How to Cancel GST Registration: A Step-by-Step Guide for Businesses

·January 11, 2025·Company Registration·10 min·

How to Cancel GST Registration

If you’re wondering how to cancel GST registration, you’re in the right place. Whether your business has closed down, your turnover has fallen below the GST threshold, or you’ve undergone structural changes, understanding the cancellation process is crucial for staying compliant with Indian tax laws.

In this detailed guide, we will walk you through the entire process of how to cancel GST registration, eligibility criteria, reasons for cancellation, and the potential consequences. Whether you are looking for a way to simplify your tax obligations or want to ensure you meet the legal requirements, knowing how to cancel GST registration can save you from unnecessary penalties and administrative hassles.

Let’s dive in and explore everything you need to know about GST registration cancellation.

What is GST Registration Cancellation?

GST registration cancellation refers to the formal process where the Goods and Services Tax registration of a business or individual is officially revoked by either the tax authorities or the taxpayer. When GST registration is canceled, the business is no longer required to comply with GST-related obligations like filing GST returns, paying GST, or collecting tax from customers.

Common Scenarios for GST Cancellation

The reasons for canceling GST registration can vary. Here are the most common situations when businesses opt to cancel their GST registration:

  1. Business Closure: If a business shuts down, it is necessary to cancel its GST registration.
  2. Turnover Below the GST Threshold: If a business’s annual turnover falls below the prescribed limit, it becomes ineligible to continue its GST registration.
  3. Change in Business Constitution or Ownership: If there are significant changes in the business structure (e.g., conversion from a partnership to a sole proprietorship), GST registration may need to be canceled.
  4. Non-Commencement of Business: If a registered business hasn’t started its operations within six months, it must cancel its GST registration.

Benefits of GST Registration Cancellation

  • Ease of Compliance: Once your GST registration is canceled, you are relieved from the responsibility of filing GST returns.
  • Reduced Paperwork: The administrative burden of maintaining GST records and filing returns becomes non-existent.
  • No Need to Pay or Collect GST: After cancellation, the business no longer needs to collect or pay GST on its sales or purchases.

Eligibility and Pre-Requisites for GST Cancellation

Before you proceed with how to cancel GST registration, it’s important to ensure that you meet the eligibility requirements and have fulfilled all the necessary pre-requisites.

Who is Eligible for GST Cancellation?

  • Voluntary Cancellation: Any taxpayer can voluntarily cancel their GST registration if they no longer require it, provided they meet all the requirements.
  • Mandatory Cancellation by Authorities: The tax authorities may cancel the registration if a taxpayer has failed to comply with GST laws, such as not filing returns or paying taxes on time.

Pre-Requisites for GST Cancellation

Here are the essential requirements before applying for how to cancel GST registration:

  1. No Pending Tax Liabilities: Ensure that there are no outstanding tax dues.
  2. File All GST Returns: All GST returns, including the final return, must be filed up to date before initiating the cancellation.
  3. Clear Input Tax Credit (ITC): The taxpayer must either utilize or claim a refund for any unutilized input tax credit (ITC).
  4. Compliance with Legal Obligations: The taxpayer must have complied with all relevant GST regulations, including payment of taxes and filing returns.

Reasons for Cancelling GST Registration

There are two types of reasons for GST cancellation: voluntary and involuntary.

Voluntary Reasons for Cancelling GST Registration

  1. Ceased Business Operations: If the business is no longer operational, the registration should be canceled.
  2. Turnover Below the GST Threshold: Businesses whose turnover falls below the threshold limit for GST registration (₹20 Lakhs for most states) can voluntarily cancel their GST registration.
  3. Change in Business Nature or Structure: A change in the business structure, such as a change in ownership, may require canceling the old registration.

Involuntary Reasons for Cancelling GST Registration

  1. Non-Compliance: Failure to meet GST filing requirements or tax payments can result in cancellation by the tax authorities.
  2. Fraudulent Activities: If the authorities discover fraudulent activities, such as tax evasion, the GST registration may be canceled.

Step-by-Step Guide: How to Cancel GST Registration Online

The process of how to cancel GST registration can seem daunting at first, but by following the step-by-step instructions outlined below, you can ensure a smooth and error-free cancellation. The entire process is done online through the official GST Portal, making it convenient and efficient. Here’s a detailed guide on how to cancel GST registration online:

1. Access the GST Portal

The first step in how to cancel GST registration is to log in to the official GST Portal. Here’s how you do it:

  • Visit the GST Portal: Go to the official GST Portal by typing www.gst.gov.in in your browser.
  • Login Credentials: Enter your GSTIN (Goods and Services Tax Identification Number) and password to log into the portal. If you don’t remember your credentials, you can retrieve or reset them using the “Forgot Password” option.
  • Ensure Connectivity: Before proceeding, make sure you have a stable internet connection to avoid interruptions during the application process.

2. Navigate to the Cancellation Section

Once you’re logged into the GST portal, follow these steps to reach the cancellation section:

  • Go to “Services”: On the top menu bar, click on “Services”. This will drop down a list of options.
  • Select “Registration”: From the dropdown menu, select “Registration”.
  • Click on “Application for Cancellation”: This option will allow you to apply for GST cancellation. You will be redirected to a page where you can start the cancellation process.

