What is Goods and Services Tax (GST)?

The Goods and Services Tax (GST) came into effect on 1st July 2017 and is an indirect tax for the entire country.It also replaced all the other indirect taxes like central excise tax, service tax, VAT, entry tax, octroi etc and is thus a comprehensive, multi-stage and destination-based tax which is levied on every value addition. As of today, there are approx 160 countries across the globe that have GST in place and India has adopted its dual GST model where both States and Central Government levies tax on goods or services or both and has components like:

  • SGST: State GST, collected by State Govt.
  • CGST: Central GST, collected by the Central Govt.
  • IGST: Integrated GST, collected by the Central Govt.
  • UTGST: Union territory GST, collected by Union Territory Govt.
How to Cancel GST Registration online in India One of the main objective of GST is to curb the overall inflation and has numerous advantage as compared to previous tax regime, such as:
  1. Regularizing the unorganized sector: One of the main advantages of GST is that it helps in regularizing the unorganized sector such as real estate. GST follows a transparent structure and thus the end user knows how much tax is applicable on the product.
  2. Easy compliance: GST is technologically driven and provides online services for its users for various taxpayer services namely registrations, returns, payments etc and thus makes its compliance easy and effective.
  3. Cascading removal: One of the main reason why GST has become quite a hit in such a short span is because of its seamless nature which removes the cascading effect of previous tax regime and thus removes the hidden business cost.
  4. Improved competitiveness: GST features not only makes its compliance easy, but also reduces the transaction cost involved in the business and thus encourage and promotes healthy competitiveness in the market.
  5. Uniformity of tax rates and structures: The very primary reason behind the implementation of GST was to remove all indirect taxes such as Service Tax, VAT, Ontroi etc and replace them with a uniform tax structure PAN India and its uniform nature increases certainty and ease of doing business.
  6. Gain to manufacturers and exporters: As mentioned above, GST implementation has encouraged competitiveness and transparency in the Indian market amongst the traders and has also helped in increasing the competition for Indian goods and services in the Indian market and thus has given boost to the Indian manufacturers and exporters.
  7. Simple and easy to administer: Its technologically oriented and uniform structure makes administration of GST quite easy both at the state and central level.
  8. Higher revenue efficiency: GST is expected to have better revenue efficiency as compared to previous tax regime because of its uniform nature.
  9. Transparent and corruption free tax administration: GST is a transparent tax system where a uniform tax structure is levied throughout the country which also will result in a corruption free tax administration.
  10. Better controls on leakage: It is a lot easier to comply with GST than it was for the previous tax regime because the government has provided all services under one roof and you can avail its services online.
  11. Relief in overall tax burden: GST has replaced all the previous indirect taxes and stage wise tax collection system with a comprehensive, robust, uniform and seamless tax structure and has thus reduced the overall tax burden.
  12. Reduced warehouse/logistics cost: As per the statistics, after GST was implemented, warehouse and logistics cost has been reduced by 20% across the country as compared to its previous tax regime.

GST implemented & Registration

Ever since GST has been implemented, it has started several benefits to Indian economy by creating an unified common national market and giving the much needed push to the Indian economy. It has also helped in boosting the export and manufacturing activity.

From the date of its implementation, the government has been quite particular about its implementation and has thus imposed heavy penalties for the defaulters and since it being a destination based tax, any supplier having an aggregate turnover of Rs 20 lakh or more need to register for the GST and also certain suppliers need to register for GST based on their product have to register for the GST irrespective of the turnover. Having said so, the giovernment has given the flexibility of getting your GST registration cancelled if you wish so irrespective of whether the GST registration was compulsory or not.

Cancellation of GST Registration

When it comes to the cancellation of GST registration, you can either choose to cancel the same either by registered person or by a GST officer. Canellation of GST registration is convered in the Section 29(1) of CGST Act 2017.

Voluntary cancellation of GST registration by registered person:

In order to cancel your GST registration, you have to give the suitable reason for doing so and the probable reasons for the same could be one of the below:

  • If you have decided to close or discontinue your registered business, then the GST registration for the same doesn’t make any sense.
  • If you have sold or transferred your registered business to someone else, then that person or entity need to get the GST registration.
  • In case either you or your business no longer falls under GST slab i.e. in case you are a migrated person or your business supply is exempted from GST.
  • Taxable person or the registered person ceases to be liable to pay tax.
  • However, if you are registered as tax deductor or tax collector and if oyu have been allotted UIN then you cannot opt for the cancellation of GST registration.

However, despite having a valid reason, you cannot opt for the GST registration cancellation before 1 year from the date of registration.

Cancellation of GST registration by a GST officer:

In case GST Officer finds faults in your GST registration then he is entitled to cancel the same however he will consider your case on the below mentioned grounds:

  • If you have obtained GST registration by an illegal or fraud manner or by any kind of supression of facts.
  • If you have opted for voluntary GST registation however have failed to start your business within 6 months from the date of registration.
  • If you have failed to furnish returns for six months in continuation.
  • If you have failed to furnish returns for three consecutive tax periods.
  • If you have contravened prescribed provisions and rules of the Act.

Once your registration is cancelled by the GST officer, you can revoke the same if you act in time by filing Form GST REG 21 within 30 days of service of cancellation of order. However, before you start with the revocation process, you need to make sure that all defaults have been cleared based on which your registration was cancelled by the GST Officer. In case the GST Officer finds your application valid and if there is no pending defaults, then he will revoke the cancellation using Form GST REG 22.

There are various forms available on the GSTIN portal which you might need during the GST registration cancellation process such as:

Form GST REG 16 - This form is used if the GST registration is cancelled voluntarily by the registered person.

Form GST REG 17 - This form is used if the GST officer has found any default in your GST registration and to issue show cause notice.

Form GST REG 18 - This form is used by the registered person to reply to the show cause notice by registered person.

Form GST REG 19 - GST Officer used this form to pass order for the cancellation of GST order cancellation.

Form GST REG 20 - You as a registered person can use this form to stop the GST registration cancelled based on the reply you have given to the show cause notice by Form GST REG 18.

Form GST REG 21 - This form is used by the registered person to revoke the cancellation.

Form GST REG 22 - This form is used by the GST officer to pass the revocation order of cancelled GST registration.

If you want to cancel the GST registration voluntarily, then you need to fill up an application Form GST REG-16 within 30 days of the event based on which you are cancelling the registration,however at times it is not possible to specify the exact date of the event then you can interpret the deadline or date in a liberal manner. While filling up the form GST REG-16, it is mandatory to include below mentioned information, such as:

  1. Ground of cancellation.
  2. The desired date of cancellation.
  3. Contact address including mobile number and email address.
  4. Particulars of the value and the tax payable on the stock of inputs, the inputs available in semi-finished goods, inputs available in finished goods, the stock of capital goods/plant and machinery.
  5. Particulars of the registration of the entity such as when was it merged, transferred or amalgamated.
  6. Particulars of the latest return filed by the taxpayer along with the ARN of the particular return.

To cancel the GST registration, login to your account on the www.gst.gov.in with your username and password and go to application for cancellation of registration under services section. Once you click on the same, Form GST REG-16 will be opened in another window where you have to fill in the asked information, most importantly the reason for GST registration cancellation from the available drop-down list. Also you would need to fill in details like the value of stock and respective tax liability of the stock. You would also need to enter the value to set-off the tax liability either from the Electronic cash ledger or Electronic credit ledger or may be both. Once the desired information is filled, tick on the verification box and mention the name of the authorized person or signatory and click on submit with dsc or submit with evc to complete the GST registration cancellation process.