Steps and Procedures for GST Cancellation: A 5-Min Read!

GST registration opens the gateway to a simplified compliance management, but what if business no longer needs it? Would you cancel it? Doesn’t matter if your business is shutting down, switching operations, or simply the revenue is going down, GST cancellation becomes important in such scenarios. 

But do you know improper cancellation can cause unnecessary penalties, legal complexities, and compliance issues. So, what’s the right procedure for cancellation of GST registration? Here’s a complete guide for you! 

This article will take you through a complete breakdown of the GST cancellation process, consequences, and timelines. Scroll down to get your queries answered. 

5 Reasons Why Businesses Opt for GST Cancellation

1. Turnover Goes Down: 

• The specified turnover limit is generally ₹40 Lakh for goods and ₹20 Lakh for services. 
• If the turnover of a business drops below the threshold, it may opt for cancellation of GST registration. 

2. Business Shut Down: 

• A business suffering through a financial crisis or even if the owner is retiring may plan to shut down. 
• In such a case, it might go for GST cancellation. 

3. Merging or Selling the Company: 

• If a business is merged into another or is sold to some other company, the GST registration will no longer be valid. 
• In such a case, the new entity or a company will apply for a fresh GST registration. 

4. Change in Business Structure: 

• For a business that is transforming its structure from proprietorship to a private limited, should issue new GST registration. 
• This is when the company plans for cancellation of GST registration. 

5. Government Cancellation: 

• If a business fails to comply with GST norms or is not able to file returns on time, the tax authorities may send a GST cancellation notice. 
• This is when the businesses go for GST registration cancellation. 

Time Limit for Cancellation of GST Registration

What Happens When Tax Authorities Cancel Your GST Registration?  

1. If the tax authorities identify non-compliance with the GST laws, they can issue a GST REG-17 (It is a Show cause notice which is issued by the GST officer to the taxpayer when the reasons for GST cancellation can’t be identified) notice for justification. 
2. The taxpayers should justify the reasons for not cancelling their GST registration using the form GST REG-18 (It’s a reply to the show cause notice i.e. GSTR REG-17 filed by the taxpayer to explain why their GST registration shouldn’t be cancelled) within 7 days. 
3. If the authorities don’t receive response from the taxpayers or the justification stands unacceptable, the authorities initiate the GST cancellation process. 

Read More: Penalties for Not Filing GST Returns

What if Your Business is Shutting Down? 

1. This is for businesses shutting down or undergoing structural changes. 
2. For such businesses, the time limit for cancellation of GST registration is 30 days. 

What happens if the business opts for voluntary  cancellation? 

1. There is no specific time limit for cancellation of GST registration for voluntary cancellation. 
2. As soon as the reason for cancellation is known, the taxpayers should initiate the process to avoid compliance issues. 

6 Steps to Cancel GST Registration! 

1. Log In To the GST Portal: 

• Visit GSTN portal www.gst.gov.in 
• Enter your credentials, i.e. User ID and password, and log in. 

2. Navigate to the GST Cancellation Section

• Navigate to  “Services” > “Registration” > Application of Cancellation of Registration 

3. Checkout the Cancellation Form 

Choose the correct reason for GST cancellation

• Business Shutdown 
• Turnover going down below the threshold 
• Changing the business structure 
• Switching to the composition scheme 

Share below details:

• GST cancellation date
• Stock details (if applicable) 
• Tax liabilities involved in closing stocks 
• Payment details (For taxes due) 

4. Submit the Application: 

• Once the form is complete, here’s what you need to do. Choose one of the two for submission.
• Digital Signature Certificate (DSC): This applies to companies and LLPs 
• Electronic Verification Code (EVC): This is for proprietorships and partnership firms. 

5. Verification by the GST Official:

• The GST officer reviews all the details and asks for additional clarification. 
• Once all the details are validated, the GST cancellation is approved using form GST REG-19 (order for cancellation of GST registration issued by the tax officer post verifying the cancellation application). 
• This is done within 30 days. 

6. File the Final GST Return (GSTR-10):  

• Once the cancellation for GST registration is approved, file GSTR-10 within 3 months. 
• This is to declare the closing of the stock and settle pending tax dues.  

Read More: GSTR-10 Final Return Filing

Who Can Cancel GST Registration? 

The Registered Taxpayer: 

• A business entity or an individual registered under GST can apply for cancellation. 
• This can be done voluntarily by the business owners. 

The Tax Authorities: 

• If the business entities or taxpayers fail to comply with the GST norms, then tax officials can issue GST cancellation notice. 
• If the taxpayers fail to give valid answers, the process gets initiated. 

Legal Heirs 

• If the registered taxpayer dies, his legal heir can apply for GST cancellation.
• The legal heir needs to submit GST REG-16 (a voluntary GST cancellation application filed by the taxpayer who no longer needs the registration), which is attached to the taxpayer’s death certificate. 

Wrap UP

GST cancellation refers to the process of terminating your GST registration. Hopefully, the blog has helped you get access to the cancellation steps, criteria, and more. Shoot your queries below and  we will surely answer them. 

Now that you are aware of the GST cancellation process, streamline your compliance with Munim GST Return filing- your go to solution for filing returns. Hurry up! Sign up today! 

FAQs 

1. Can we file returns after GST cancellation? 

GSTR-10 should be filed after cancellation of GST registration within 3 months. 

2. What is the cost of GST cancellation? 

GST registration cancellation is free on the government portal but can involve a few professional charges. 

3. Can I apply for GST registration again after cancellation? 

If the GST cancellation is done by the tax authorities, the taxpayers can request for revocation of the cancellation through form GSTR REG-21. 

4. What if GST returns are not filed for six months? 

If the GST cancellation is made by the tax authorities, the taxpayers can request for revocation of the cancellation through form GSTR REG-21.