3. Provide the Necessary Details

This step is crucial in ensuring your cancellation request is submitted correctly. Here, you’ll need to provide details about why you are applying for cancellation and other related information:

  • Reason for Cancellation: From the provided list of reasons, choose the most appropriate reason for cancellation. For example, if your business has ceased operations, select “Business closure” or if your turnover is below the threshold, choose “Turnover below the prescribed limit.”
  • Effective Date of Cancellation: You need to mention the date from which you want the cancellation to take effect. It’s advisable to provide a future date, as GST cancellation usually takes some time to process.
  • Supporting Documents: Depending on the reason for cancellation, you will be asked to upload supporting documents. These documents might include:
    • Proof of business closure (e.g., a certificate of closure or a letter from the relevant authorities).
    • Financial statements proving that turnover has fallen below the threshold.
    • Invoices and returns that show the cessation of business activities.

Be sure to keep all these documents ready in PDF or JPEG format before starting the process.

4. Verification and Submission

Once you’ve filled out the necessary details, you must authenticate your application for cancellation. There are two ways to verify your application:

  • Digital Signature Certificate (DSC): If you are the authorized signatory, you can use a DSC to sign your application. This is an official method and ensures the integrity of the data submitted.
  • Electronic Verification Code (EVC): If you don’t have a DSC, you can verify your application using an EVC. This code will be sent to your registered mobile number or email. Enter the code into the portal to complete the verification.

After verification, carefully review all the details entered in the application. Make sure everything is accurate because any errors could lead to delays or rejection of the request.

Once you’re satisfied with the details, click Submit. Upon submission, the GST portal will generate an acknowledgment receipt. This receipt will have a reference number that you can use to track the status of your application.

5. Confirmation and Acknowledgment

After you submit your application for GST registration cancellation, you will receive an acknowledgment from the GST Portal. This is an important step in the how to cancel GST registration process:

  • Review the Acknowledgment: The acknowledgment receipt will contain a unique reference number (ARN) and other details about your application. This number will be crucial in tracking the status of your cancellation request.
  • Track Application Status: You can use the ARN to monitor the progress of your cancellation request. To check the status, go to the “Track Application Status” section of the GST portal and enter the ARN.
  • Wait for GST Cancellation Confirmation: The authorities will review your application and documents. If everything is in order, the GST department will approve your cancellation request. You’ll receive a confirmation email stating that your GST registration has been officially canceled.

The entire process, from applying to receiving confirmation, may take anywhere from 15 to 30 days, depending on the complexity of the case and the volume of applications being processed.

Important Notes to Keep in Mind

  • Final Return Filing: After your cancellation request has been processed and approved, don’t forget to file your final GST return. This is an essential step, as failure to submit the final return could lead to penalties.
  • Input Tax Credit (ITC): Before submitting your cancellation request, ensure that you have settled any pending input tax credit (ITC). Unclaimed ITC should either be refunded or utilized.
  • Pending Liabilities: If you have any outstanding tax liabilities, ensure they are cleared before initiating the cancellation request. The GST authorities may reject your application if there are dues.

Following these steps correctly will ensure a smooth and efficient process for how to cancel GST registration. By taking care of all the details and ensuring compliance with the necessary prerequisites, you will avoid unnecessary delays or rejections.

Consequences of GST Registration Cancellation

After the cancellation of your GST registration, several things change:

What You Will No Longer Need to Do:

  • File GST Returns: No more need to file regular GST returns.
  • Pay GST: You won’t need to pay GST on sales or claim GST on purchases.
  • Claim ITC: You will lose the right to claim input tax credit (ITC) on your business expenses.

Potential Penalties for Non-Compliance:

  • Continuing Business Without GST: Operating a business without valid GST registration after cancellation can result in heavy fines.
  • False Representation: If the cancellation process is based on false information, legal actions may be taken.

Revocation of GST Cancellation

Revocation is applicable when the GST registration was canceled by the tax officer due to reasons like non-compliance or errors in the application.

Steps for Revocation:

  1. Log into the GST Portal.
  2. Complete the Revocation Form: Provide all necessary information explaining why you want to revoke the cancellation.
  3. Upload Required Documents: Submit the necessary documents along with your application.
  4. Wait for Approval: The tax authorities will review your revocation request and respond.

Timelines for Revocation: The revocation process can take up to 30 days.

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Frequently Asked Questions

Q1. Can I re-register for GST after cancellation?

Ans: Yes, you can reapply for GST registration if your business activities resume or if you surpass the turnover threshold.

Q2. What documents are required for GST cancellation?

Ans: Documents such as proof of business closure, tax payment receipts, and final return filings are typically required.

Q3. How long does it take to process a cancellation request?

Ans: The GST cancellation process generally takes 15-30 days, depending on the case.

Q4. What happens if my cancellation request is rejected?

Ans: If rejected, the authorities will notify you with reasons. You can address these issues and reapply for cancellation.

Q5. Can I cancel GST registration if my turnover is below the limit?

Ans: Yes, businesses with turnover below the threshold limit are eligible to cancel GST registration.

Q6. What happens if I don’t cancel my GST registration?

Ans: Failing to cancel your registration when required can lead to penalties for non-compliance.

Q7. Can the GST department cancel my registration without my request?

Ans: Yes, if the authorities find non-compliance or fraudulent activities, they may cancel your registration.

Q8. How do I check the status of my GST cancellation application?

Ans: You can track the status of your GST cancellation request directly through the GST Portal using your acknowledgment receipt number.

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