Cancellation of GST registration: Why, When, and How?
Undeniably, a GST registration can provide innumerable benefits for any business form. It enhances the ease of doing business by ruling out all the tough and trying tax and legal compliances, allowing access to the simplified tax norms and facilitates faster and easier movement of merchandise. However, there are certain cases wherein a tax assessee might not require any GST certificate and thus may wish to opt for termination or cancellation of GST registration.
Why does anyone opt for cancellation of GST registration?
Albeit there are several benefits of the voluntary GST registration, certain constraints may force an entrepreneur or a normal taxpayer to opt for discontinuance of his status of a GST registrant. Here are some of the cases where a tax assessee may opt for cancellation of GST registration:
- If an individual has been inadvertently registered under GST, he may opt to cancel his new GST registration as to get away from redundant tax liability.
- If the annual turnover of an individual does not exceed INR 20 lakhs and he has registered under GST, he can opt to cancel his GST certificate as he does not mandatorily require GST registration. He can avoid filing regular GST returns by being a non-registrant. If he doesn’t cancel his registration, he is likely to receive tax notices from the GST department and will have to incur the penalty for not fulfilling the tax liability.
- If a GST registered entrepreneur wishes to dissolve or discontinue his business, he must cancel his GST certificate as soon as possible, or he will continue to receive tax notices from the government.
- If an individual or his business entity is not accountable for registration under GST, he may annul his GST certificate.
- If the government registration threshold is increased later by and you get out from its cover)
- In case the business has been sold or has been acquired by another party on account of a take-over bid, the GST tax liability will continue to arise under the previous owner’s name. To get rid of such liability, the former owner needs to cancel his GST registration and the buyer party needs to get New GST registration online.
Likewise, there can be many other reasons for cancelling an existing GST certificate.
Who can cancel GST certificate?
As per the GST laws, any of these persons can cancel GST certificate:
- An applicant who has requested for the cessation of the certificate on the GST registration portal
- The legal heir of the taxpayer, in case of his death or abdication of his property
- The tax officer
Circumstances where GST registration is invalidated by a tax officer:
A GST certificate can be quashed by a GST tax officer in case-
- A registered person under the regular scheme has failed to GST Return online for 6 months in a row.
- A registered person under composition scheme has failed to file GST returns for 3 successive quarters.
- The GST registrant has flouted any of the norms or provisions as under CGST Act 2017.
- An individual who has opted for voluntary GST registration under the business name but has not commenced any trade in the six months since the date of registration.
- If the individual has registered under GST by deceptive means, the authorized person has the right to invalidate the registration with retrospective effect. In this case, all the input credits and other credits will be denied to the buyers who have dealt with such trader.
The individual whose registration is cancelled will receive a legal notice clarifying the reason for cancellation, as shown above. Moreover, he will be given a chance to give his justification prior to the cancellation.
How to cancel the GST registration?
Given below is the complete process of cancellation of GST certificate:
Step 1: Log in to GST Portal and choose the option “Application for Cancellation of Registration” from the Registration sub-menu of the Services tab.
Step 2: the page for cancellation will appear. Under the Cancellation details, choose the appropriate reason for cancellation.
Step 3: Next, you will be asked whether you have issued any tax invoice during the month.
Step 4: If any tax invoice has been issued, then FORM GST REG-16 is compulsory to be filed. This will be shown in the warning as shown below.
Step 5: Enter the details of an authorized signatory, with the place.
Step 6: Finally, click ‘Submit with EVC’ button in case of a proprietorship or partnership firm. In case of LLPs or Company, click on ‘Submit with DSC’ button.
The GST certificate will be cancelled within a month.
If you have any query regarding GST registration procedure or you need any guidance about online GST registration process in India, feel free to contact us at 8881-069-069.