32nd GST Council meeting

 

10th January 2019
 
32nd GST Council meeting was held at New Delhi and chaired by Shri Arun Jaitley. Announcements made was a big relief to MSMEs and small traders.

The key takeaways of the 32nd GST Council meeting are as follows:

• Increase in GST registration limit from Rs 20 lakhs up to Rs 40 lakhs for suppliers of goods.
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• Changes in the existing composition scheme made by increasing the turnover limit to join the scheme up to Rs 1.5 crores, tax payments to be made quarterly and returns to be filed annually starting 1st April 2019.
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• New composition scheme is introduced for service providers and those who supply services along with goods; the Turnover limit set is Rs 50 lakhs and the Tax rate is fixed at 6%.
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• No rate cuts were announced this time. GoMs were formed to study taxation of under-construction properties & lotteries.
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• Calamity cess up to 1% for up to 2 years will be charged for supplies made within the State of Kerala.

JSON file errors and Possible suggestions/Actions to be taken…

Filing GST returns…?? As all GST returns have to be filed online only using either offline GST return tool or punching online on portal, it have all possibilities to get error if you have selected to upload the return using offline GST return tool using either “Excel template” or “CSV files”.

Unfortunately, GST return preparation tool will generate JSON file even if errors contain in the data entered but after uploading the same file on portal after some time you may get error status and you may get frustrated or even miss out the due date of filling the return.

I have complied possible error and suggestions while filing of GST returns;

1

Jason file uploaded successfully with no error report but less invoices updated on GST portal Suggestion/Action to be taken 1. Values accepted only up to 2 decimal point. More than 2 decimal figures will not be updated on online portal. Round up values in this manner only 2. Cross tally total invoice numbers uploaded and reflected in online portal 3. This error is due to wrong GST number of customer in Jason file 4. Cross tally for total turnover details and aggregate turnover details as same is not reflected when Jason file is uploaded. Q2 : GST number is not correct Utmost care must be taken while uploading the details in offline tool for GST numbers. It should be always validated well from GST portal Q3 : Error in Json structure validation 1. Punching of state name instead of selecting from dropdown in excel utility 2. Multiple tax rate in one invoice but same has punched with single line 3. Wrong Port code or Shipping bill number 4. In case of exports without payment of duty – selecting GST rate other than 0% 5. No special character should be present in any cell i. Ensure that GSTIN is mentioned in the JSON file. ii. Ensure that you have uploaded the most recent and correct JSON file in the GST Portal under the correct GSTIN. iii. If the problem still persists, download the latest version of the GST Offline return tool or GST software and prepare the JSON file Q 4 :No Gross turnover details reflecting after uploading JSON file Cross tally for total turnover details and aggregate turnover details as same is not reflected when Jason file is uploaded. You are required to punch the same online and save the same. Q5 : No documents issued reflected in Table no. 13 Cross tally for document issued during the period details (Table no.13) as same is not reflected when Jason file is uploaded. You have to update and save and wait for some time to update the same Q6 : No section data or Gross Turnover is available to process the request If you’re filing a NIL return without any invoices, you need to punch in table no.8 all values to 0 (again) then save the return. Error will be resolved Q7 : The GSTIN is invalid. Please provide a valid GSTIN 1. Download JSON report and open in Word Doc         2. Search for the error number‘RET191113’         3. You will see the invoices where    the issue has occurred.         4. Note the   invoice numbers         5. Correct the GSTIN and then re-upload to GSTN portal     Q8 :The rate entered is not valid according to the Rate List You must have not entered correct tax rates. Kindly round off the tax rate before uploading the same in excel utility or CSV file. Q9: Invoice number does not exist. Please enter a valid Invoice number. Invoice Number should be alphanumeric, a maximum of 16 characters in length, and can contain only ‘-’ or ‘/’ as special characters. Please check that all invoice numbers follow this format. Q10 : Invoice already exist with different CTIN or same CTIN. Please delete the existing invoice and re-upload again 1. Check if the invoice is already uploaded on govt portal: 2. Ignore the error if the invoice is   uploaded and you don’t need to  make any changes 3. To make changes, delete the old   invoice on the government   portal. 4. Upload the changed invoice with proper JSON file Q11: Date is Invalid. Date of invoice cannot be before registration date. 1. This is possible that invoice date you have mentioned is earlier than the date on which your customer has obtained their GSTIN registration. 2. Delete the these invoices 3. Enter these invoices to B2C(S)   section 4. Your client may not be eligible for ITC in such cases

