Complete Guide to GST Registration Cancellation in India

The Goods and Services Tax, which was implemented recently, on July 1st, 2017, with a lot of promises and a work in progress tagline, is known for combining all indirect taxes into one.

All business units with a yearly turnover of fewer than 20 lakhs are exempt from paying GST, and all business units with a turnover greater than this exemption limit must register with the GST.

But what if you want to cancel your GST registration? How can you do it? Are you even eligible for it?

To understand this we must first learn about the cancellation process, eligibility, the forms required for the cancellation process, and more.

In the following sections, we will learn all these details along with the step-by-step process to cancel the GST registration.

What does the term "Cancellation of GST Registration" mean?

Cancellation of GST registration simply means that the taxpayer is no longer a GST registered individual.

He/she will not be required to pay or collect GST, nor will he/she be able to claim the input tax credit. This implies that he/she will also be unable to file GST returns.

The conditions under which a GST registration can be canceled

  • Business discontinuance or closure.
  • A taxable person is no longer required to pay tax.
  • Transfer of business due to amalgamation, merger, de-merger, sale, leasing, or other means.
  • Changes in the business's constitution resulting in a change in the PAN.
  • The person registered voluntarily but did not begin any business within the time frame specified.
  • If a taxable person is no longer required to register under the GST Act.

Who is eligible to cancel the GST registration?

Businesses can cancel their registration using the recently added feature on the GSTN portal. However, the cancellation feature is limited to only three entities:

  • An individual taxpayer
  • GST officer-in-charge
  • The taxpayer's legal heir

Taxpayers who have already registered under the GST Act may cancel their registration at any time. The cancellation could be for various reasons, such as:

  • The company has gone out of business.
  • The business has been fully transferred, amalgamated, demerged, or otherwise disposed of. In this case, the transferee (or the new company formed as a result of amalgamation/demerger) must be registered.
  • There has been a change in the company's structure. For example, a private limited company has changed to a public limited company.

In some cases, such as the death of the taxpayer, the cancellation of the registration can be initiated by the legitimate heir. While registration can be done voluntarily, it can only be done after a specified time has passed since the date of GST registration.

What happens after the cancellation of GST registration?

Following are the consequences of a GSTIN cancellation:

  • The taxpayer is no longer required to collect and pay GST.
  • There will be no need to file any GST returns.
  • If the GST registration is canceled and the business continues, it will be considered an offense under GST and the business will get subjected to severe penalties.

Forms required for cancellation under GST regulations

The taxpayer must file a cancellation application in FORM GST REG 16. The legal heirs of the deceased taxpayer will proceed in the same manner as described below:

  1. Form GST REG 16
    • Form GST REG 16 must be used to file a cancellation request.
    • Form GST REG 16 must include -
      • the details of inputs, semi-finished goods, and finished goods held in stock on the date of cancellation of registration.
      • Liability in this regard
      • Payment information
  2. Form GST REG 17
    • Using the REG 17 form, an authorized GST officer can provide notice of show cause/cancellation to the registered taxpayer and its business entity.
    • The authorized officer can cancel the registration after issuing the GST REG 17 form to the taxpayer, and he can ask for show cause as to why the registration should not be canceled.
  3. Form GST REG 18
    • The show-cause notice can be responded to using the provided GST REG 18 form within the time specified.
    • The taxpayer or the concerned party must respond to the notice within 7 days of its issuance, explaining why the registration should not be canceled.
  4. Form GST REG 19
    • Within 30 days of the date of application, the proper officer must issue a cancellation order in form GST REG-19.
    • The cancellation will take effect on a date determined by the officer, and the taxable person will be notified.
  5. Form GST REG 20
  6. If the GST officer is unsatisfied with the show cause notice, he may direct the revocation of any proceedings toward the cancellation of the registration, and he must issue an order in Form GST REG 20.

  7. Form GST REG 21
  8. This form is used by the taxpayer to apply for the revocation of GSTIN cancellation.

  9. Form GST REG 22
  10. Form GST REG 22 is used by the authorized officer to issue an order for the revocation of the cancellation.

GST registration cancellation for migrated taxpayers

This service is available to all taxpayers who have not issued an invoice since their registration. It’s important to note that if the individual has filled out any tax invoices, he can fill out form GST REG 16.

After conducting the necessary investigation, the proper officer shall cancel the registration.

The procedure for cancellation of GST registration online on the GST portal
Follow the steps listed below for GSTIN cancellation:

  • 1st step: Log in to the GST portal using your username and password.
  • 2nd step: Click on the ‘Cancellation of provisional registration' tab.
  • 3rd step: The cancellation page will open. Enter your reason for cancellation in the specified box.
  • 4th step: Following that, a popup will ask if the taxpayer has raised any tax invoices during the GST period. Click on ‘No.'
  • 5th step: Enter the authorized signatories' information and place.
  • 6th step: Finally, if you are a sole proprietorship or a partnership, sign off with EVC. LLPs and corporations are required to sign with DSC.

GST registration cancellation by the tax officer

The authorized tax officer can order for the cancellation if the taxpayer:

  • Does not operate from the declared place of business.
  • Issues an invoice or bill without providing goods/services.
  • Is in violation of the anti-profiteering provisions (for example, not passing on the benefit of ITC to customers).
  • The use of ITC from the electronic credit ledger to discharge more than 99% of the tax liability for specified taxpayers who violate Rule 86B.*
  • A taxpayer who is unable to file GSTR-1 because GSTR-3B has not been filed for more than two months.*
  • The input tax credit is claimed in contravention of the provisions of Section 16 of the Act or the rules.*

*These recent regulations have been put in effect since January 1st, 2021.

Procedure

  • If the proper officer has reason to cancel a person's registration, he will send a show-cause notice in form GST REG-17 to that person.
  • Within 7 days of receiving the notice, the person must respond in form REG–18 explaining why his registration should not be canceled.
  • If the response is found to be satisfactory, the proper officer will dismiss the case and issue an order in form GST REG–20.
  • If the registration is subject to cancellation, the proper officer will issue an order in form GST REG-19. The order will be sent within 30 days of the date of the show cause's response.

Revocation of cancellation of GST registration

The official cancellation of a decision or promise is referred to as revocation. In this case, a revocation means the registration cancellation process has been reversed and the registration is still valid.

This is only applicable when a tax officer cancels a taxable person's registration on his initiative. Within thirty days of the date of the cancellation order, the taxable person may apply to the officer for revocation of the cancellation.

Procedure

  • If a registered person's registration has been canceled without his/her request by the authorized officer, he/she can apply for revocation of cancellation in form GST REG 21.
  • He/she must submit it on the common portal within 30 days of the date of service of the cancellation order.
  • If the officer is satisfied, he can revoke the cancellation by issuing an order in form GST REG 22 within 30 days of the application's receipt. Reasons for registration revocation or cancellation must be documented in writing.
  • The officer may reject the application for revocation by issuing an order in form GST REG 05 and notifying the applicant.
  • Before rejecting an application, the officer must issue a show-cause notice in form GST REG 23 to the applicant, requesting that the applicant explain why the application should not be rejected. The applicant must respond in form GST REG 24 within 7 working days of receiving the notice.
  • The officer will decide within 30 days of receiving the applicant's clarification.

It’s important to note here that if the registration has been canceled due to failure to file returns, an application for revocation cannot be filed. Such returns must be filed first, along with payment of all tax, interest, and penalty amounts owed.