Every business and individual with an aggregate yearly turnover of over ₹40 lakhs must get GST taxpayer registration. The limit is over ₹10 lakhs for businesses established in the North Eastern states. A person who conducts business operations without GST registration will be liable for heavy penalties.
Taxpayers can cancel their GST registration voluntarily if their business turns dormant. Businesses with low business turnover can also go for surrender or cancellation of the registration. A GST officer may also cancel the registration if their business is non-compliant. After GST registration, the entity or person must refrain from filing GST returns. They are not required to collect or pay any tax under the GST regime.
Grounds for cancellation or surrender of regular taxpayer registration
A business owner or the Central Tax Authority may go for GST registration cancellation under the following conditions –
The individual is registered under any tax laws –
The businesses with old tax regime registration need not sign up for GST registration. For example – the VAT threshold limit was ₹ 10 lacs, while it’s ₹40 lakhs for GST. Hence, the individuals with VAT registration need not to go for GST registration.
Business discontinues business operations –
If the business’s operations stop, the individual can file for GST registration cancellation. However, cancellation isn’t permitted in the cases mentioned below –
- A business entity comes in partnership with another business.
- Full or partial business transfer due to the death of the owners or any other reason.
- Amendments in the business constitution.
- If a registered individual is no longer eligible for the GST scheme (excluding the persons who have voluntarily registered under the CGST Act – section 25 (3)).
- If an individual has registration under the composition GST scheme fails to file returns within 3 months of their registration date.
- If the individual fails to comply with the provisions and laws of GST, it results in GST cancellation.
- If a taxpayer neglects GST returns submission consecutively for 6 months.
- If a business signs up for voluntary registration under the CGST- section 25(3) and doesn’t conduct business operations within the first 6 months from the registration date.
- If a taxpayer gets GST registration using fraudulent or misstated facts.
Procedure for cancelling or surrendering regular taxpayer registration
The Procedure for cancelling or surrendering GST is free and easy. Before you start the cancellation process for GST, you must clear the due GST liabilities. Plus, you must ensure remittance of output tax liability of goods or input tax in the capital goods, finished goods, and semi-finished goods stock. The one with the higher value will be considered.
Also, repayment of the current stock’s input tax credit is mandatory because the individual can no longer claim ITC in case of GST registration cancellation.
The taxpayer can use a cash ledger or GST electronic credit to clear their final tax payment. You can make the payment when you file the GSTR-10 return.
In case of non-compliance with the GST annual return, GSTR-1, or GSTR-3B, the taxpayer must file a late return before starting the GST cancellation procedure.
After the initial preparations are done, follow the steps listed below to proceed with GST cancellation –
Step 1 –
An application forGST cancellation can be submitted by filling out Form GST REG-16, which is available on the official GST website. The application requires the following details-
- Contact details of the individual, including their email address and mobile number.
- Details of the tax payable and the value of the stock of inputs, finished goods inputs, semi-finished goods inputs, and plant and machinery or capital goods stock.
- Desired cancellation date.
- Reason to cancel regular taxpayer registration.
- Details of the latest GST return submitted by the person, along with the ARN details of the particular return.
Step 2 –
The GST authority reviews an application before cancelling an order. The review process is completed within 30 days of submitting Form GST REG-19 from the application’s date. The cancellation will be applicable from the date decided by the Officer. The taxable individual is notified about the same.
Final GST Return
After cancellation of the GST registration, the business or taxpayer must submit a final return. Form GSTR-10 should be filled and submitted within three months of the cancellation order date or GST cancellation date (whatever of the two comes first). It is to ensure that the taxpayer has no pending GST dues.
The provision doesn’t apply to non-resident taxpayers or input service distributors who pay tax dues under Section 10, Section 51, and Section 52.
If the taxpayer fails to file the final GST return using Form GSTR-10, they will get notified through Form GSTR-3A. They must file the return within 15 days of notice issuance.
If the taxpayer ignores the notice, the concerned Officer takes necessary steps to determine the taxpayer’s liability. The assessment order is cancelled if the taxpayer files the return within 30 days following the notice.
Implications and consequences of cancelling or surrendering regular taxpayer registration
After the tax official cancels the GST registration, the following implications and consequences will follow –
- The person will be notified about the registration cancellation through email and SMS.
- GST registration cancellation order on Form REG-17 is sent to the person. The taxpayer’s GST portal dashboard will have all the order details. They can print views or download them.
- Individuals won’t be permitted to upload invoices or file a return for the specified period post-cancellation date. The GST Practitioner won’t conduct any GSTP activities after the cancellation date.
- Individuals cannot modify the registration info after the cancellation order is issued. However, they can update the mobile number and email till clearance of all the dues.
Tax liabilities and compliance obligations after cancellation or surrender
The registration cancellation does not affect the taxpayer’s liability for any omission or commission acts committed after or before the cancellation date. As per the CGST/SGST Act – section 29(3), the taxpayer must file for pending GST returns.
The GST law mandates that registered taxpayers file pending returns, such as NIL returns for the specified period, with no supplies. However, return filing should be done before the cancellation process. Form REG-16 instructions have eased the requirement to file returns when there is no taxable supply.
