GST has brought many benefits, both to taxpayers and to the government in India. It has been instrumental in the economic progress of the country. The popularity of this uniform indirect taxation system is evident in the increasing number of GST registrations since its implementation. The taxation system has been evolving, with the government introducing many changes in compliance procedures to help taxpayers. Filing the periodic returns on time is part of the compliance process. GSTR-10 is an important return that has to be filed by a person whose GST registration is cancelled or surrendered, and it is a final return that helps in a smooth exit for the taxpayer from the GST system.
What is GSTR-10?
GSTR-10 is a return that is required to be submitted under GST law by taxpayers who have opted to cancel their GST registration. The cancellation can be voluntary due to various reasons, like closure of a business, transfer of business due to mergers, changes in the constitution of the business, etc. it can also be by government order due to non-compliance, breaches in rules, or cessation of business. After cancellation of registration, collection of GST from customers and input tax credit claims are prohibited.
Purpose of GSTR-10
GSTR-10 is a one-time statement that is treated as a last return. It is a statement of stocks held by the taxpayer on the day immediately before the date on which the cancellation is effective. It is intended to provide the details of the ITC pertaining to the closing stock (including inputs and capital goods) that needs to be reversed and paid by the taxpayer. Taxpayers can also file nil GSTR-10 returns. It can be filed online or offline. Taxpayers have to discharge their full liabilities that are declared in this return.
When to file GSTR-10?
GSTR-10 must be filed within 3 months of the date of cancellation or the date of the order of cancellation, whichever is later. For example, if the cancellation order dated May 1, 2022, was received on May 10, 2022, the due date for filing GSTR-10 is August 10, 2022.
Who is required to file GSTR-10?
All persons and entities registered under GST whose GST registration is cancelled except the following:
- Input service distributors
- Non-resident taxable persons
- Persons required to deduct tax at source (TDS) under section 51
- Persons paying tax under Composition scheme under section 10
- Persons required to collect tax at source (TCS) under section 52
Reasons for GST registration cancellation
Various circumstances, like closure of business or a change in business structure like merger, amalgamation, etc.
Below the threshold limit
If the turnover of the business falls below the specified threshold limit for GST registration, the business can apply for voluntary cancellation.
Cancellation by order of GST authorities
The GST authorities can initiate the cancellation of a taxpayer’s registration under certain circumstances, like:
Timely filing of returns, collection and payment of taxes, and maintenance of records and documents are all part of GST compliance. When taxpayers fail to meet these obligations, the authorities can cancel their registration.
b. Dormant business:
If a business remains dormant or non-operational for extended periods of time, the authorities can decide to cancel the taxpayer’s registration.
c. Non-compliance of GST rules
Breaking the stipulated rules or indulging in fraudulent practices can lead to cancellation of GST registration.
Pre-requisites of filing GSTR-10
- Taxpayer must be registered under GST and have valid GSTIN
- Taxpayers must have valid user ID and password to login to the GST portal
- Taxpayers must have applied for cancellation and an order has been received for cancellation of registration, or in the case of Suo-moto cancellation, the order for cancellation of registration has been issued by the department.
- The aggregate annual turnover of the taxpayer must be above 20 lakh rupees
Penalty for non-filing or late filing of GSTR-10
If the taxpayer does not file GSTR-10 by the due date, they will receive a notice from the tax authorities instructing them to file the return with all the details and clear their pending tax obligations within 15 days. If the taxpayer fails to file the return, they will receive a final order for cancellation of registration stating the tax-payable amount along with interest and penalty.
Distinction between annual return and final return GSTR-10
All taxpayers who are registered under GST are required to file the annual return in Form GSTR-9 every year, while the GSTR-10 final return must be filed by taxpayers whose registration has been revoked or cancelled.
Details to be provided in GSTR-10
The following details are required to be provided while filing GSTR-10:
- GSTIN: The 15-digit goods and services identification number linked to the PAN
- Legal name, company name: The legal name and trade name must be provided
- Location: The address of the taxpayer or company recorded in the GST
- Application reference number (ARN): The ARN granted by the tax authorities after the cancellation request has been submitted
- Date of surrender of cancellation: The date mentioned in the cancellation order
- Indication of the cancellation order: Here, the taxpayer has to select ‘yes’ if the cancellation has been done after the order has been received from the authorities and ‘No’ if it is a voluntary cancellation
- Cancellation order: If the cancellation is based on the order of the authorities, the cancellation order ID has to be mentioned
- Effective cancellation date: The date mentioned in the cancellation order
- Particulars of closing stock: Details of closing stock and the input tax credit linked to that stock at the time of closure of the business has to be mentioned
- Amount of tax payable on closing stock: On the basis of the stock value provided in the above, the amount of credit on inputs and capital goods will be automatically calculated and updated under this heading. This amount must be paid by the taxpayer.
- Verification: After all the details are furnished, the taxpayer has to verify the return with the digital signature certificate (DSC) or electronic verification certificate (EVC) through Aadhar authentication.
The primary purpose of the filing of GSTR-10 is to ensure that all financial transactions and tax liabilities are properly accounted for and also to recover the outstanding liabilities and ineligible input tax credit pertaining to the closing stock before the cancellation of GST registration. The final return is a statement of the final status of the business that provides a comprehensive summary of the financial activities of the taxpayer until the date of closure. Calculating the final outstanding tax liabilities, including interest and other penalties, making the payment to the government, and filing GSTR-10 is significant as it indicates the completion of the taxpayer’s GST obligations. Therefore, understanding the process of filing GSTR-10 and the rules governing it are very important for taxpayers.
Frequently asked questions
Can the cancelled registration for which the final return has been filed be revoked by the tax authorities?
Answer: Yes, the tax authorities can restore the registration that was cancelled by a taxpayer by an order passed by an appellate or higher authority.
Can a taxpayer login to the GST portal after applying for cancellation of registration?
Answer: Yes, the taxpayer’s login will be active for the activities required to be fulfilled after cancellation.
Can GSTR-10 be revised after it is filed?
Answer: No, GSTR-10 cannot be revised after it is filed.
Can GSTR-10 be filed by discharging partial liability?
Answer: No, GSTR-10 cannot be filed without discharging full liability as declared in the return.