The Goods and Services Tax (GST) registration is a fundamental aspect of smooth financial operations for businesses in India. It lowers rates of tax evasion and corruption while combining the majority of indirect taxes and contributing significantly to the economic structure of the nation.
In certain circumstances, it is valid for registered persons to cancel their GST registration, such as if they want to restructure the business, shift to a different location, or amalgamate or discontinue the business. As long as the taxpayer or their entity has no pending dues or unpaid taxes, or is undergoing a legal process, they can go ahead and cancel their GST registration, and even revoke the cancellation if they feel the need for it.
MPVD & Associates offers a host of GST consulting services, which also include support for GST cancellation. This article is an extension of our knowledge sharing, to give you a clear guideline about the process, its methods and approaches of cancelling your GSTIN.
Reasons To Cancel GST Registration Voluntarily
Everyone registered under the previous indirect tax legislation was required to switch to the GST. It’s possible that many of these individuals weren’t eligible for GST registration. In most states, the threshold for service tax was Rs. 10 lahks and for VAT it was Rs. 5 lakh. The GST has evened it out to Rs. 20 lakhs. They had to confirm, nevertheless, that you are not making interstate supply because, with the exception of service providers, registration is required for interstate suppliers.
So if you are not earning a good profit and your turnover falls below the threshold limit for mandatory registration, maybe you want to close the business and try other income channels, it is reasonable to cancel the GST registration. Several such circumstances are listed below:
- Demise of the registered person, in the case of which, their family members can come forward to apply for GST cancellation
- Company Insolvency and in occasion of shutting down the business
- Transfer of business to a new entity, amalgamation, merger or de-merger
- Modification of PAN due to a change in the business’s charter or for any other relevant reason
Step by Guide to Voluntary Cancellation of GST Registration
The voluntary GST cancellation process could be straightforward as long as you follow the rules, and present proper documents to avoid complications. The cancellation means that the taxpayer will not have to pay the tax anymore, but it will be a legal offence if they continue to receive business payments even after cancelling. Such out-of-record transactions might be subject to heavy penalty charges.
- Voluntary Cancellation of GST Registration Online
- Visit the Online Portal of GST and log in using your official credentials
- Find the >>Services<< tab under which, you will find >>Registration<< and under it, you will find >>Cancellation Application<<. Select it to proceed.
- Add the required information in the form. It includes the cause of cancellation and the date the business will be closing etc.
- Submit required documents Place Documents Online: Documentation supporting the cancellation may be necessary, depending on the reason. For instance, a closure certificate can be required in the event of a business shutdown.
- Verification Process of Application
- The tax authority verifies the details and documents provided.
- If everything aligns with the requirements, the application gets approved.
- If any additional information or clarification is needed, the tax officer might raise queries or request more documents through the portal.
- Approval of GST Cancellation
- A cancellation order is issued by the tax authority specifying the effective date of cancellation.
- Any remaining input tax credit (ITC) or liabilities are settled accordingly.
- The GSTIN (Goods and Services Tax Identification Number) is deactivated, and the business ceases to be a GST-registered entity from the effective date mentioned in the order.
In certain circumstances, your application may be rejected by the assessing officer based on erratic information or non-compliance with certain policy guidelines. But not to panic, because this can be sorted, which starts with the assessing officer producing the written intimation about the reason for the rejection. You have to respond to this within 7 days. This step can be made simple if you contact MPVD & Associates beforehand, and get expert help to revert to the letter with a more polished and confident response.
Revoking Cancelled GST Registration
You may also revoke or reverse the cancellation of the GST using the same name and documents for it. As per the common guidelines of the CGST notification released on March 3, 2023, the time limit to revoke GST registrations that were cancelled before December 31, 2022.
Also read: GST registration rejected: how to re-apply
For more personalised solutions, you may always get in touch with us at MPVD & Associates GST Consultant in Kolkata.