How To Cancel GST Registration?[Step-wise Process]

There are many reasons you might need to cancel your GST registration, so it is not a bad idea to know how to cancel GST registration. You might have closed down your business, changed the business’s nature or changed the revenue streams. There might have been some mistakes during the initial GST registration, including mistakes in the documents submitted, errors in form filling or erroneous taxation rates.

What is GST?

The Goods and Services Tax (GST) is an indirect tax levied on the sale of goods and services in India. GST has absorbed all other indirect state and central taxes, except a few state taxes. As a result, it is a multi-staged and comprehensive tax. It replaced the previous policy of point-of-origin taxation with a policy of point-of-destination or consumption taxation. It is levied at each stage of production as it is a multi-stage tax, but it is refunded to all parties involved in production except the final consumer.

The acquired revenue in an intra-state business transaction is split 50-50 between the centre and the state. For example, if Maharashtra generates around Rs. 10 crores in tax revenue, the state keeps Rs. 50 crores while the central government receives Rs. 5 crores.

GST legislation allows the state to import goods or services to collect the tax in any interstate transaction involving the movement of goods and services across state lines. Consider another example: In an inter-state transaction, goods are exchanged between Maharashtra and Gujarat. In this case, Gujarat is the state that receives the goods and collects the taxes, which are then divided equally between the centre and the state.

As a business owner, financial accounting takes centre stage. With these new GST laws, it is increasingly hard to focus on your business growth rather than taxes. OkCredit is a financial accounting service that offers various business-specific services, allowing you to focus on your growth while it takes care of all of your financial concerns.

What happens after GSTIN cancellation?

The cancellation of GST registration essentially means that you won’t be a registered GST payer. Henceforth, you won’t be able to claim tax credits for your GST payments, and consequently won’t have to pay any GST, and do not have to file any returns. A cancellation will entail:

• The taxpayer need not pay the tax anymore.
• If you continue to operate your business after canceling your GST registration, it will count as an offense under GST laws and incur heavy penalties.

Here is a list of who can cancel GST registration:

• You, as a taxpayer, may request cancellation. The reason might be revenue-based, wherein your revenue doesn’t justify the threshold you’re being taxed in.
• A tax officer could request it.
• It could also be opted for by legal heirs on behalf of the taxpayer after their death.

Some reasons that might induce a cancellation are:

• The company is no longer in business.
• The corporation has been fully transferred, merged, demerged, or otherwise disposed of.
• The transferee (or newly formed company due to amalgamation/demerger) is required to register. The transferor’s registration will be cancelled if the transferor goes out of business.
• The company’s structure has shifted.

Earlier, in the case of voluntary GST registrations, an application for cancellation could be made only one year after the date of registration. This clause is no longer in effect.

Cancellation of GST registration by Migrated Taxpayers

Everyone who was previously registered under previous indirect tax laws was required to migrate to GST. Many of these individuals may not have been required to register for GST. For example, the VAT threshold in most states was Rs. 5 lakh, whereas the GST threshold is Rs. 20 lakh*. They had to make sure you weren’t making interstate supplies, though, because all interstate suppliers, except service providers, must register.

*Rs. 40 lakh if only goods are provided in a few states, or Rs.10 lakh if only services are provided in a few special category states/union territories. In this case, a taxpayer was required to submit an application electronically through the GST portal using Form GST REG-29.

Following the completion of the necessary investigation, the registration shall be cancelled by the appropriate officer.

Cancellation by taxpayer (other than migrated)

Form GST REG 16 should be used to file a cancellation request. Form GST REG 16 must include the following information:

• At the time of registration cancellation, inputs, semi-finished goods, and finished goods were held in stock.
• In this regard, liability is important and is to be mentioned.
• Payment particulars.

Within 30 days of the date of application, the proper officer must issue a cancellation order in Form GST REG-19. The officer will notify the taxable person of the cancellation, which will take effect on a date that the officer determines.

Cancellation by Tax Officer

A tax officer may cancel GST registration:

• If the taxpayer fails to pay the registration fee, or
• Does not operate from the stated location, or
• Issues an invoice or bill without providing goods or services (violates the terms), or
• Violates the anti-profiteering provisions (for example, not passing on benefit of ITC to customers)

If the proper officer believes that a person’s registration should be cancelled, he will issue a show cause notice in Form GST REG-17. The said person must respond in Form REG–18 within 7 days of receiving the notice, explaining why his registration should not be cancelled.

If the response is deemed satisfactory, the case will be dismissed and an order in the Form GST REG–20 will be issued. If the registration is to be canceled, the appropriate officer will issue an order in Form GST REG-19. The order will be sent within 30 days of the date of the show cause’s response.

Revocation of GSTIN cancellation

If the proper officer arbitrarily cancels a registered person’s registration, the latter may file an application for cancellation revocation in Form GST REG-21. He must submit it to the common portal within 30 days of the service date of the cancellation order. If the proper officer is satisfied, he may revoke the cancellation of registration within 30 days of receipt of the application by issuing an order in Form GST REG-22. Reasons for registration, revocation or cancellation must be documented in writing.

If the proper officer is satisfied, he may revoke the cancellation of registration within 30 days of receipt of the application by issuing an order in Form GST REG-22. Reasons for registration, revocation or cancellation must be documented in writing. The proper officer may reject the application for revocation by issuing an order in Form GST REG-05 and notifying the applicant.

Before rejecting an application, the proper officer must issue a show cause notice in Form GST REG–23 to the applicant, asking the applicant to explain why the application should not be rejected. The applicant must respond in Form GST REG-24 within 7 working days of receiving the notice.

Conclusion

Although it’s great to know how to cancel GST registration, it is a serious undertaking you must ponder over before making the final decision. Revocation, although possible, is a lengthy process and it’s not certain that it will be successful.

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FAQs

Q. Is GSTR-10 mandatory?

Ans. It is only mandatory for taxpayers who have cancelled their GSTIN. It isn’t a liability for a regular GSTIN holder.

Q. What if GSTR-10 is not filed?

Ans. Suppose the taxpayer does not respond to the tax notice or fails to file the GSTR-10 return. In that case, the tax officer will issue a final order of cancellation that includes the amount of GST tax owed, as well as any interest or penalty.

Q. What is the late fee for GSTR-10?

Ans. The fine is Rs. 200.