source :taxguru

ITC Rules for Capital Goods under GST

Businesses use many capital goods on which input tax credit is available. This article is for the portion of credit of GST paid on purchasing capital goods.

Topics:

• What is capital goods?
• What is Common Credit?
• Why is common credit important?
• Types of ITC for Capital Goods
  • Capital Goods used only for Personal Use or for Exempted Sales
  • Capital Goods used for normal sales
  • Common credit for partly personal and partly normal sales
• Calculations for common credit
• Reversal of credit under certain circumstances
• Capital goods send on job work

What is capital goods?

Capital goods are assets such as buildings, machinery, equipment, vehicles and tools that an organization uses to produce goods or services. For example, a blast furnace used in iron and steel industry is a capital asset for the steel manufacturer.

Difference between capital goods & other inputs

Let us take an example.

You are making a cake in your oven. You add ingredients eggs, water, flour, butter. These are your inputs. The cake is your final product.  The oven is the capital good which helps you to make the cake.

Inputs are consumed while making the final product and are treated as business expenses as cost of production.

Capital goods are not consumed when the final product is made. They are not consumed in a single year of production. Therefore, they cannot be entirely deducted as business expenses in the year of their purchase. Instead, they are depreciated over the course of their useful lives. The business recognises part of the cost each year through accounting techniques as depreciation, amortization and depletion.

What is credit on capital goods?

When you purchase anything, you are required to pay GST on it. Later, you can claim input tax credit on the GST paid on your purchases. SImilarly, when you are purchasing any machinery for your factory, you will pay the applicable GST rate. This GST paid can be claimed as credit in the same way as inputs.

However, if you claim depreciation on the GST paid while purchasing the capital asset, you cannot claim input tax credit.

What is Common Credit?

Businesses often use the same assets and inputs for both business & personal use.

For example, Ms. Anita is a freelance designer and blogger. She has a personal laptop which she also uses for her freelance work. She can claim the input credit of GST paid on purchase of laptop only to the extent it pertains to her freelance business.

Ms. Anita has also purchased a special designing software. Since this pertains only to her business, she can claim full ITC on this.

Why is common credit important?

ITC is only available for business purposes. Many traders use the same inputs for both business & personal reasons. A taxpayer cannot claim any tax benefit of personal expenses.

Again, goods exempted under GST already enjoy 0% GST. ITC cannot be claimed for inputs used in such exempted goods as it will lead to negative taxation.  So, ITC on inputs for exempted goods will also be removed.

The following calculations will help you to calculate the common credit that is attributable to personal supplies & exempted supplies leaving behind only the portion that pertains to taxable sales. Only that amount can be claimed as ITC.

The credit that is attributable to personal supplies & exempted supplies must be reversed in GSTR-2. Click here to find out the reversal process in GSTR-2.

Types of ITC for Capital Goods

Let us take each case one by one.

A. Capital Goods used only for Personal Use or for Exempted Sales

No ITC is available for personal purchases or for capital goods used in exempted sales. This will be indicated in FORM GSTR-2 and shall not be credited to the electronic credit ledger.

Example 1: Personal Purchases

Ms. Anita has purchased a fridge. Since this is not required for her business, i.e., a purely personal purchase, she will not be able to claim any ITC on the GST paid for the fridge.

Example 2: Capital Goods used for exempted sales

Mr. Avinash has purchased a small flour mill in his grocery shop to grind wheat grains to flour. Since he is producing unbranded flour it is exempted from GST. As it is an exempted sales, he cannot claim any ITC on the GST paid for the mill.

