Know about GST Registration Cancellation Fees

The Goods and Services Tax needs to be paid for the supply of goods and services. However, the registration for a taxpayer can be cancelled based on circumstances. There are different instances when you can cancel your GST registration from your end.

This blog focuses on GST registration cancellation fees and procedures while highlighting the procedure to revoke GST registration cancellation for a seamless experience.

Meaning of Cancellation of GST Registration

Cancellation of GST registration refers to a taxpayer or registered business owner or entity with GST registration that is no longer a registered person under the GST regime or is an unregistered person thereafter. This person will not have to pay or collect GST. Further, the person will not have to claim input tax credit or file GST returns.

Importance of Timely GST Cancellation

If there is no business activity after getting GST registration, as a regular taxpayer you should begin the GST cancellation request process. When a taxpayer stops filing of GST returns and the registration lapses, he/she cannot apply for a new registration using the same PAN card even after filing of tax returns. Thus, this creates a window for cancellation of GST registration.

In addition, if the GST authorities cancel the registration, a normal taxpayer should apply for revocation of cancellation by paying a late-filling fee or with payment of penalty. You can, however, cancel the registration appropriately or continue to file GST returns after revocation of cancellation.

Once you receive GST registration, ensure you maintain compliance and apply for GST registration cancellation if there is no business activity.

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Cancellation Criteria for GST : Who Can Apply?

For GST cancellation, specific criteria must be met. Take a look at who qualifies to apply for this process.

By the Taxpayer:

Taxpayers possessing a GST registration can initiate the GST cancellation procedure if he/she finds it unnecessary to have the registration. 

By Tax Authorities:

An authorised tax official might initiate voluntary cancellation of GST for taxpayers if he/she finds non-compliance with rules for the taxpayer. The tax officer can issue a show-cause notice using the form GST REG-17 within the specific time limit.

By Legal Successors:

In the case of the taxpayer’s demise, the legal successor can apply for cancellation of the deceased taxpayer’s GST registration. The legal successors in that case will not have to pay GST after cancellation.

Cancellation of GSTIN for Migrated Taxpayers

Many taxpayers had to migrate from indirect tax laws to GST. However, such individuals are not liable to be registered under GST due to the higher threshold limit. For instance, the threshold limit under the VAT regime for the majority of the states was ₹5 lakh and service tax was ₹10 lakh. However, the threshold under GST is ₹40 lakh.

As a result, the officer with proper authority will have to conduct an enquiry and will cancel the registration, if required. If you are a migrant taxpayer, ensure you do not undertake inter-state supply, as registration is mandatory for inter-state supply and you cannot cancel the registration.

Here are the steps to cancel registration for migrated taxpayers:

Step 1: Visit the GST portal and log in.

Step 2: Click on ‘Cancellation of Provisional Registration’.

Step 3: Select the reason for cancellation after you see the GSTIN and name of your business on the screen.

Step 4: Fill in the details asked like business turnover and other important details on the screen and submit using an Electronic Verification Code (EVC).

GST Registration Cancellation Fees or Charges

There is no government fee for GST cancellation. However, there may be a professional fee based on the assistance that you seek for GST cancellation.

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GST Cancellation Process

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You can apply for GST cancellation seamlessly on the official GST portal. Here is a step-by-step on how to do so: 

Step 1: Visit the official GST website and log in using your user credentials.

Step 2: Find the ‘Service’ tab and choose ‘Registration’ followed by ‘Application for Cancellation of Registration’.

Step 3: You will find the ‘Basic Details’ tab chosen by default. Enter your ‘Address for Future Correspondence’.

Step 4: Save and continue.

Step 5: Select the reason for cancellation from the drop-down menu and submit.

How to Check GST Cancellation Status? 

You can check the status of GST cancellation online. Here is the process to check it:

Step 1: Visit the official GST portal.

Step 2: Navigate to the 'Services' tab and select 'Registration'.

Step 3: Click on ‘View GSTIN Information’.

Step 4: Fill in GSTIN and the captcha code.

Once you go through the above steps, the screen will display the cancellation status.

Why Does a Taxpayer Wish to Cancel his Registration?

