Explain how to cancel GST registration or deregister for GST ?

GST Cancellation

Full Guide [Updated 2020]

Topics Covered :-

What is GST Cancellation ?

Why should you deregister for GST ?

How to cancel GST registration ?

Forms you need for deregistration.

Revocation of Cancellation of GST.

In case if you were looking for a step-by-step guide on ‘How to Cancel GST Registration?’ then you have come to the right place. This article will solve all your queries about What is GST cancellation, should you apply for GST cancellation, how to do it and everything else.So, wasting no time, let’s get started with the guide.

What is GST cancellation?

If a taxpayer applies for GST cancellation, then he/she is no longer has to pay or collect GST. The Central Tax Authority cancels his/her GSTIN number and ceases to be a GST registered person

However, for certain businesses, GST registration is mandatory and may face a heavy penalty if the business keeps on being operational even after getting deregistered for GST.

Why should you deregister for GST?

One should consider deregistering for GST if he/she complies with any of the reasons given below –

A person no longer needs to be registered under GST.
If a person who previously registered under any old tax law or does not falls under the new GST Act, he/she is no more liable to pay or collect GST.

For example, the threshold for total turnover for VAT was used to be 10 Lakhs, but under GST, it has increased to 20 Lakhs. In this case, the taxpayer can cancel his/her GST registration.

If a taxpayer had opted for GST registration before but has failed to begun any trade in the 6 months since the date of registration, he/she may also file for GST cancellation.

However, a person may keep on paying GST if he/she has voluntarily registered under Section 25(3) of the CGST.
Dissolution or amalgamation of Business.
GST registration can be cancelled if the business has been discontinued, transferred fully, amalgamated, demerged or otherwise temporarily terminated its operations until further notice.

The new entity (formed as a result of merger /demerger / amalgamation) has to get itself registered under GST.
Change in the constitution of the business.
GST number will get cancelled in case of any change in the constitution of the business.

For example, change from a Private Limited Company to a Public Limited Company
Defaults committed against GST Rules.
If the taxpayer fails to comply with the GST Act regulations or has failed to furnish returns for a continuous period of six months, his/her GST number will subject to cancellation.

If a person, who is under the GST composition scheme has also failed to furnish returns for a period of three months, he/she will also meet the same consequences as stated above.

GST number will also be cancelled if the defaulter is found to have committed any of the following unlawful practices –
- Registration obtained through fraud
- Misstatement
- Suppression of facts
- Non Commencement of Business
A person, who has failed to start a business within six months from the date of registration will be subjected to cancellation of GST number.

How to cancel GST registration?

Cancellation of GST can be done by –

Requested by the taxpayer.

Any individual who was paying taxes according to old VAT norms has to migrate to GST and as such, many will find themselves not liable to be registered under GST.

The individual can opt-out of GST unless he/she voluntarily remains in it. The entire procedure is explained below –

Visit the official GST portal (Click Here) and log in with your username and password.
Under the ‘Service’ tab, a drop-down menu will appear.
Click on ‘Registration’ and then select ‘Application for cancellation of registration’
Type in your reason for cancellation. Select ‘No’ if you have issued no invoice during the GST regime and fill up the rest of the form. If you have had issued an invoice, then FORM GST REG-16 needs to be filled.
Fill in the mandatory details mentioned below (if applicable) –
- Details of inputs or semi-finished/finished goods held in stock.
- Details of capital goods or plant and machinery.
- Details of pending GST liability, fines, penalty, etc.
- Details of input tax credit and GST payment made.
Finally, choose electronic cash ledger or electronic credit ledger to pay off any tax liability incurred.

For Companies and LLPs, DSC is compulsory.

Bonus Point : To bypass this tedious process, opt for our GST Cancellation Plan where our expert will do everything for you.

Tax Officer

If a registered taxable person has contravened the provisions of Act or Rules, the following actions will be executed –

The proper officer will send the concerned person a show-cause notice in FORM GST REG-17 if he/she has valid reasons to cancel the person’s GST cancellation.
The person has to respond to the notice within 7 days and explain why his/her registration should not be cancelled in FORM GST REG–18.
If the proper officer finds the person’s reason satisfactory, he will drop off the charges and pass an order in FORM GST REG –20.
If the response found to be unsatisfactory, the proper officer will proceed with the person’s GST cancellation and will issue an order in FORM GST REG–19 within 30 days from the date of reply.

Legal heirs in case of death of the taxpayer

The legal heirs of the deceased taxpayer will have to fill FORM GST REG-16. The process to fill the form is explained below.

Forms you need for deregistration

FORM GST REG-16 :

FORM GST REG-16 is to be filled by –

The taxpayer wants to cancel his/her GST registration but has issued an invoice during the GST regime.
The legal heir in case of demise of the taxpayer.

Details to be filled –

Details of inputs, semi-finished, finished goods held in stock on the date on which cancellation of GST registration is applied.
liability therom
Details of payment.

FORM GST REG-17 :

An authorised tax officer can issue FORM GST REG-17 to cancel the GST registration of a taxpayer and its business entity by asking him/her to provide reasons on why he/she should be exempted.

FORM GST REG-18 :

The taxpayer/entity has to furnish with satisfactory reasons in FORM GST REG-18 within 7 days of the issuance of the given notice of show-cause or has to appear for personal hearing on the given date and time.

FORM GST REG-19 :

FORM GST REG-19 is issued by the tax officer to proceed with order of GST registration cancellation of the concerned taxpayer/entity if the reasons provided in FORM GST REG-17 is deemed unsatisfactory. The order must be sent under 30 days from the date of application or the response date in FORM GST REG-18.

FORM GST REG-20:

If the tax officer finds the reasons provided by the taxpayer/entity to be satisfactory, he/she will drop the GST cancellation proceedings against the person and will issue FORM GST REG-18.

FORM GST REG 21 – 24 is explained in the following section.

Revocation of cancellation of GST

The concerned taxpayer/entity can also apply for revocation of cancellation of GST in FORM GST REG -21 with 30 days of arrival of the notice of GST cancellation from the tax officer. If the tax officer is satisfied with the response, he/she can he can revoke the cancellation of registration by an order in FORM GST REG -22 within thirty days from the date of receipt of the application, mentioning the reason of revocation in writing. Else, the tax officer can reject the application by an order in FORM GST-5.

Before rejecting, the officer has to send a show-cause notice to the concerned taxpayer/entity by issuing FORM GST REG–23, asking why should his/her application should not be rejected. The applicant has to reply within 7 days in FORM GST REG-24 from the date of service of notice. Thereon, the tax officer will have 30 days to review the application and take his/her final decision.