Cancellation of Registration Under GST

GST was introduced in India in 2017 to bring multiple service charges and indirect taxes under one roof. However, if you don't need a GST, you can cancel it anytime. However, you should know that GST cancellation and GST registration are two separate entities, and this article will only focus on the cancellation of GST registration.

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You may seek cancellation of GST registration in these scenarios:

• You discontinue or close your business.
• Your business is transferred, sold, merged, demerged, or disposed of.
• There is a change in business constitution (for instance, sole proprietorship converted into a private company) requiring a new PAN / legal entity.
• You cease to be liable to be registered (for example, turnover falls under threshold or you no longer make taxable supplies).
• You had taken voluntary registration but business never commenced within six months of registration.
• Death of the proprietor (in which the legal heirs may apply).

A GST registration can be cancelled by:

• A registered person/taxpayer (or legal heirs) can initiate voluntary cancellation by applying through the GST portal using Form GST REG-16.
• A proper officer (tax authority) may cancel a registration on valid grounds under Section 29(2) of the CGST Act.
• In the event of the death of the proprietor, legal heirs may initiate cancellation.

A few of the cases where GST cancellation is required are:

1. Business Discontinuation

• Merger with a separate legal entity
• Fully transferred business for varied reasons
• Alteration in the business continuation
• Disposed or demerged
• A taxable individual no longer needed to be registered

2. Rejection by Government Official

• Produces invoices without the influx of service or goods
  
• When the person does not conduct business from his place of business
• Haven’t filed returns for half a year
• Deviated the facilities of anti-profiteering
• The composition person is exempted from filing returns for periods
• Registration was done illegally or not abiding by the provisions of the law
• Business is not started within 6 months of registration
• When an individual has not used GST credit according to law

Here is the step-by-step guide for cancelling GST registration:

Step 1: Visit the official GST portal

Step 2: Click on ‘Registration’ and then on ‘Application for Cancellation of Registration’ under ‘Service’

Step 3: Fill your details in:

• Basic details
• Cancellation details
• Verification

Then click ‘Save and Continue’

Step 4: Enter the reason behind your GST termination. You will like to see the following reasons:

• Ceased to be liable to pay tax
• Change in the business constitution forces to make changes in PAN Card
• Transfer of business on account of demerger, amalgamation, leased, sale, or otherwise
• Closure of business /Discontinuance of business
• Death of the sole proprietor
• Others

Step 5: A 'verification' dialogue box will pop up upon providing the reasons behind the cancellation. Here, provide the names of the authorised signatory and the place of declaration. You will also receive an OTP for verification purposes. Then choose an ideal option for cancellation.

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While filling out the GST cancellation form, you need a few important information as discussed below:

• Email ID, registered address and registered mobile number
• Reason for GST registration termination and your desired date to putting termination into effect
• Details of your last filed return
• GST registration details of the new entity if the existing unit is merged /transferred/demerged, etc.
• Details behind tax payable. For instance, input available on finished and semi-finished goods, and capital and the stock of input

Before cancelling GST, you must also know about a few consequences of your action. In this regard, two of the most serious consequences include the –

• A taxpayer will refrain from paying GST
• For a few businesses, this registration is mandatory. However, if the GST registration is cancelled and you are still continuing your business, it will imply an illegal act under GST, and you might pay a heavy penalty

As mentioned earlier, the government introduced the GST for the simplification of tax and its better functioning. However, it would help if you remembered the difference between revocation and cancellation of GST registration. Also, a GST cancellation can be initiated by an officer, a registered person, or a legal heir of a registered person.

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