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Overview

GST registration can be cancelled voluntarily by a business or by tax authorities for non-compliance, such as missed returns or incorrect filings. Cancellation requires reversing any input tax credit and filing returns until it's approved. Non-compliance can lead to penalties. Vakilsearch helps you handle GST cancellation smoothly and in full legal compliance.

What is GST Cancellation?

The cancellation of GST registration is the process of removing a business from the Goods and Services Tax (GST) registration list. It applies when a business discontinuation occurs and it no longer meets the criteria for GST registration or has stopped operating. GST cancellation can be voluntary or initiated by the GST department.
A business may cancel its registration if it is no longer required to collect or pay GST such as when turnover drops below the threshold or operations have ceased. The GST department may also cancel registration due to non-compliance, like failure to file returns, using fraudulent documents, or violating GST rules. Once cancelled, the business is no longer required to collect GST or file returns. However, any pending dues or legal obligations must be cleared before cancellation is complete

Who Can Cancel GST Registration?

An existing gst registration can be cancelled by different parties under specific circumstances. Here's a breakdown of who can initiate the cancellation process, along with the necessary application form :

By the Taxpayer

Businesses can initiate voluntary cancellation of their GST registration if they submit a completed application and meet the necessary criteria :

1. They are no longer operating or have shut down.

2. Their annual turnover falls below the prescribed GST threshold.

3. They are no longer required to be registered (e.g., switched to a different tax scheme).

4. They have opted out of the GST system due to a change in business structure.

By Tax Authorities

The GST department can cancel registration in cases of non-compliance, such as if there are pending gst returns, and businesses must respond promptly to avoid penalties.

1. Failure to file GST returns for an extended period.

2. Obtaining registration through fraudulent means or false documents.

3. Violating GST provisions, including issuing invoices without actual supply of goods or services.

4. Not conducting business from the declared place of business.

By Legal Successors

GST registration can also be cancelled by legal heirs or successors when they ensure that the final gst return is filed.

1. The registered person is deceased.

2. The business is transferred due to amalgamation, merger, or demerger.

3. Ownership changes hands permanently.

Each of these scenarios, including the formation of a new entity, requires a formal application or process, and the cancellation is subject to approval by the GST authorities.

Procedure for GST Registration Cancellation

Cancelling your GST registration involves a straightforward process, but it must be done carefully to avoid legal or financial issues — especially those related to GST return filing.. Here's how to proceed:

• Login to the GST Portal at www.gst.gov.in using your credentials.

• Navigate to Services > Registration > Application for Cancellation of Registration.

• Select the reason for cancellation from the dropdown menu.

• Enter the required details, such as the date of cessation of business or transfer of ownership.

• Provide supporting documents if required (e.g., closure certificate, business transfer agreement).

• Verify the application using Digital Signature Certificate (DSC) or Electronic Verification Code (EVC).

• Submit the application.

• Track the application status on the portal until you receive a cancellation order from the GST officer.

Documents Needed for GST Cancellation

The following documents, including your mobile number, are typically required to cancel your GST registration:

• PAN card of the business or proprietor

• GST registration certificate

• Proof of business closure (if applicable)

• Identity and address proof of the authorized signatory

• Bank account details

• Declaration or affidavit (if required)

• Business transfer documents (in case of merger, acquisition, etc.)

Consequences of Not Cancelling GST Registration

Failing to cancel GST registration when it's no longer applicable can lead to several consequences, including late fees :

• Penalties and interest on non-compliance, including late filing of returns.

• Continued obligation to file GST returns until cancellation is approved, even if the business has stopped operating.

• Reversal of input tax credit (ITC) on closing stock, capital goods, and inputs.

• Legal complications for non-adherence to GST regulations.

• Departmental action, including forced cancellation and potential audits or scrutiny.

It’s crucial to complete the cancellation process properly with guidance from tax officials to avoid future liabilities.

Reasons for GST Registration Cancellation

Here are some of the most common reasons, including not filing the final return, why a business might cancel its GST registration:

• Business has ceased operations

• Turnover falls below the GST threshold

• Business has been sold, merged, or transferred

• Change in business constitution (e.g., proprietorship to partnership)

• Voluntary opt-out of GST

• Non-compliance with GST rules and regulations

• Death of the proprietor

• Migration to a different tax structure or scheme

Who Cannot Apply for GST Registration Cancellation?

Not all GST-registered entities are eligible to apply for cancellation. The following categories are excluded from this process:

Tax Deductors/Collectors

1. Entities registered solely for the purpose of deducting or collecting tax at source under GST (such as government departments or e-commerce operators) cannot cancel their GST registration voluntarily.

2. These entities have different compliance obligations and are governed under specific sections of the GST Act

Holders of Unique Identity Number (UIN)

1. Organizations that hold a UIN—such as foreign diplomatic missions, consulates, and UN bodies—are not allowed to cancel their registration.

2. UIN is issued only to claim tax refunds on inward supplies and not for conducting taxable business activities, so cancellation is not applicable.