cancellation of gst registration

Cancellation of GST Registration in India

The Goods and Services Tax (GST) system in India mandates that businesses and entities must obtain GST registration if their turnover exceeds the prescribed threshold limits. However, there are scenarios where a registered entity may need to cancel its GST registration. This guide provides a comprehensive overview of the process, requirements, and implications associated with the cancellation of GST registration.

Table of Contents

1. Introduction

2. Reasons for Cancellation

3. Eligibility for Cancellation

4. Cancellation Process

   • Online Cancellation

   • Manual Cancellation

5. Documents Required

6. Effects of Cancellation

7. Reactivation of GST Registration

8. Common Issues and Resolutions

9. Conclusion

Introduction

GST registration cancellation involves the formal termination of a GST registration for a business or individual. This process is necessary when a registered taxpayer ceases to engage in taxable activities, undergoes restructuring, or for other valid reasons specified under the GST laws.

Reasons for Cancellation

Businesses or entities may seek GST registration cancellation for various reasons, including:

1. Closure of Business: The business has ceased operations and no longer engages in any taxable activity.

2. Sale of Business: The business is sold, and the new owner obtains a new GST registration.

3. Change in Business Structure: The entity changes its legal structure or merges with another company.

4. Voluntary Cancellation: The business wishes to cancel its registration voluntarily for reasons such as non-compliance or change in business operations.

5. Non-Compliance: Failure to comply with GST laws, resulting in the cancellation by authorities.

Eligibility for Cancellation

Before initiating the cancellation process, ensure that:

• Outstanding Liabilities: All GST liabilities, including taxes and penalties, have been settled.

• Pending Returns: All GST returns have been filed up to the date of cancellation.

• No Pending Orders: There are no pending tax orders or disputes.

Cancellation Process

Online Cancellation

1. Log In to the GST Portal:

• Access the GST Portal.

• Log in using your GST credentials (User ID and password).

2. Navigate to the Cancellation Option:

• Go to the “Services” tab.

• Select “Registration” and then “Application for Cancellation of Registration.”

3. Fill Out the Cancellation Form:

• Complete Form GST REG-16 (Application for Cancellation of Registration).

• Provide details such as reasons for cancellation, closure date, and other required information.

4. Submit the Application:

• Review the application for accuracy.

• Submit the form electronically.

5. Acknowledgment and ARN:

• After submission, you will receive an Acknowledgment Receipt Number (ARN).

• The GST Portal will generate a cancellation order after processing the application.

Manual Cancellation

1. Submit a Written Request:

• If online filing is not feasible, submit a written request for cancellation to the local GST office.

• Include details such as GSTIN, reason for cancellation, and closure date.

2. Documentation:

• Attach required documents and proofs as specified by the GST office.

3. Verification and Processing:

• The GST officer will verify the request and documentation.

• The officer may issue a cancellation order based on the verification.

Documents Required

The following documents are generally required for the cancellation of GST registration:

1. GST Registration Certificate: Copy of the GST registration certificate.

2. Proof of Closure: Documents evidencing the closure of business or cessation of operations.

3. Final GST Returns: Copies of the final GST returns filed up to the cancellation date.

4. No Dues Certificate: Proof of clearance of all outstanding GST liabilities and dues.

5. Board Resolution: In case of a company, a board resolution approving the cancellation of registration.

Effects of Cancellation

1. Tax Liabilities: Post-cancellation, the entity is no longer liable to pay GST on future transactions. However, it must ensure that all previous tax dues are settled.

2. Input Tax Credit (ITC): Any unused ITC must be reversed, and the details must be provided in the final return.

3. Legal Compliance: The entity must comply with any legal or regulatory requirements related to business closure or change.

Reactivation of GST Registration

If a business needs to resume operations after cancellation, it must apply for a new GST registration. The process involves:

1. New Registration Application: Submit a new registration application through the GST Portal.

2. Verification: Provide necessary documents and information as required for the new registration.

3. Approval: Await approval and issuance of a new GSTIN.

Common Issues and Resolutions

1. Pending Returns: Ensure all returns are filed before applying for cancellation. Non-filing can delay the process.

2. Outstanding Dues: Clear all outstanding GST dues to avoid complications.

3. Verification Delays: Regularly check the status of the application and respond promptly to any queries from the GST office.

Conclusion

Cancelling GST registration is a significant process that requires careful attention to compliance and documentation. Understanding the reasons for cancellation, following the correct process, and ensuring all dues and returns are settled can facilitate a smooth cancellation process. For businesses considering cancellation, it is advisable to consult with a tax professional or legal advisor to navigate the complexities and ensure all regulatory requirements are met.

References

• Goods and Services Tax Act, 2017

• GST Portal

• Form GST REG-16