GST Surrender (without commission)

GST Registration Surrender: A Comprehensive Guide

Surrendering GST registration, also known as cancellation or revocation of registration, is the process of formally closing down a Goods and Services Tax (GST) registration. This process is necessary when a business no longer needs to be registered under GST, either due to closure, falling below the threshold limit, or other valid reasons. This comprehensive guide explains the entire process of GST surrender, including eligibility, reasons for cancellation, steps involved, required documents, and important considerations.  

Reasons for GST Registration Surrender:

A registered person may apply for cancellation of GST registration due to various reasons, including:

• Closure of Business: If the business has permanently ceased operations.  
• Transfer of Business: If the business has been transferred, sold, or merged with another entity.  
• Change in Constitution of Business: If there is a change in the constitution of the business, such as conversion from a proprietorship to a partnership or a company.  
• Turnover Falling Below Threshold Limit: If the aggregate turnover of the business falls below the threshold limit for GST registration (₹20 lakh for supply of services and ₹40 lakh for supply of goods, with some exceptions for special category states).  
• Voluntary Cancellation: Even if not required, a person who has taken voluntary registration can also apply for cancellation.  
• Any Other Genuine Reason: Any other valid reason as accepted by the proper officer.

Who Can Apply for GST Surrender?

Any registered person can apply for cancellation of GST registration if they meet any of the aforementioned criteria. This includes:

• Regular taxpayers.
• Composition taxpayers.
• Input Service Distributors (ISDs).
• Non-Resident taxable persons.

Procedure for GST Surrender:

The process for surrendering GST registration is primarily online through the GST portal. The steps involved are as follows:  

1. Application for Cancellation (Form GST REG-16): The registered person needs to file an application for cancellation of registration in Form GST REG-16 on the GST portal (www.gst.gov.in).  

2. Details to be Provided in Form GST REG-16: The application requires the following details:

   • GSTIN of the registered person.
   • Reasons for cancellation.
   • Date from which cancellation is required.
   • Details of stock held on the date of cancellation.
   • Liability details, including tax payable, if any.
   • Details of input tax credit to be reversed.
   • Details of payment made towards liability, if any.

3. Furnishing of Details of Stock Held: The applicant must provide details of stock held on the date of cancellation. This is important for determining any tax liability on the stock.  

4. Payment of Dues: Before applying for cancellation, the registered person must ensure that all outstanding GST dues, including tax, interest, and penalties, are paid.

5. Reversal of Input Tax Credit: The applicant needs to reverse any input tax credit availed on inputs held in stock, semi-finished goods, and finished goods on the date of cancellation.  

6. Submission of Application: Once all the details are filled and necessary payments are made, the application is submitted online.

7. Acknowledgement: Upon successful submission, an acknowledgement is generated.

8. Verification by Proper Officer: The proper officer will verify the application and supporting documents. They may also conduct a physical verification of the business premises if deemed necessary.

9. Order for Cancellation (Form GST REG-19): If the proper officer is satisfied with the application and finds everything in order, they will issue an order for cancellation of registration in Form GST REG-19. The cancellation will be effective from the date specified in the order.  

10. Suo Moto Cancellation by Tax Authorities (Form GST REG-17): In certain circumstances, the tax authorities can also initiate suo moto cancellation of GST registration in Form GST REG-17. These circumstances include:  

    • Contravention of any provisions of the GST Act or rules.
    • Non-filing of returns for a continuous period (three months for regular taxpayers and six months for composition taxpayers).
    • Not conducting any business from the declared place of business.

Documents Required for GST Surrender:

While the application is primarily online, certain documents may be required to support the cancellation request, depending on the specific reason for cancellation:

• Proof of closure of business (e.g., closure deed, resolution of the company).
• Proof of transfer of business (e.g., sale agreement, merger agreement).
• Details of stock held on the date of cancellation.
• Copy of last filed GST return.
• Any other documents as required by the proper officer.

Time Limit for Application:

There is no specific time limit for applying for cancellation of GST registration, provided the reason for cancellation is valid. However, it is advisable to apply for cancellation as soon as the need arises to avoid any future compliance issues.

Revocation of Cancellation:

If a GST registration has been cancelled by the proper officer suo moto (on their own), the registered person can apply for revocation of cancellation in Form GST REG-21 within 30 days from the date of the cancellation order. The proper officer may revoke the cancellation if they are satisfied that there is sufficient cause for doing so.  

Important Considerations:

• Outstanding Dues: Ensure all outstanding GST dues are cleared before applying for cancellation.
• Reversal of ITC: Properly reverse any input tax credit availed on stock held on the date of cancellation.  
• Matching of Records: Ensure that the details provided in the application match with the records available with the GST department.
• Follow-up: It is advisable to follow up with the tax authorities to ensure timely processing of the cancellation application.
• Professional Assistance: If facing complexities or uncertainties, seeking professional advice from a tax consultant is recommended.

Consequences of Non-Compliance:

Operating a business without a valid GST registration when required can lead to various consequences, including:

• Penalties and fines.
• Seizure of goods.
• Legal action.

Conclusion:

Surrendering GST registration is a formal process that requires careful attention to detail. By understanding the reasons for cancellation, the procedure involved, and the necessary documentation, businesses can smoothly navigate the surrender process and avoid any potential complications. It is crucial to ensure all outstanding dues are cleared and all necessary compliances are met before applying for cancellation. Consulting with a tax professional can provide valuable guidance and ensure a hassle-free surrender process.