Goods and Services Tax or GST is a comprehensive, destination-based indirect tax regime, which came into force from July 1st, 2017.
In case any business or entity registered under GST wants to surrender their GST registration for any reason, Govt provides this provision via their GST portal.
In this article, we will share step by step GST cancellation process and the details about the application for cancellation of GST registration. There are some cancellation reasons which Govt considers as valid, which we will share in this article.
If someone wants to know How to activate cancelled GST registration, that information can be availed at the end of this article.
GST Cancellation Process: What Are The Valid Reasons?
As per the official notification of the Central Board of Indirect Taxes and Customs, these following reasons are valid for initiating the GST cancellation process:
- A person who is not supposed to be registered under GST but have registered by mistake.
- A business has closed down, or due to the death of the partners, owners or the business has been transferred fully to another entity
- A business has been merged or amalgamated with another business
- Any change in the constitution of the business
- A taxable person who is no longer liable to pay GST
- Any person or business who is paying taxes under the Composition levy has not filed any returns for three consecutive tax periods
- Any person who has registered for GST under sub-section (3) of section 25 has not started his/her business within 6 months of the registration
- GST registration has been obtained via fraud means, or correct information has been suppressed
Step By Step GST Cancellation Process
When it comes to Surrender of GST registration, there are two categories which come into the picture:
GST cancellation of migrated accounts, and GST cancellation of non-migrated accounts.
GST Cancellation Process For Migrated Taxpayers
When GST was implemented, several taxpayers who were registered with the old VAT system were automatically migrated to GST. Now, the VAT system, the threshold was Rs 5 lakh to get registered, while in GST, it’s Rs 20 lakh.
Hence, most taxpayers were not eligible to be under GST, and the cancellation process for them comes under this category.
Migrated GST registered taxpayers need to file FORM GST REG-29 at the GST portal to cancel their GST registration. Hence, there is no Application for cancellation of GST registration letter format, since it’s done online via the GST portal.
Step 1: In the GST Portal, click “Cancellation of Provisional Registration.”
Step 2: In the cancellation page that opens, your GSTIN and name of the business are automatically populated. Here, you are required to enter the reason for cancellation.
Step 3: The system will ask if you have issued any tax invoices during the month?
Step 4: Enter the details about the authorized signatories and the location.
Step 5: Sign off with Electronic Verification Code (EVC) if you have a proprietorship or a partnership business.
Step 6: If your business is LLP or company, then sign off with a digital signature certificate.
Step 7: If you have issued any tax invoice for the month, you need to file FORM GST REG-16 for cancellation.
GST Cancellation Process For Non-Migrated & Other Paypayers
For non-migrated and other taxpayers, they will need to fill FORM GST REG 16 for GST cancellation.
The steps are the same as above, with a few additional details:
- You need to enter the details of input, finished, and semi-finished goods which are present in your stock (during the same time when the process of cancellation has been initiated)
- Liability thereon
- Payment details
Upon filling in the details, an authorized officer will send a showcase notice to the taxpayer via FORM GST REG-17.
The taxpayer needs to reply to this show cause notice via FORM REG–18, stating why the registration should not be cancelled.
If the taxpayer replies with why the GST registration should not be cancelled, the officer will drop the proceedings via FORM GST REG–20.
In case the GST registration is indeed liable to be cancelled, then that authorized officer will issue an order for cancellation via FORM GST REG-19, which has to be issued within 30 days of the cancellation request.
That officer will notify GST’s precise cancellation date, and the taxpayer will be notified.
How To Activate Cancelled GST Registration?
In case the taxpayer wants to revoke the cancellation, and get back into GST, then these are the steps:
Step 1: The taxpayer must fill in FORM GST REG-21 from the GST portal. This is applicable when the GST registration has been cancelled suo moto by an authorized officer.
Step 2: This form needs to be filled in within 30 days of the cancellation of the GST
Step 3: If the reasons for revocation are not sufficient, then the officer will reject the request for revocation via FORM GST REG-05 and inform the taxpayer.
Step 4: The officer will issue FORM GST REG–23 to serve a show-cause notice to the taxpayer, asking why the request for activation should not be entertained.
Step 5: The taxpayer must reply to the notice via FORM GST REG-24
In case the reasons are accepted, then the officer will take the appropriate decision and inform the applicant via FORM GST REG-24.
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