The Procedure to Cancel GST Registration for Businesses with Turnover Below ₹20 Lakhs
Introduction
Many small business owners and freelancers in India mistakenly register for GST even when their annual turnover falls below the ₹20 lakh threshold. If you belong to this category and do not meet the criteria for mandatory GST registration, you can cancel it. You can legally cancel your GST registration online through the GST portal. By understanding the correct procedure, you can avoid future compliance issues. In this blog, we will guide you step-by-step on how to cancel your GST registration if you registered by mistake.
Who should cancel their GST Registration?
Not every business is required to stay registered under GST, especially if the annual turnover is below the prescribed limit. If you’ve registered under GST by mistake or your business no longer meets the criteria, it’s best to cancel your registration to avoid unnecessary compliance.
You should consider cancelling your GST registration if:
- Your annual turnover is below ₹20 lakhs (or ₹10 lakhs for special category states).
- You voluntarily registered but no longer wish to continue.
- Your business has been discontinued or closed.
- There is a transfer of business due to merger, amalgamation, or sale.
- You are no longer supplying taxable goods or services.
- Your business has shifted to a composition scheme and no longer needs regular GST registration.
When can you apply for GST Cancellation?
A taxpayer can apply for GST cancellation when they no longer meet the criteria for mandatory registration or when specific changes occur in the business. The GST law allows for cancellation under various circumstances, whether initiated by the taxpayer or by the tax authorities.
You can apply for GST cancellation in the following situations:
- Your business turnover is below the threshold limit (₹20 lakhs or ₹10 lakhs).
- You have closed or discontinued your business operations.
- Your business has been fully transferred due to a merger, demerger, or sale.
- You have changed the nature of your business, like from a sole proprietorship to a company.
- You registered voluntarily but now wish to opt out.
- You are switching to a composition scheme and no longer need regular registration.
We provide New GST Registration, GST Return Filing, and Cancel GST Registration services, ensuring quick, easy, and compliant GST solutions for your business.
What documents are required for GST Cancellation?
To apply for GST cancellation, you need to keep the following documents ready:
- PAN card of the business or individual
- GST registration certificate
- Aadhar card of the applicant
- Proof of business closure (if applicable)
- Bank account details, such as a cancelled cheque or bank statement
- Details of last return filed (if applicable)
- Authorization letter or Board Resolution (in case of companies or LLPs)
- Address proof of the business location
- Declaration or affidavit for cancellation (in some cases)
Step-by-Step Procedure to Cancel GST Registration (For Mistaken Registration):
If you have registered under GST by mistake and wish to cancel your registration, you can do so easily through the GST portal. Here’s a simple step-by-step guide:
Step 1: Visit the GST Portal: Go to the official GST portal at www.gst.gov.in.
Step 2: Login with Credentials: Use your valid username and password to log in to your GST account.
Step 3: Navigate to ‘Application for Cancellation’: After Logging in, Go to Services > Registration > Application for Cancellation of Registration.
Step 4: Fill in the Cancellation Form: You have to fill Form GST REG-16 for the GST cancellation. Along with the form, you will need to provide the reason for cancellation and the required details, such as the date from which the cancellation is to be effective, stock details, and liabilities.
Step 5: Upload Supporting Documents: Attach all the relevant documents such as PAN, Aadhar, proof of business closure (if any), and the last return filed.
Step 6: Submit the Application: Submit the application and verify the it while using either Digital Signature Certificate (DSC), e-Sign, or Electronic Verification Code (EVC).
Step 7: Acknowledgment and ARN Generation: After submission, an Acknowledgment Reference Number (ARN) will be generated. Which will be use to track the status of GST Cancellation.
Step 8: Final Approval by GST Officer: The GST officer will review your application and issue a cancellation order (Form GST REG-19) within 30 days if satisfied.
Key Points to remember
- GST registration is not mandatory if your turnover is below ₹20 lakhs (₹10 lakhs for special category states).
- Always file all pending GST returns before applying for cancellation.
- Use Form GST REG-16 for cancellation by the taxpayer.
- The application must include a valid reason and supporting documents.
- You cannot collect GST or issue tax invoices after cancellation.
- Cancellation does not exempt you from liability for any dues or returns before the cancellation date.
- Keep the ARN safe to track your application status.
Conclusion
If you follow the correct procedure, you can easily cancel your GST registration if you registered by mistake. By meeting all compliance requirements and submitting the necessary documents, you will avoid future tax liabilities and penalties. Make sure to cancel your registration on time to stay compliant with GST regulations and streamline your business operations.
Suggested Read :
GST Cancellation for Non-Filers
Impact of GST Cancellation on Business
Restoration of Cancelled GST Registration
When and Why GST Nil Return is Necessary
FAQ
1. What is the threshold turnover limit for GST registration?
The threshold turnover limit for GST registration is ₹20 lakhs for most states and ₹10 lakhs for special category states like the North-east states and hill states.
2. How can I check the status of my GST cancellation application?
You can track the status of your GST cancellation application using the Acknowledgment Reference Number (ARN) on the GST portal.
3. When should I apply for GST cancellation if my turnover falls below the limit?
You should apply for GST cancellation as soon as you realize that your turnover is below the threshold limit and you’re no longer required to be registered under GST.
4. Why is it important to cancel GST registration if not required?
It is important to cancel GST registration to avoid unnecessary compliance burden, penalties, and the responsibility of filing regular GST returns when you’re not eligible.
5. Where do I submit the application for GST cancellation?
The application for GST cancellation must be submitted online through the official GST portal under the “Application for Cancellation” section.
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