GST Cancellation

Introduction

GST registration can be cancelled by a business if it is dormant or fails to meet the required turnover threshold. It can also be cancelled by a GST officer if the business fails to comply with GST regulations. After cancellation, the entity is relieved from the obligation to file GST returns and collect or pay GST. ProMunim of India offers a seamless service to facilitate GST cancellation, with a team of seasoned professionals who understand the intricacies involved and are committed to guiding clients through the process.

Method of Cancellation of Registration:

• Voluntary Cancellation:This type of cancellation is initiated by the taxpayer voluntarily when they no longer wish to remain registered under GST. It may occur for various reasons, such as the business becoming dormant, ceasing operations, or no longer meeting the turnover threshold for GST registration. Voluntary cancellation can be applied for through the GST portal by submitting the necessary application and supporting documents.
• Cancellation by GST Officer:This type of cancellation is initiated by the GST officer when there are grounds for cancellation based on non-compliance or other reasons specified under GST law. The GST officer may cancel the registration if the taxpayer fails to comply with GST regulations, such as not filing GST returns, not paying taxes, or engaging in fraudulent activities. The taxpayer is typically given an opportunity to respond to the show cause notice issued by the GST officer before cancellation is affected.

Circumstances:

• Business Closure:When a business ceases operations or is permanently closed down, the taxpayer may apply for GST registration cancellation to terminate their GST registration.
• Dormant Business:If a business remains inactive or dormant for an extended period and does not engage in any taxable supplies, the taxpayer may opt for GST registration cancellation.
• Non-Meeting Threshold:If a business's turnover falls below the prescribed threshold limit for GST registration over a specified period, the taxpayer may apply for cancellation.
• Change in Legal Structure:In cases where there is a change in the legal structure of the business, such as conversion from a proprietorship to a partnership or company, GST registration may need to be cancelled and re- registered under the new legal entity.
• Transfer of Business:When a business is transferred, sold, or acquired by another entity, the existing GST registration may be cancelled, and the new owner may apply for fresh registration.
• Non-Compliance:If a taxpayer fails to comply with GST regulations, such as not filing GST returns, not paying taxes, or engaging in fraudulent activities, the GST officer may initiate cancellation proceedings.
• Death of Sole Proprietor:In the case of a sole proprietorship, if the proprietor passes away, the legal heirs may apply for GST registration cancellation if they do not wish to continue the business.

Final Return:

Filing the final return post GST cancellation is a crucial step to formally close the GST registration and fulfil remaining compliance obligations. Here's a summary of the process:

• Submission of Final Return:After the GST registration is cancelled, the taxpayer must file the final return, known as the GST Final Return. This return consolidates all the details of outward and inward supplies made up to the date of cancellation.
• Details in Final Return:The final return includes details such as sales, purchases, input tax credit (ITC) availed, tax liabilities, and any other relevant information for the period up to the date of cancellation.
• Filing Procedure:The final return can be filed online through the GST portal by logging in with the GSTIN and selecting the option to file the final return. The taxpayer must ensure that all the information provided is accurate and complete.
• Payment of Dues:Any outstanding tax liabilities, interest, or penalties must be paid before filing the final return. The taxpayer must clear all dues to avoid compliance issues and penalties.
• Nil Return:If there are no transactions to report for the period up to the date of cancellation, the taxpayer must file a nil return indicating zero sales and purchases.
• Acknowledgment:After filing the final return, the taxpayer will receive an acknowledgment confirming the submission. It is essential to keep a copy of the acknowledgment for future reference.
• Closure of GST Registration:Filing the final return marks the formal closure of the GST registration. Once the final return is filed, the taxpayer is relieved from further GST compliance obligations.
• Document Retention:It is advisable to retain all relevant documents and records related to GST compliance, including the final return and acknowledgment, for the prescribed period as per GST regulations.

Frequently Asked Questions