B. Capital Goods used for normal sales

XYZ has purchased machinery to manufacture shoes. Since, shoes are normal taxable supplies, the GST included paid while purchasing machinery will be completely available as ITC. This shall be indicated in FORM GSTR-2 and shall be credited to the electronic credit ledger.

C. Common credit for partly personal/ exempted and partly normal sales

1. The ITC paid for the capital goods will be credited to electronic credit ledger
2. Useful life of such capital asset will be taken as 5 years from the date of purchase
3. Now the total amount of input tax credited to electronic credit ledger for the whole useful life will be distributed over the useful life

The useful life will be taken as 5 years.

If you pay GST on a monthly basis then you will use the following formula

If your turnover is less than 1.5 crore, then you will pay GST on a quarterly basis. ITC will be calculated using the following formula

Calculations for common credit

C.1 For exempted supplies

The amount of ITC attributable to exempt supplies out of common capital credit –

Remaining amount after deducting credit for exempt supplies will be allowed as ITC.

All the above calculations must be done separately for:

• Central tax
• State Tax
• Union Territory Tax
• Integrated Tax

C.2 What happens if one starts using an asset for exempt goods also for taxable goods?

 If a capital asset was earlier used exclusively used for:

1. Personal purpose OR
2. Selling exempted goods

And now it will is used commonly for:

1. Business and personal purpose OR
2. Effecting taxable and exempt supplies

Input tax to be credited to electronic credit ledger = Input Tax – 5% of Input tax for every quarter or part thereof from date of invoice

Let us understand this via an example.

Mr. Avinash bought a capital asset for use in exempt supplies only. He paid Rs 1,00,000/- along with GST of Rs 18,000 as input tax on 01/10/2017. On 15/11/2018 he wishes to use the capital asset commonly for both taxable and exempt supplies.

Now the eligible common input tax credit will be calculated as follows

= Input Tax – 5% of Input tax for every quarter or part thereof

The no. of quarters from 01/10/2017 to 15/11/2018= 5

= 18,000 – (5% of 18000) * 5 quarters

= 18,000 – 4,500

= 13,500

Now, this is the common credit available to Mr. Avinash. He will credit Rs 13,500 to Electronic Credit ledger.

Now he will calculate the ITC attributable to exempted supplies as per the formula in C.1.

Common credit for 1 month= 13,500÷60=225

Assuming his total turnover is 160 lakhs and exempted sales is 40 lakhs-

=56.25

This amount 56.25 will be reversed in GSTR-2 under Table 11 ITC Reversal.

Reversal of credit under certain circumstances

In the following circumstances the proportionate ITC will be reversed i.e. added to output tax liability in GSTR-2:

1. Where a normal taxpayer opts to pay tax under composition scheme or goods/services supplied by him become exempt
2. In case of supply of capital goods or plant and machinery, on which input tax credit has been taken
3. Every registered person whose registration is cancelled

Input tax credit involved in the remaining useful life in months shall be computed on pro-rata basis, taking the useful life as five years.

Example:

Capital goods have been in use for 4 years, 6 month and 15 days.

Therefore, the useful remaining life in months= 5 months ignoring a part of the month

Input tax credit taken on such capital goods= C (say 10 lakhs)

Input tax credit attributable to remaining useful life= C *5÷60

=10,00,000*5÷60

=83,333

The above calculation must be done separately for integrated tax and central tax.

This amount must be reversed in (i.e. becomes part of output tax liability) and furnished in:

1. Where a normal taxpayer opts to pay tax under composition scheme or goods/services supplied by him become exempt- FORM GST ITC-03
2. Registration is cancelled- FORM GSTR-10

This must be accompanied by a certificate from a practicing chartered accountant or cost accountant.

In case of sale of capital goods, if the amount determined above is greater than the tax on transaction value of such sale, then the amount determined as above will be added to output tax liability. The details must be furnished in FORM GSTR-1.

