returns.