Form GST REG-16: applying to cancel GST registration

When can you apply to cancel?

Section 29(1) allows a registered person to seek cancellation when the business is discontinued, transferred fully, amalgamated or demerged, when its constitution changes in a way that changes PAN, when the person is no longer liable to be registered, or on the death of a sole proprietor, through the legal heir.

Voluntary registrants can also cancel. The earlier condition that a voluntary registrant must wait one year was removed in 2019. Officers can separately cancel a registration on their own under section 29(2), for example for non-filing of returns, which is a different process starting with a notice in REG-17.

What must you declare and pay?

Section 29(5) requires you to pay an amount equal to the input tax credit on inputs held in stock, inputs in semi-finished or finished goods, and capital goods on the date of cancellation, or the output tax on those goods, whichever is higher. For capital goods, the credit is reduced by percentage points for the period used. This amount is paid through the electronic ledgers before or along with GSTR-10.

REG-16 asks for the value of stock and the tax involved, the date from which cancellation is sought, and details of the last return filed. All returns up to the date of cancellation must be filed.

What documents and data are needed?

Prepare these before you start, because the portal does not let you save a half-filled cancellation application for long, and the stock figures need some working with your accountant first.

• Reason for cancellation and the date of the event
• Closing stock statement with input tax credit on stock and capital goods
• GSTIN of the transferee in case of transfer, merger or amalgamation
• Details of returns filed up to the date of cancellation
• Board resolution or partner consent where applicable

Timelines after you apply

The officer can seek clarification through a notice in REG-03. After examining the application, the officer passes an order in REG-19 within 30 days of the application or of your reply. Cancellation takes effect from the date the officer determines, which can be the date you requested or a later date.

Within three months of the date of cancellation or the date of the order, whichever is later, you must file the final return in GSTR-10. If it is not filed, a notice in GSTR-3A follows, and the officer can assess the liability on best judgement.

Common errors and consequences

Mistakes include applying for cancellation while returns are pending, forgetting to reverse credit on closing stock, choosing a cancellation date earlier than the last invoice, and assuming that cancellation ends all obligations. Liabilities for periods before cancellation remain, and notices can still be issued for them.

A business that simply stops filing without applying for cancellation will usually face suo motu cancellation with late fees and interest accumulating. Applying properly keeps the record clean if you need GST registration again. Refogo's partner professionals can file REG-16 and GSTR-10 for a fixed fee.

Step by step

1. 1File pending returns

   Bring GSTR-1 and GSTR-3B up to date until the proposed cancellation date.

2. 2Value closing stock

   Compute credit on stock and capital goods to be paid under section 29(5).

3. 3File REG-16

   Go to Services, Registration, Application for Cancellation, fill reasons, date and stock details.

4. 4Sign and submit

   Submit with DSC or EVC and note the ARN.

5. 5Respond to any notice

   Reply to REG-03 within the time given; the order is issued in REG-19.

6. 6File GSTR-10

   File the final return within three months of the cancellation date or order.