Capital goods send on job work

ITC will be allowed to the principal manufacturer if a capital asset has been sent to a job worker for job work.

Condition

Such goods must be received back within a period of 3 years of being sent out.

Implications

If the goods are not sent back within 3 years, it shall be treated as a deemed supply from the date of sending the goods and tax would be payable along with interest for late payment of taxes.

For more information on ITC on job work please refer our article.

Please also read our article on ITC rules for common credit for inputs under GST.

From the above calculations, it is clear that ITC Rules for Common Credit under GST have been meant to be followed strictly to avoid interest and other recovery mechanisms.

GST Reverse Charge Mechanism (RCM) further Deferred/ Suspended till 30 Sept. 2018

As per News Reports, the provisions relating to Reverse Charge Mechanism (RCM) under GST have been further Deferred by Revenue Deptt. for 3 months, i.e. from 30 June 2018 to 30 Sept. 2018, for which CBIC will issue the Notification shortly.

GST Reverse Charge Mechanism (RCM) further Deferred/ Suspended till 30 June 2018: CBEC Notification

The CBEC has notified that the reverse charge mechanism (RCM), under Section 9(4) of the CGST Act, 2017/ Section 5(4) of the IGST Act, 2017, has been further deferred/ suspended till 30 June 2018, in line with GST Council recommendations dt. 10 March 2018. In the meantime, a Group of Ministers  (GoM) will look into the modalities of its implementation to ensure that no inconvenience is caused to the trade and industry.

CBEC Notifies Partial Suspension of ‘Reverse Charge Mechanism (RCM) under GST till 31 March 2018

GST Council, in its 22nd Meeting dt. 6 Oct. 2017, has recommended that the reverse charge mechanism (RCM) under Section 9(4) of the CGST Act, 2017/ Section 5(4) of the IGST Act, 2017 shall remain deferred/ suspended till 31.03.2018 and will be reviewed by a committee of experts.

Accordingly, the CBEC has notified suspension of Reverse Charge Mechanism (RCM) till 31 March 2018 under Section 9(4) of the CGST Act, 2017/ Section 7(4) of the UTGST Act, 2017/ Section 5(4) of the IGST Act, 2017. There is nothing in the Notification on the effective date of RCM suspension. However GSTN has tweeted on 12 Oct. 2017 that the RCM Suspension will be applicable w.e.f. the date of Notification (i.e. 13 Oct. 2017).

It may be noted that there is no change on reverse charge provisions under Section 9(3) of CGST/ SGST Acts, Section 7(3) of UTGST Act and Section 5(3) of the IGST Act, relating to GTA, Legal Services provided by an Advocate, etc. and for that reason only it’s called to be a partial suspension of RCM till 31 March 2018.

This partial suspension of RCM is basically meant for convenience of large taxpayers and survival of unregistered taxpayers. It will provide an opportunity to such taxpayers with more time till 31 March 2018, to be familiar with the compliance requirements. Meanwhile the Government will also be able to streamline the relevant procedures. In fact large/ registered businesses were reluctant to make compliance/ pay tax on behalf of small/ unregistered businesses and they were avoiding to do business with them. This will benefit small businesses and substantially reduce compliance costs.

Reverse Charge: Buying from Unregistered Dealers

Latest update as on 23rd Mar 2018

Applicability of Reverse Charge Mechanism (in case of supplies made by unregistered persons to registered persons) has been postponed until 30.06.2018.

Reverse Charge under GST is a very important topic. There are certain goods & services which attract reverse charge. However, this is not all.

As per Sec 9(4) of CGST Act, if a registered person purchases goods/services from an unregistered dealer (URD) then the registered taxpayer is liable to pay GST on reverse charge basis. All the provisions of the Act will apply to such recipient as if he were the person liable for paying the tax in relation to the supply of goods or services.