The taxpayers seeking cancellation of their GST registration can submit an undertaking stating that no taxable goods were supplied between the registration application date and the cancellation date. According to CBIC, in cases where the required undertakings are submitted, no Form GSTR-3A (assessment notice) will be issued for failing to file returns.
Seeking guidance and authorization for cancelling or surrendering regular taxpayer registration
In some cases of surrendering and cancellation ofRegular Taxpayer Registration, the concerned authority may reject the application. It could be due to the reasons mentioned below –
- The application submitted by the taxpayer needs to be completed.
- The new business doesn’t have taxpayer registration before applying (in case of amalgamation, transfer, or merger of business).
In any of the conditions, the applicant will receive a notice from the authorised official to inform them of the discrepancy. The person is required to send a response for the same within a week of the receipt date. If the taxpayer fails to respond within the specified period, their application will be rejected. However, they may be provided an opportunity to present their case.
There are many things to consider when cancelling or surrendering regular taxpayer registration.
Hence, seeking guidance and authorization from a GST Expert is wise. The professionals will facilitate you with eligibility consultation document preparation. They could also guide you with application drafting. And the best part is that you will be guided through the registration process.
The GST expert will check the status of your GST return. And they will also assist in completing the outstanding GST returns. The expert will also track your application for taxpayer registration cancellation. Overall, the experts will ensure a seamless GST registration cancellation procedure.
Making informed decisions about cancelling or surrendering regular taxpayer registration
You must have learned how businesses can get their regular taxpayer registration cancelled. And what steps are to be followed for the same. Cancellation of registration is one of the significant things. It is important to make an informed decision when submitting a cancellation request.
Taxpayers should know that the GST cancellation option is limited to 3 entities only. The following can initiate the registration cancellation –
- GST officer
- The taxpayer
- Taxpayer’s legal heir
The registration cancellation can only be initiated by a third party in some cases. It is possible in cases like taxpayer’s death. Voluntary registration is also allowed only after a year of taxpayer registration.
Individuals cannot upload invoices or file a return after the specified date cancellation.
So keep all the above factors in mind. And map the different parameters before initiating regular taxpayer registration cancellation/surrender requests.
After a GST registration, the individual must ensure tax compliance. A business doesn’t conduct any operations after getting GST registration. The individual must go for GST cancellation. A person doesn’t file GST returns and his GST registration lapses. He can’t use the same PAN for GST registration.
If the government cancels the GST registration, the taxpayer must submit a cancellation request to revoke any late fees. After the restoration, you may file GST returns or cancel the taxpayer registration.
Frequently Asked Questions
Under which conditions do tax officials cancel GST?
Tax officials can cancel the GST registration of a person under the following conditions–
- Misconduct related to GST law proceedings
- Transfer of business due to lease, sale, amalgamation, demerger/merger, etc.
Which form should be filled by the taxpayer after cancellation of GST registration?
A taxpayer whose registration is surrendered or cancelled must fill and submit form GSTR-10 to file their return.
Can a taxpayer revoke their taxpayer registration?
The taxpayer can revoke their GST registration after 90 days. They must submit an appeal to the high court. They can also submit appeals to the concerned authority.
What is the final return? Why is it important to file after registration cancellation?
The return filed by a taxpayer with surrendered or cancelled registration through the Form GSTR-10 is termed a Final Return. It is important to file this return because it includes the statement of stocks that the taxpayer holds from the date preceding the cancellation date.
What are the GST registration cancellation consequences?
GST registration cancellation means the person won’t be considered a registered GST taxpayer anymore. They won’t be liable for collecting or paying GST. And they won’t be eligible for input tax credit claims. They won’t have to file returns as well.
How does GST registration cancellation differ from surrendering GST registration?
A taxpayer can file for GST registration and surrender to the GST department by himself. Their legal hire can also apply. Cancellation of taxpayer registration means the individual won’t be counted as a registered taxpayer. And they need not to collect or pay anymore.
What period is GST registration surrender specified?
If taxpayers cancel their GST registration involuntarily, they must file a cancellation application within 30 days of the cancellation date.
Can a taxpayer run their business after regular taxpayer cancellation?
Suppose an official authority cancels a taxpayer’s GST registration for non-compliance with the statutory GST provisions and wants to conduct business operations. In that case, they need to apply for GST registration. The re-registration procedures must be followed after that.
What should a taxpayer respond to the show cause notice for registration cancellation?
If an authorised official has valid reasons for the registration cancellation an individual. Then, a show-cause notice will be sent to the person. The notice is sent using the form GST REG-17. The person is responsible for sending their response. Use form REG-18 within 7 days of receiving the notice. They must provide proper reasons why their registration shouldn’t be cancelled.
What is suo moto cancellation?
It refers to a Services Tax registration cancellation by the tax officer. However, they must have proper reasons specified under the CGST Act Section 29(2). For initiating the cancellation proceedings is important.
How to check the GST cancellation status?
To check the status of their GST registration cancellation, follow the steps listed below –
- Visit the GST website
- Select ‘Services’ > ‘Registration’ > ‘Services’ > ‘View GSTIN Information’
- Now add GSTIN and then enter the Captcha Code