Is Cancellation of GST Registration Possible without Filing Returns?
India introduced the Goods and Services Tax (GST) in July 2017, making indirect taxes easier to understand. Companies that make more than a certain amount of money must register for GST. However, some companies close down, fall below the limit, or no longer need to register for GST. People often ask, “Can I cancel my GST registration without filing any returns?”
Before you can cancel your GST registration, you must first file all of your outstanding reports. But let’s look into this condition more closely to see why it’s necessary and what will happen as a result.
How GST Registration Works
Businesses with annual sales more than ₹40 lakhs (₹20 lakhs for special category states) must register for GST. Small businesses that want to get an input tax credit or take part in official trade can also register on their own if they have a low turnover.
After registering, a company must file GST returns regularly (every month, three months, or once a year, depending on the type of taxpayer) until the registration is legally revoked.
When Can You Stop Registering for GST?
People can cancel their GST registration for several good reasons:
- The business shuts down, moves, or merges with another one.
- For example, if the taxpayer’s sales have dropped below a certain level, they no longer need to be registered.
- Change in the structure of the business, like going from being a single proprietorship to a company.
- Cancellation by a listed person on their own.
- However Act says that all dues and returns must be made up to the date of cancellation, no matter what the reason is.
- The law says you have to file your taxes first.
Rule 20 of the CGST Rules, 2017 says that any taxpayer who wants to cancel their GST registration must make sure that they have made all of their GST returns up to the date they want to cancel.
Among these are:
- GSTR-1 is for sending goods abroad.
- GSTR-3B is a summary report.
- If needed, fill out GSTR-9 (annual return).
If any tax returns need to be filed, the GST portal will not let the cancellation entry (FORM REG-16) go through. You will see an error message in the portal telling you to fill out the backlog of tax forms first.
Why is this Important?
Tax bills that haven’t been reported could be a sign to the government that returns are still due.
- Possible problems with the ITC (input tax credit).
- Loss of money or the chance of a scam.
Because of this, the government wants to make sure that the user has done everything they need to do to comply before letting them leave the system.
What Will Happen If You Don’t Cancel Your Returns But Stop Filing Them?
If you stop making returns even though you no longer have a business or need to be registered for GST, it could have serious consequences:
Fines and fees for being late: ₹50 a day (₹20 if no return), up to a certain limit, can add up fast.
Tax debt interest: If you owe tax, interest at 18% p.a. will be charged.
With a “show cause notice” (SCN), the department can give notice that the register is being canceled under Section 29(2).
Cancellation by department: If you don’t answer, your registration can be canceled without cause, and you’ll still have to pay any taxes and returns that are still due.
Tips on How to Correctly Cancel Your GST Registration
If you want to cancel your GST registration legally, here are the steps you need to take:
- Put in all of your returns: Finish all the GSTR-3B, GSTR-1, and GSTR-9 forms that are still open (if needed). Check the GST site to see how your return is going.
- Pay Past-Due Amounts: Take care of any unpaid taxes, such as late fees or interest.
- Send in Form REG-16: Go to Services > Registration > Application for Cancellation of Registration after logging in to the GST site.
- Give a Reason: Pick a reason for the cancellation and give the date it starts.
- Upload any supporting documents that you need, such as a letter of closing, a transfer deed, or something else.
- Verification and ARN: Send the form with an EVC or digital signature. An ARN (Application Reference Number) will be sent to you.
- Order to Cancel Your Registration (REG-19): Your registration will be canceled and the order will be sent to you if the officer thinks everything is okay.
What Happens If The GST Officer Takes Away My Registration?
If you don’t file your reports, the GST officer can cancel your registration without even having to ask you to. This usually happens after being inactive for a few months. But even so, you still have three months to make your final returns in GSTR-10.
- You still have to pay all of your dues up until the date of cancellation.
- There are still fines and interest to pay for being late.
Get Started with TaxDunia
Do things the right way if you want to cancel your GST registration. There is no way around the law that lets you avoid filing your GST forms and get away with it. If you don’t follow the rules, you could get legal warnings, fines, and problems in the future, especially if you want to do business with them again. Reach out to TaxDunia to understand the complexities of GST and file your returns regularly.
