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GST Revocation: GST Cancellation Process

Businesses may need to cancel their Goods and Services Tax (“GST”) registration due to various reasons. Understanding the GST cancellation process, its requirements, common mistakes, and steps involved is essential for businesses to ensure compliance and avoid penalties. 

A. What is the GST cancellation process?

GST cancellation refers to the process where a taxpayer’s GST registration is nullified, and they are no longer required to collect or pay GST. Cancellation can be initiated by the taxpayer voluntarily, by a tax officer, or due to other reasons like non-compliance.

Once the registration is cancelled, the taxpayer must not conduct any taxable supply, as they will not be allowed to charge GST or claim Input tax credit (“ITC”).

1. Who can apply for GST cancellation?

a) Voluntary cancellation by the registered person

• Change in constitution of business leading to change in PAN: When the business structure changes, resulting in a new PAN, GST registration must be cancelled and a new one obtained.
• Ceased to be liable to pay tax: If the taxpayer is no longer required to pay GST due to falling below the threshold limit or other exemptions, registration can be cancelled.
• Discontinuance of business / closure of business: If the business has been permanently shut down, GST registration is no longer required and should be cancelled.
• Others: Any other valid reason that necessitates the cancellation of GST registration.
• Transfer of business on account of amalgamation, merger, demerger, sale, leased or otherwise: When business ownership changes due to restructuring, the existing GST registration must be cancelled, and the new entity must register separately.

b) Cancellation by a Tax Officer 

The tax office may cancel GST registration for several reasons, including -

• If the taxpayer fails to file GST returns for a continuous period of six months.
• If the taxpayer fails to pay any amount of tax, interest or penalty beyond a period of three months from the date on which such payment becomes due.
• If GST registration was obtained through fraudulent means.
• If there is a violation of GST laws and regulations.

c) Cancellation by legal heirs (in case of death of proprietor)

In the event of the death of a sole proprietor, legal heirs can request cancellation of the GST registration.

2. Documents required for GST cancellation

When applying for GST cancellation, the following documents may be required:

1. GST registration certificate
2. Details of the last GST return filed 
3. Closing stock details, including liabilities
4. Tax invoices related to the closing stock
5. Declaration of no pending dues or claims
6. Bank account details and proof of business closure (if applicable)

3.Key requirements for GST cancellation

To ensure a smooth GST cancellation process, the following key requirements must be met:

1. Filing of pending returns: All pending GST returns up to the date of cancellation must be filed.
2. Clearance of tax liabilities: Any outstanding tax liabilities must be paid before applying for cancellation.
3. Reversal of input tax credit (“ITC”): If there is any remaining ITC, it must be reversed before cancellation.
4. Compliance with time limits: The application for cancellation should be filed within the prescribed time. GST cancellation can be filed voluntarily at any time (with GSTR-10 due within 3 months), while tax officer-initiated cancellations require response within 7 days. For business closure or merger, the application must be submitted within 30 days of the event.
5. GSTR-10 filing: After cancellation, taxpayers must file GSTR-10, also known as the final return, within three months.

4. Common mistakes in the GST cancellation process

Many taxpayers make errors during GST cancellation, leading to delays or legal complications. Some common mistakes include:

1. Not filing pending GST returns:  Many businesses apply for cancellation without filing their pending returns, which leads to rejection.
2. Failure to pay outstanding tax liabilities: The GST department does not approve cancellation unless all tax dues are cleared.
3. Ignoring ITC Reversal: Some taxpayers forget to reverse the input tax credit before applying for cancellation.
4. Incorrect submission of documents: Submitting incomplete or incorrect documents can result in rejection.
5. Late filing after prescribed time: Delaying the GST cancellation application beyond the prescribed time can lead to penalties and legal complications.
6. Missing GSTR-10 filing: Not filing the final return (GSTR-10) within three months can attract penalties.

B. Step-by-step process for GST cancellation

For taxpayers applying voluntarily

Step 1: Log in to the GST portal

1. Visit www.gst.gov.in.
2. Enter your GSTIN, username, and password to log in.

Step 2: Scroll through the cancellation section

1. Click on ‘Services’ > ‘Registration’ > ‘Application for Cancellation of Registration.’

2. Select the reason for cancellation (e.g., business closure, turnover below the threshold).

Step 3: Provide details for the cancellation application

1. Select the appropriate reason from the dropdown.
2. Enter the required details, such as:
1. Date from which cancellation is to be applied
2. Tax liability details
3. Details of closing stock and ITC reversal

3. If the reason for cancellation is "Change in business constitution resulting in a PAN change" or "Transfer of business due to amalgamation, merger, de-merger, sale, lease, or other reasons," enter the GSTIN of the transferee entity in the "Details for Transfer, Merger, or Change in Constitution" section. The system will validate the GSTIN and automatically populate the trade name based on the legal name of the business.

Step 4: Upload supporting documents

Upload necessary documents such as:

1. Latest GST returns
2. Business closure proof (if applicable)
3. Tax invoices for closing stock (if applicable)

Step 5: Complete verification and submit application

1. Review all details carefully.
2. Submit using a digital signature certificate (“DSC”) or electronic verification code (“EVC”).

Step 6: ARN, processing and track status

1. After submission, an ARN (Application reference number) is generated.
2. A confirmation message will also be sent to your registered mobile number and email ID via the GST portal.
3. The application is sent for review by the GST officer.
4. If any additional documents are required, the taxpayer will be notified.
5. Once approved, a cancellation order is issued, and the registration is cancelled

To track the status of your application, visit ‘Services’ > ‘Track Application Status’ in the GST portal.

C. Frequently asked questions (“FAQs”)

1. Can we cancel GST registration online?

Yes, GST registration can be cancelled online through the GST portal by submitting the application along with required documents.

2. How much time does it take to cancel GST?

Once the application is submitted, it generally takes 15-30 days for approval, depending on the verification process.

3. Can we check GST cancellation status online?

Yes, you can track the status by logging into the GST portal under ‘Track Application Status’ in the ‘Services’ section.