All businesses registered under GST are required to file regular returns and follow compliance procedures as specified under the law. But sometimes situations may arise that require the cancellation or surrender of their GST registrations. This can alleviate compliance obligations for businesses. Following the cancellation of GSTR-10 registration, traders are not allowed to collect GST from customers or claim input tax credit. It is mandatory for taxpayers who have cancelled or surrendered their GST registration to file a final return in Form GSTR-10 within a stipulated period. Non-compliance with filing the return could lead to heavy penalties and other legal consequences.
Reasons For Cancellation or Surrender GST Registration
There could be many reasons for opting to cancel the GST registration for a business. It could be voluntary or by a government order due to various reasons. The reasons for cancellation or surrender of GST registration are as follows:
- Voluntary Cancellation
- Non-Voluntary Or Suo-Moto Cancellation
- Change In Constitution Of The Business Or Any Taxable Person
- Non-Filing Of GST Returns For 6 Months
- Non-Filing Of GST Returns For 3 Months U/S 10 Of GST Act
- No business activity due to discontinuance, closure or transfer of business, death of proprietor, transfer, amalgamation, Or demerger
- GST Registration Obtained By Fraud, Willful Misrepresentation, or Suppression Of Facts
Purpose of GSTR-10
GSTR-10 acts as a final statement of the business. It provides the details of stock held and the input tax credit related to it that needs to be reversed or paid to the government on the date of cancellation or surrender of registration by the taxpayer.
Who is required to file GSTR-10?
All registered taxpayers who have opted for cancellation of their GST registration or whose registration is deemed to be cancelled by the tax authorities are required to file a final return electronically as specified under Section 45, Rule 81 of the CGST Act, 2017. The taxpayers who are not required to file GSTR-10 are:
- Input service distributors
- Non-resident taxable persons
- Composite taxpayers
- Taxpayers who deduct tax at source (TDS) under section 51
- Taxpayers who collect tax at source (TCS) under section 52
Important points about GSTR-10 filing
- It is mandatory to file Form GSTR-10 for taxpayers who are registered under GST after registration has been cancelled or cancellation order is issued by the department.
- A nil return can be filed when there are no inputs held in stock, inputs contained in semi-finished or finished goods held in stock, and capital goods, plants, and machinery on which input tax credit is required to be reversed or the amount of tax required to be paid back to the government.
- It is mandatory to file GSTR-3B and GSTR-1 before filing the final return, GSTR-10.
Timeline for submitting GSTR-10
The GSTR-10 return must be filed within 3 months from the date of cancellation or date of order of cancellation, whichever is later.
Penalty for late-filing or non-filing of GSTR-10
if the return is not filed by the person whose registration has been canceled by the due date, they will receive a notice from the tax authorities. if the taxpayer does not respond to the notice and file the returns within 15 days of receiving it, the tax officer will receive a final order for cancellation along with the computation of the tax liability, including interest and other penalties. The taxpayer may face legal consequences if he ignores the final order and does not respond to it.
For non-filing of Form GSTR 10 within the due date, a fine of Rs. 200 per day (Rs 100 for CGST and Rs 100 for SGST) up to a maximum of Rs 10,000 will be levied.
Details Required In GSTR-10
While filing the final return in GSTR-10 online in the GST portal, the taxpayer has to login with valid credentials and provide information in tables. The return is divided into 11 segments, which are as follows:
The first four sections are auto-populated after logging into the portal
Trade or business name
The taxpayer has to provide the details in the following sections:
5. Application reference number
When the application for cancellation of registration has been accepted by the authorities, the number on the cancellation order is the reference number that the taxpayer has to provide here.
6. Effective date of surrender or cancellation
The date mentioned in the order received from the tax authorities should be provided here.
7. Indication of cancellation order
The taxpayer has to mention whether the cancellation was made voluntarily or by the order of the government
8. Cancellation order ID
if the order for cancellation has been issued by the authorities, then the ID has to be mentioned.
- In cancellation details, the reason for cancellation has to be selected from the drop-down menu.
- Effective date of cancellation
The cancellation order’s effective date has to be provided
9. Particulars of closing stock
The taxpayer has to provide information about the closing stock. Invoice-wise details of stocks with invoices and details of stock without invoices at the time of closure of the business have to be furnished. The details of inputs held in stock, inputs held in semi-finished and finished goods held in stock, capital goods, plant and machinery on which input tax credit is required to be reversed have to be furnished. The input tax credit linked to that stock has to be paid back to the government.
When invoices are not available, the stock is valued at its fair market price. In such cases, a certificate from a chartered or cost accountant attesting to its accuracy must be submitted.
10. Payment of Liabilities
The amount of tax payable on closing stock is calculated by the system, along with the late fee and other penalties, from the details of closing stock furnished and auto-populated in tables 9 and 10. A summary of the added details is available and can be downloaded and verified by the taxpayer. After all the information is provided and liabilities are calculated, the taxpayer has to pay the tax and file the return.
Authentication, either through a digital signature certificate (DSC) or an electronic verification certificate (EVC), has to be done before filing the final return. the tax liability is adjusted by the electronic cash and credit ledgers. if the available balance in the electronic cash and credit ledgers is less than the amount required to offset the liabilities, then the balance amount, after adjusting the amount in the electronic ledgers, can be generated and the amount paid through other payment modes. if the balance in the electronic ledgers is more than the tax liabilities, the taxpayers can claim a refund of the excess amount.
GSTR-10 is a final return that must be submitted by taxpayers who have opted to cancel their GST registrations either voluntarily or by government order. Timely submission of the order is important to avoid penalties and notices from the authorities. Accurate and timely filing of the final return is important, as it ensures a smooth exit from the GST system for the taxpayer and a closure to their compliance obligations. Therefore, it is important for taxpayers to understand the intricacies of filing the final return accurately.
Frequently asked questions
What is the main distinction between an annual return and a final return?
The annual return has to be submitted by all regular taxpayers except those specified to be exempt. The final return is one-time return
that is required to be submitted by taxpayers who have opted to cancel or who are required to surrender their GST registration.
Can GSTR-10 be revised after it is filed?
No, GSTR-10 cannot be revised after it is filed.
Can GSTR-10 be filed offline?
Yes, GSTN has provided an offline tool for filing GSTR-10.