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Reasons Why Your GSTIN Can Get Cancelled And How To Avoid Cancellation?

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Posted on
Oct 16, 2022
Reasons Why Your GSTIN Can Get Cancelled

A business owner has dozens of challenges to face every day such as stock management, communicating with suppliers, keeping financial records, providing customer service, promoting the company, and the list goes on. In addition to these, monthly or quarterly GST return filling is a significant task that is time-consuming and needs lots of preparation and attention. If a taxpayer does not file their mandatory GST returns on time and stays up-to-date on any changes to the GST rules, it might lead to the cancellation of their GST registration.

In this piece, we’ll look at some of the potential causes for having your GST registration revoked, as well as some strategies for avoiding that fate.

What Do you Mean by GST Cancellation?

Cancellation of GST registration means the GST granted to the taxpayer by the CTA (Central Tax Authority) is revoked. In simple words, you will no longer be a GST-registered taxpayer. Furthermore, you would be exempt from GST obligations (both as a payer and a collector). Please note that this exemption isn’t without consequences: GST registration is obligatory for several types of enterprises. If you continue your business even after the GST cancellation, it will be considered a severe offense and huge penalties will be charged against you. Therefore, it is recommended that the GST return filling is done on time and as per the rules.

Reasons that Could Lead to GST Cancellation

A taxpayer can face cancellation of GST registration by an authorised GST officer under the following conditions outlined in GSTR 3B: 

Reason Details
Non-filling of GSTR 3B Failure to file tax returns for six consecutive months (3 consecutive months for composite taxpayers) can result in the cancellation of GST registration.
Rule 86B is violated Taxpayers whose monthly taxable value of supply is greater than Rs.50 lakh may, under certain conditions, use ITC from their electronic credit ledger to pay off more than 99% of their tax obligation. It may result in a violation of Rule 86B though there are certain exceptions for that.
Inaccurate sales reporting It is extremely unusual for a registered person to be uninformed that an invoice was issued for non-delivered goods or services. This could happen if the registered person gives the product or service without providing an invoice, or if the buyer returns an item but the sale is still recorded in their books.
Violating anti-profiteering rules Anyone whose actions violate anti-profiteering laws runs the risk of having their GST registration revoked. It might happen if you don’t tell your clients about the new, lower GST rates.
Illegal ways of getting registered Fraud, deceit, or other dishonest means were used to get GST registration.
Not initiating business after GST registration If the business is not started within 6 months of the GST registration, it may lead to GST cancellation
Other reasons When a company ceases operations completely or partially, when a sole owner dies, when it is merged into another company, when it is demerged, or when it is sold, the associated GST number is cancelled.

How you May Avoid the Cancellation of GST Registration?

The following measures can be taken to avoid GST cancellation:

  • Revoking the cancellation order: If your GST registration has been cancelled, you have the opportunity to apply for the revocation of the cancellation order. It can be done by filling out FORM GST REG-17 explaining why your registration should subsist. You must file this reply within seven business days of your GST cancellation.
  • Requesting the concerned authority: A taxpayer who has their GST registrations cancelled at the authority’s discretion has 30 days from the day of the GST cancellation order to request the concerned authority for overturning the cancellation. 
  • If the appropriate officer acts in the manner prescribed by law within the given time frame and issues an order, the application filed for revocation of cancellation of GST registration may be denied or the revocation of the cancellation of registration may take place.
  • Paying the pending taxes: If a person’s registration was revoked because of a lack of timely filing of required tax forms, that person’s registration will not be reinstated until all back taxes, plus interest, penalties, and late fees are paid in full.
  • Filing the returns for the cancellation period: In circumstances where a registration has been revoked retroactively, the registered person must submit all GST return fillings for the period between the registration’s effective cancellation date and the date of the order revoking the cancellation of the registration within thirty days of the order’s date.

The Bottom Line

GST return fillings need to be submitted every month and occasionally on a quarterly basis. Consequently, it can be challenging to stay on top of things. To avoid any issues, you can subscribe to GST Helpline or any other GST mobile app. Through a GST mobile app, you can receive notifications regarding the most recent GST news updates and changes in addition to being informed of all GST return filing deadlines. The prompt alerts assist you in filing your returns on time, preventing you from incurring significant fines.

GST filling is also essential to secure a business loan. By filling out GST returns regularly, you may obtain an online business loan to meet the capital requirements of your business. As GST returns are an important document to procure a loan for a business, they are also termed GST business loans. GST business loans get approved quickly as there is no need to submit balance sheets, bank statements, and similar documents. These quick business loans are issued on the basis of GSTR which makes the loan assessment simple and hassle-free.

Read More:

The Impact Of GST On Business Loans?

Jurisdiction of GST State Code

GST Return Filing

Documents Needed for GST Registration

Checklist To Consider Before Filing September GST Returns

Business Loans vs. Equity Financing

Business Loans vs. Equity Financing: Which One Is Right For Your Business?

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