Complete Guide to Apply Online Application for Cancellation of GST Registration

Goods and Services Tax (GST) is a comprehensive tax system implemented in India to regulate the taxation of goods and services. It replaced multiple indirect taxes, offering a simplified and unified tax structure. Businesses engaged in the supply of goods and services must register under GST if they meet specific criteria.

However, there are instances when businesses may choose to cancel their GST registration, either due to business closure, a change in business operations, or a fall in turnover below the taxable threshold.

 What is GST Registration?   

GST registration is the process through which a business or individual registers with the Goods and Services Tax authorities to collect and remit taxes. It is mandatory for businesses whose turnover exceeds the prescribed limit or those involved in inter-state supplies, e-commerce, or providing taxable goods or services.

GST registration grants the taxpayer a unique GST Identification Number (GSTIN), which serves as the official proof of registration and allows businesses to collect GST from customers and claim input tax credit (ITC) on purchases.

 When Can GST Registration Be Canceled?   

While GST registration offers several advantages, businesses may find it necessary to apply for the cancellation of GST registration for various reasons.

Some common scenarios include:

• Business Closure: If the business is shutting down or ceases its operations.

• Fall in Turnover: If the business’s turnover falls below the prescribed threshold for mandatory GST registration (Rs. 40 lakhs for goods and Rs. 20 lakhs for services).

• Change in Business Structure: If the business undergoes a merger, amalgamation, or reorganization that requires canceling the current GST registration.

• Voluntary Cancellation: A business owner may choose to cancel GST registration voluntarily if they no longer wish to engage in taxable activities.

• Non-Compliance with GST Regulations: If a business fails to meet GST compliance requirements, the tax authorities may cancel the registration.

 Conditions for Cancellation of GST Registration   

Before applying for cancellation of GST registration, the business must meet certain conditions:

1. Outstanding Returns: All pending GST returns must be filed up to the date of application.

2. Clearance of Stock: If applicable, all stock must be cleared and the necessary tax paid on it.

3. No Further Liability: There should be no outstanding tax liabilities or dues, including interest or penalties, for which the taxpayer is responsible.

If these conditions are met, the taxpayer can proceed with the cancellation GST registration application.

 Step-by-Step guide to apply online application for cancellation of gst registration

If you meet the eligibility criteria and wish to proceed with the cancellation of GST registration, follow this step-by-step guide:

 1. Log In to the GST Portal   

The process for cancellation GST registration is carried out online through the GST portal. To begin, you need to log in with your GST credentials:

• Go to the official GST portal at www.gst.gov.in.

• Enter your username and password to access your account.

 2. Navigate to the Cancellation Section   

Once logged in, navigate to the section for cancellation:

• On the dashboard, click on the “Services” tab.

• Under “Services,” select “Registration” and then click on “Application for Cancellation of Registration.”

This will direct you to the section where you can initiate the cancellation process.

 3. Fill in the GST REG-16 Form   

To apply for cancellation of GST registration, you must complete Form GST REG-16, which is specifically used for cancellation requests. In this form, you will be required to provide the following information:

• Reason for Cancellation: Choose the appropriate reason for canceling your registration (e.g., business closure, turnover falling below the threshold, etc.).

• GSTIN Details: Provide your GST Identification Number (GSTIN) and other relevant details, including the legal name and address of the business.

• Outstanding Tax Liabilities: Mention if there are any outstanding tax dues. Ensure that all dues are cleared before proceeding with the cancellation request.

• Details of Stock: If applicable, provide details about the stock on hand at the time of cancellation and the taxes already paid on it.

Make sure that all the information provided is accurate and up-to-date to avoid delays or rejection of your cancellation request.

 4. Submit the Application for Cancellation   

After completing the form, review all the details to ensure accuracy. Once you are sure that everything is correct, click on “Submit.” The portal will process your application and issue an acknowledgment receipt.

 5. Respond to Any Queries from Tax Authorities   

Once the cancellation request is submitted, the GST authorities will review your application. In some cases, they may request additional information or clarification. It is essential to respond promptly to any queries from the tax department to prevent delays in the cancellation process.

 6. Await Approval of Cancellation   

After reviewing the application, the tax authorities will decide whether to approve the cancellation of GST registration. If all requirements are met, they will issue a formal order of cancellation. The cancellation order will be sent to you through the GST portal.

Typically, the authorities take about 30 days to process and approve the cancellation application. If the authorities require more information, the process may take longer.

 7. Post-Cancellation Responsibilities   

Once your GST registration is canceled, you must fulfill certain post-cancellation obligations, such as:

• Final GST Return: You need to file the final GST return for the period during which the registration was active.

• Clearance of Stock: If there is any leftover stock, you must pay GST on it.

• Refund Claims: If you are entitled to any refunds of Input Tax Credit (ITC), you can file a refund application within the stipulated time frame.

Failure to fulfill these obligations may result in penalties or other legal issues.

 Conclusion   

GST registration is required for businesses meeting specific turnover thresholds or involved in the supply of goods and services. However, there are instances when businesses need to apply for cancellation of GST registration, such as business closure or a fall in turnover.

It is crucial to follow the correct procedure to avoid penalties or complications. Proper compliance is essential to maintain good standing with GST authorities even after the registration is canceled.

Suggested Read :

GST Nil Return

GST Compliance Challenges

Due Dates of different GST returns

Role of Directors in GST Cancellation

Impacts of GST cancellation on Businesses