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GST Registration Cancellation

What is Cancellation of GST Registration?

  • Introduction of GST :
  • Implemented on July 1, 2017. Aimed to simplify business operations and provide tax benefits
  • Streamlined Indirect Tax Policy :
  • Government's updated policy minimizes manual involvement. Expedites processes for increased efficiency.
  • Significance of GST Cancellation :
  • Overview explores the importance of the GST cancellation process. Outlines the steps to initiate cancellation.

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Reasons for GST Cancellation

Cancellation of GST registration signifies that the taxpayer is no longer a registered individual under GST. They are relieved from the responsibility of paying or collecting GST, claiming input tax credit, and filing GST reports. Your registration may be cancelled under the following circumstances

  • Selective Registration :
    An individual registered under a different law is not compelled to register under the specified GST Act, emphasizing exceptions in the registration requirement for certain cases
  • GST Cancellation Factors :
    Cancellation of GST registration may result from business discontinuation, full transfer (including due to the proprietor's death), amalgamation, demerger, or any other disposal, as stipulated.
  • Taxable Individuals :
    Individuals liable for taxes, excluding those who voluntarily register under section 25(3) of the GST Act, fall under the category of a taxable person .
  • GST Non-Compliance :
    Failure to comply with the provisions of the Goods and Services Tax Act or its associated rules by a registered individual constitutes a violation and can lead to penalties.
  • Non-Compliance Consequences :
    If a registered person, excluding those under the Composition levy, fails to submit returns for six consecutive months, it results in non-compliance and potential cancellation of registration.
  • Voluntary Registration :
    A person with voluntary registration under Section 25(3) not initiating business within six months from registration may undergo cancellation procedures.
  • Integrity Breach :
    Obtaining registration through fraudulent means, willful misrepresentation, or deception constitutes a breach of integrity and undermines the legitimacy of the registration process.

    • Who is eligible to cancel GST Registration?

    By following the GST cancellation procedure, the taxpayer can independently cancel their GST registration. This is referred to as 'Suo moto cancellation.

    Registration Integrity

    If discrepancies are detected, the authorized officer has the authority to terminate the GST registration, ensuring compliance and integrity within the Goods and Services Tax system.

    Legal Heir

    In the event of an individual's passing, the legal heir possesses the authority to initiate the cancellation process for their Goods and Services Tax (GST) registration.

    GSTIN Deactivation

    The deactivation of GSTIN for migrated taxpayers, previously registered under indirect tax regulations, involves ending their inclusion in the Goods and Services Tax system

    On what grounds might the officer decline registration?

    The Tax officer might cancel the registration on multiple grounds. They are listed as follows

    STEP : 1

    • If the registered entity ceases all business activities from the specified location mentioned in the registration, the GST authorities may initiate cancellation proceedings

    STEP : 2

    • Issuing invoices or bills without corresponding goods or services, infringing on provisions, is considered a violation, leading to potential legal and regulatory repercussions

    STEP : 3

    • Violates anti-profiteering regulations by neglecting to pass on the benefits of Input Tax Credit (ITC) to customers, contravening the established GST guidelines and regulations.

    STEP : 4

    • Violates anti-abuse provisions, such as failing to pass on Input Tax Credit benefits to customers. This violation became effective from January 1, 2021.

    STEP : 5

    • For taxpayers violating Rule 86B, utilizing ITC from the digital credit ledger discharges over 99% of the tax liability, applicable when the monthly taxable supply exceeds Rs. 50 lakh

    STEP : 6

    • If GSTR-3B remains unfiled for over two months (or one quarter for QRMP scheme participants), it results in the inability to file GSTR-1

    STEP : 7

    • (g) Obtaining Input Tax Credit in violation of Section 16 of the Act or its rules constitutes an unlawful practice against the outlined provisions

    Why would a taxpayer seek to terminate their registration?

    Complete Halt

    Company operations have come to a complete cessation.

    Transaction Outcome

    Upon complete transfer, amalgamation, demerger, or disposal

    Termination

    Cancellation occurs if the transferor ceases business operations

    Restructuring

    If there has been a structural change in the company