A taxpayer might seek to cancel their registration for the following reasons: 

• If he discontinues the business
• When the taxpayer transfers the business ownership. In other words, when there is the transfer of business, amalgamation, demerger or disposal of the business, the registration will have to be cancelled. The transferee will have to register while the transferor will have to unregister the business.
• There is a change in the constitution of business.

From 1st January 2022, Central Board of Indirect Taxes (CBIT) mandated Aadhaar authentication for taxpayers applying for revocation of cancelled GST registration under the CGST Rule 23 in form REG-21. For instance, if a private limited company changes to a public limited company, the rule applies.

Forms for Cancellation

Form GST REG-16 is used to cancel GST registration. Here’s how to complete the cancellation process using this form:

• Ensure you enter the following details in form GST REG-16:

1. Details pertaining to inputs, semi-finished and finished goods that you hold on the date on which you apply for cancellation of registration
2. Liability thereon
3. Payment details

• The tax officer issues an order of cancellation within 30 days from the date of receiving the cancellation application. Additionally, the cancellation becomes effective from a date set by the authorised tax officer, and the taxable person will be notified accordingly.

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Why Will an Officer Cancel a GST Registration?

A tax officer can cancel the registration under the following circumstances: 

• When the taxpayer does not conduct business from the mentioned place of business
• If the taxpayer issues an invoice or bill without the supply of goods and services
• Violates the anti-profiteering provisions by not passing on the ITC benefits to the customers
• When a taxpayer utilises ITC from an electronic credit ledger to pay more than 99% of the tax liability violating Rule 86B with the total taxable value of supplies over ₹50 lakh in a month with some exceptions.
• A taxpayer who cannot file GSTR-1 because he/she has not filed GSTR-3B for more than 2 consecutive months or one quarter for those opting for the QRMP scheme.
• Taxpayers availing input tax credits violate the provisions of Section 16 of the Act. Violations can be if the taxpayer supplies goods exempt of GST.

The procedure that the tax officer has to follow is here:

• To cancel GST registration, an authorised tax officer will release a show-cause notice to a taxpayer in form GST REG-17.
• The person has to reply within 7 days from the date of receiving the show-cause notice using form GST REG-18.
• If the GST officer finds the reason satisfactory, he/she will proceed with form GST REG-20 to retain the registration.
• In the case where the reason is not satisfactory and the registration is liable to be cancelled, the tax officer will proceed with form GST REG-19 to cancel it. The order will be sent within 30 days from the date of receiving a response from the taxpayer with respect to the show-cause notice.

What Is Revocation of Cancellation?

Revocation of cancellation of registration indicates that the registration continues to be valid and is not cancelled. The decision to cancel has been reversed when there is a revocation.

When Is Revocation of Cancellation Applicable?

Revocation of cancellation applies when a tax officer cancels the registration of a taxable person without a request from the end of the taxable person. Such a taxable person can then apply for revocation within 30 days of receiving the cancellation order. Further, the due annual returns need to be filed along with the penalties and interest before applying for revocation.

In such a case, a taxable person can follow the procedure below to revoke the registration:

• A registered person can submit a revocation application in form GST REG-21 if the registration has been cancelled by a tax officer without a request from the taxpayer.
• The registered taxpayer has to apply within 30 days from the date of receiving the cancellation order on the Common Portal.
• If the officer finds the revocation application satisfactory, he/she will proceed with form GST REG-22 within 30 days of receiving the application.
• The tax officer may have reasons for rejection of the application if he/she does not find the written reasons satisfactory using form GST REG-05 and notify the same to the applicant.
• Before rejecting, the proper officer needs to release a show-cause notice using form GST REG-23 and the applicant has to reply to it within 7 days using form GST REG-24.
• After receiving the form GST REG-24, the proper officer will reply within 30 days with his decision.

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Conclusion

As there are no GST registration cancellation fees to be paid to the government, the process is affordable. You can easily cancel your registration by following the procedure and using the appropriate forms. Further, you can consider the limit of GST registration cancellation if you are a migrant taxpayer without undertaking inter-state supply.

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