GST Cancellation: Documents, Fee and Process
You can cancel your GST registration if the GST rules don’t apply to you or you are shutting down your business or profession, or the tax officer calls for cancellation. Are you a business owner in India looking to cancel your GST registration? Contact our Tax Experts to learn more about GST Cancellation.
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What Is GST Cancellation ?
Cancellation of GST registration simply means that the taxpayer will not be a GST registered person anymore. He will not have to pay or collect GST or claim the input tax credit and accordingly, need not file GST returns.
Once GST Registration will get cancelled following will be consequences
- The taxpayer will not pay GST anymore
- For certain businesses, registration under GST is mandatory. If the GST registration is cancelled and business is still continued, it will mean an offence under GST and heavy penalties will apply.
Reasons for GST Cancellation
GST authorities may initiate the termination of a taxpayer’s GST registration for a variety of reasons. Among the most common explanations are:
- Non – compliance: If a taxpayer fails to comply with GST requirements, such as failing to file returns for an extended period of time, authorities have the authority to terminate their registration.
- Business Discontinuation: When a company closes or is sold, the GST registration becomes obsolete and is subject to cancellation.
- Changes in Business Structure: Certain changes in business structure, such as amalgamation, demerger, or ownership change, may result in GST cancellation.
- Voluntary Cancellation: Taxpayers who no longer wish to continue their GST registration may request for voluntary cancellation.
GST Cancellation Fees
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Application for GST Registration Cancellation
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Final Return filing
Documents Required For GST Cancellation
The following documents are required for GST Cancellation:
- User ID and Password of GST Registration
- A copy of the GST registration certificate.
- A copy of the PAN card of the registered person.
- Details of the tax paid on such inputs, semi-finished, finished goods held in stock on the date of cancellation.
- Application for Cancellation of Registration in Form GST REG-16.
Detail of Last Return filled by Taxpayer
GST Cancellation Process
Step 1: Gather Your Documents:
Before you can cancel your GST registration, you will need to gather the following documents:
- Your GST registration number
- Your GST login credentials
- Your GST returns and payment records
- Your business closure or transfer documents (if applicable)
Step 2: Log in to the GST Portal:
Log in to the GST portal using your GST login credentials.
Step 3: Navigate to the Cancellation Form:
Once you are logged in, navigate to the GST registration cancellation form.
Step 4: Fill Out the Cancellation Form:
Fill out the GST registration cancellation form, providing all the necessary information, including your reason for cancelling your GST registration.
Step 5: Submit the Form:
Once you have filled out the form, submit it electronically.
Step 6: Wait for Confirmation:
You will receive a confirmation of your GST registration cancellation via email or SMS. The cancellation will take effect from the date you specified in the form.
GST Final Return Filing
A GST Final Return is a return that must be made by a registered individual when their GST registration is cancelled. A registered individual who cancels their GST registration must file a final return within three months of the cancellation date. This return will include information on all supplies made and received during the registration period, as well as the tax liability and input tax credit claimed.
The GST Final Return is a summary of all transactions that occurred during the registration period, including information on all taxable supplies, exempt supplies, and non-GST supplies. It also includes information on all input tax credits claimed as well as any outstanding tax liabilities. Even if no transactions occurred throughout the reporting period, the Final Return must be filed.
Once the Final Return is filed, the GST officer will review it and may request further information if necessary. If the officer is pleased with the return, he will issue a Form GST REG-06 acknowledgement. The GST Final Return acts as the registered person’s account closure with the GST administration.
It is vital to note that if a registered person fails to file the GST Final Return within the stipulated time limit, they would be fined Rs. 100 per day, up to a maximum of 0.25% of their sales in the state or union territory. Therefore,
Important Considerations
Before proceeding with GST cancellation in India, consider the following:
- Outstanding Dues: Ensure that all outstanding dues are cleared before applying for cancellation to avoid any issues.
- Input Tax Credit: Make sure to utilize any remaining input tax credit before cancellation, as it will be forfeited post-cancellation.
- Legal Implications: Understand the legal implications of GST cancellation, including penalties for non-compliance.
Frequently asked questions (FAQs)
GST cancellation refers to the process where a registered taxpayer’s Goods and Services Tax (GST) registration is canceled. This may happen voluntarily by the taxpayer or due to compliance issues or violations under GST law. Once canceled, the taxpayer is no longer required to comply with GST regulations.
GST registration can be canceled under several circumstances, including:
- Voluntary cancellation by the business.
- The business ceases its operations.
- GST returns are not filed for a continuous period.
- The business is no longer required to be registered under GST (e.g., turnover falls below the threshold limit).
- Non-compliance with GST law (e.g., failure to pay taxes or submit documents when requested).
Yes, businesses can voluntarily apply for GST cancellation. This is commonly done when the business discontinues its operations or if it is no longer required to maintain GST registration due to a reduction in turnover.
The processing time for GST cancellation can take up to 30 days from the date of application submission. During this time, the GST department may ask for additional documents or clarification.
Generally, the following documents may be required for GST cancellation:
- A letter requesting cancellation of GST registration.
- Final GST returns (GSTR-3B, GSTR-1) and related documents.
- Bank details for the refund of any pending input tax credit (ITC).
- Declaration regarding closing of business operations (if applicable).
After GST registration is canceled:
- The business will no longer have to pay GST on sales.
- You may need to reverse any unutilized input tax credit (ITC).
- A final GST return (GSTR-10) must be filed within 30 days of cancellation.
- GST invoices cannot be issued post-cancellation.
If the final return (GSTR-10) is not filed within the prescribed 30 days after cancellation, the GST department may impose a penalty. Non-compliance could also lead to further legal action.
If you are eligible for a refund of unutilized ITC after GST cancellation, you must file the final return (GSTR-10) and apply for a refund through the GST portal. You will need to submit documents proving the balance ITC.
Once your GST registration is canceled, you are no longer required to pay GST on any transactions. However, if any taxes were due at the time of cancellation, you must settle them before the cancellation is approved.
If you have any pending dues when applying for GST cancellation, you must clear them before your cancellation request is processed. Failure to do so may result in rejection of your cancellation application.
SetupFiling helps businesses navigate the GST cancellation process by providing expert assistance. From preparing the necessary documents to ensuring compliance with GST laws, SetupFiling.In can handle the paperwork and help you avoid common mistakes during the cancellation process.
