Goods and Services Tax registration retraction typically signifies that individuals paying taxes in India are no longer recognised as registered entities. Consequently, such individuals would be unable to collect or pay any Goods and Services Tax and would not be eligible to claim input tax credits. This also implies that they are not required to file any tax returns. In this blog, we shall discuss the documents required for GST retraction.
Goods and Services Tax Retraction
Before going into the documents required for GST retraction, let us learn about the concept of retraction first. Goods and Services Tax Retraction of registration refers to the rectification made to the application form, indicating that the termination of Goods and Services Tax registration has been reversed. This retraction is applicable only in cases where the officer of Goods and Services Tax has forcefully terminated the GSTIN registration of a taxpayer. After the termination order date, the affected individual has a 30-day window to reapply for GST cancellation with the office of GST.
Strategy for the Termination of GST Registration
The termination and registration of Goods and Services Tax can be a complex process, often viewed as a challenging undertaking. To navigate this procedure successfully, individuals must adhere to a strategic approach. Missing any required steps during the termination filing can necessitate restarting the entire process. Acquiring a thorough understanding of the termination process is essential to streamline the procedure. While the termination process itself is not overly complicated, precision is crucial to avoid potential errors that could result in both time and financial costs.
Implications of Goods and Services Tax Registration Termination
Before going into the documents required for GST retraction, let us learn about its implications. Mentioned below are the result of GST retraction:
1. Inability to Pay Goods and Services Tax
Upon GST retraction, taxpayers will no longer have the legal obligation to pay GST. This cessation marks a significant shift in the financial responsibilities of the business or individual.
2. Legal Ramifications for Business Operations
For certain businesses, GST registration is obligatory. If GST registration is terminated while the business continues to operate, it is considered a violation under Goods and Services Tax regulations. Such a contravention may result in severe penalties imposed on the offending entity. It is crucial for businesses to be aware of the legal implications associated with the termination of GST registration to avoid legal consequences.
Procedure for the Termination of Goods and Services Tax Registration by the Taxpayer
Mentioned below is the process for GST retraction after you have ready the documents required for GST retraction:
1. Access the GST Online Portal:
· Visit the official Goods and Services Tax website.
· Log in to your account using your username and password.
2. Go to Registration Termination:
· After successful login, click on the ‘Services’ option.
· Under ‘Services,’ locate and select the ‘Registration’ option.
3. Choose Application for Termination:
· In the ‘Registration’ tab, choose ‘Application for Termination of Registration.’
4. Complete REG-16 Form:
· Fill in the REG-16 Form with essential information, termination details, and verification details.
· Provide information about addresses and bank accounts for future reference.
· Save and continue after filling in all required details.
5. Activate Termination Details Tab:
· Proceed to the Termination details tab, where you must fill in necessary sections under the main details.
6. Specify Reasons for Termination:
· Select the appropriate reason for termination from options such as business constitution change, expiration of GST payment accountability, business closure, business transfer, proprietor’s death, or others.
· Choose the termination date and enter GSTIN.
· Save and continue after entering the details.
7. Verification Details:
· Complete the verification tab by providing necessary details.
8. Submit Application:
· Click on ‘Submit with DSC’ (Digital Signature Certificate) or ‘Submit with EDC’ (Electronic Document Verification) to finalise the application.
· Enter the OTP received on the provided number in the case of EDC submission.
9. Goods and Services Tax Officer Verification:
· After submission, the Goods and Services Tax Officer will verify the application.
· Upon acceptance, the officer will pass a registration termination order through Form REC-19 within 30 days of application submission.
10. Notification of Termination Order:
· The tax officer will notify the applicant about the termination order, specifying the effective date of termination.
Necessary Documents Required for GST Retraction
Various forms form part of the essential documents required for GST retraction. These documents required for GST retraction include:
1. Form GST REG-16:
This form is a prerequisite for applying for GST termination.
2. Form GST REG-17:
A cause notice for retraction necessitates the submission of this form.
3. Form GST REG-18:
Required for responding to the notice received during the termination process.
4. Form GST REG-19:
Essential during the period of order dissolution, signifying the culmination of the termination proceedings.
5. Form GST REG-20:
This document is involved in the termination process, indicating the order to decline the proceedings of termination.
6. Form GST REG-21:
Necessary at the moment of retraction, serving a role in the reversal of the termination order.
7. Form GST REG-22:
Required for the retraction order of the registration termination, outlining the reversal process.
Eligibility for Termination of GST Registration
After seeing the documents required for GST retraction, let us now look at the eligibility for it. The termination of Goods and Services Tax registration is permitted under various circumstances, which include:
1. Turnover Below Threshold:
Taxpayers with a turnover less than the specified threshold value are eligible to cancel their registration.
2. Tax Officer’s Discretion:
Tax officers can initiate termination on their own accord.
3. Demise of Main Proprietor:
In the event of the main and sole proprietor’s death, legal beneficiaries can cancel the registration.
4. Business Shutdown:
Individuals who have closed down their business and are no longer operating can apply for registration termination.
Points to Remember for Filing Goods and Services Tax Registration Termination
When filing an application for the termination of Goods and Services Tax registration using the REG-16 Form, you need the following information alongside the documents required for GST retraction:
1. Contact Information:
Mobile number, email id, and other relevant contact details.
2. Reasons for Termination:
Clear understanding of the reasons for terminating Goods and Services Tax registration.
3. Business Details:
· Address of the main business site.
· Goods and Services Tax Identification Number (GSTIN).
4. Termination Specifics:
Chosen termination date for registration.
5. Business Changes:
Information about business registration if the business unit underwent mergers, collaborations, or transfers.
6. Inventory Details:
· Information about the value and payable tax on input stocks.
· Details about inputs in semi-finished and finished goods.
· Information about the commodity of capital plant/goods and machinery.
7. Return Information:
Facts of the return with the specific return’s Acknowledgement Reference Number (ARN).
8. Termination Status Checking Method:
Familiarity with the method to check the status of termination.
Final Thoughts
The documents required for GST retraction play a vital role in the seamless and accurate termination of Goods and Services Tax registration. These essential documents, including GST REG-16, REG-17, REG-18, REG-19, REG-20, REG-21, and REG-22, constitute a comprehensive framework for initiating, responding to notices, and completing the entire retraction process. Each of these documents required for GST retraction serve a specific purpose, ensuring compliance with regulatory procedures. The meticulous preparation and submission of these documents facilitate a transparent and efficient process, allowing individuals to successfully retract their GST registration in accordance with the prescribed guidelines.
