In India, the Goods and Services Tax (GST) system
permits the cancellation of a GST registration in specific situations. A
company may request the voluntary cancellation of its GST registration provided
that its total revenue for the fiscal year does not over the Rs 40 lakh GST
threshold. This relieves small enterprises of the stress of compliance.
If GST returns are
not filed for a continuous period of six months, or if taxes are not paid for a
continuous period of six months, the registration may be cancelled
involuntarily. In this situation, the appropriate officer must provide a show
cause notice that includes the rationale for the proposed cancellation and a
response window. If it is shown that a business has routinely broken any GST
regulations or fraudulently obtained input tax credit, registration may also be
terminated. The cancellation
order's effective date is usually when registration cancellations go into
effect. Within the allotted time frame following the cancellation date, refund
requests are still eligible to be submitted. Before cancellation, all
outstanding taxes must be paid in full, and within three months of the
cancellation date, FINAL GST returns must be submitted. According to the
relevant pre-GST legislation, any stock that remains at the moment of
cancellation is taxed. Regarding previous transactions, some compliance obligations
could persist even after the cancellation.
Reasons for GST Cancellation in India
- Voluntary
Cancellation: Companies may request the voluntary
cancellation of their GST registration if their total yearly revenue does not
surpass Rs 40 lakhs. For tiny entities, this eliminates the burden of
compliance.
- Non-filing
of Returns: A registered person's GST registration may be
terminated upon the issuance of a show-cause notice if they neglect to file
returns for a continuous period of six months.
- Non-payment
of Taxes: After giving the business a chance to explain itself,
cancellation may occur if taxes and interest are not paid for a continuous six
months.
- Violation
of Provisions: Frequent noncompliance with
inspection/audit procedures, submitting fraudulent invoices, obtaining phoney
input tax credits, and other infractions of the GST regulations may lead to
termination.
- Discontinuance
of Business: A GST registered person's registration
may be revoked if tax authorities have cause to suspect that the person's
business operations have been terminated.
- Transfer/Change
in Constitution: Cancellation may also occur for failure
to notify within the required timeframe of any changes in firm ownership or
legal status.