This provision will apply if the below conditions are met:

• There should be a supply of goods or services
• The supply should be in respect of taxable goods/services
• Supply must be by an unregistered person.
• Supply must be to a registered person
• Supply must be an intra-state supply as compulsory registration is required for inter-state sales

Purchasing from Unregistered Suppliers

Purchases upto Rs. 5,000 per day from unregistered suppliers will not attract GST.  In other words, there is a reverse charge on buying from unregistered dealers if you are dealing with unregistered suppliers and making payments above Rs. 5,000.

Example:

ABC Ltd. is a registered company which has spent Rs. 7,500 on purchases from a URD. Should it pay GST via RCM (Reverse Charge Mechanism) on Rs. 1,500?

Once the limit of Rs. 5,000 in a day is crossed, the GST is payable on the entire amount of Rs. 7,500 on RCM.

What does it mean?

Registered taxpayers will have to look into their expenses daily and analyze their P/L accounts to check whether any transactions/expenses fall under RCM.

If the expenses are above Rs. 5,000 then they will be required to pay GST on these transactions under RCM.

What is the process of paying tax via RCM on purchases from URDs?

• You will be required to fill up all the correct HSN codes for the goods and services that fall under RCM. This will not be a problem as you can use our HSN calculator for free to find out the HSN codes for all the items.
• Upload invoice details on our software. While uploading invoices, you can select whether RCM is applicable or not.
• If you cross the threshold of Rs. 5,000, you will get an alert message saying that your aggregate purchases from URDs have exceeded Rs. 5,000.

The message will read:“Please verify: There are one or more unregistered purchase invoices under reverse charge without any tax (no or 0 tax) in your data. As per GST rules you should add appropriate tax amount against such invoices before filing.”

• Our software will identify invoices which do not have any GSTIN and can be subject to RCM.
• You will be asked to select the appropriate invoice.
• You will be asked to enter the invoice taxable value and GST payable under RCM.
• Our software will track these invoices and remember their treatment. If an earlier invoice from the same GSTIN was marked as under Reverse Charge, the system will alert the user that a similar invoice from the same GSTIN had already marked been under Reverse Charge and hence the new invoice may also be under Reverse Charge.

Note: One thing you can do is ask your vendors to bill accordingly. If you find you are exceeding the Rs. 5,000 limit, you can ask your vendor to split the bill for consecutive days so that you do not end up paying tax for small amounts.

For example, you have a bill of Rs. 500 from a printer. You find that your total purchases from URDs is Rs. 5,250,i.e., crossing the threshold of Rs. 5000.

You can-

1. Make payment the next day and enter bill for the next day
2. Request the printer to issue 2 bills for 2 days for Rs. 250 each

What are the Profit & Loss items which might attract GST under RCM?

You must remember to keep a close track of the expenses portion of your P/L account. Following is an example of some expenses which can attract GST under RCM-

• Rent
• Commission payments
• Printing and stationery
• Repairs and Maintenance
• Office Maintenance
• Vehicle maintenance
• Computer maintenance
• Legal Fees
• Consultancy Fees
• Professional Fees
• Audit Fees
• Freight and transportation expenses (GTA)
• Gift expenses
• Business promotion expenses
• Advertisement

Exceptions

For these items, RCM will not apply for the simple reason that GST is not applicable on these:

• Salary and wages
• Electricity
• Interest
• Car fuel (Diesel/petrol)
• Government Fees (such as MCA fees, land registration fees etc.)

Exempted Goods and RCM

If the supply involves exempted goods/services RCM will not be applicable.

Examples:

1. A registered person hires auto rickshaw for commuting from one place to another. 

This section will not apply as the transportation of passenger by auto rickshaw is exempted from GST.

2. A registered person stays in a budget hotel whose tariff is Rs. 800 per day. Is GST applicable on RCM?

Since the room tariff is less than ₹1,000 it is exempted from GST. The question of RCM does not arise.

Opinion

There are certain complexities & confusion in paying GST under RCM.

For items excluding GST, you will just calculate the GST amount and pay under RCM. Many URDs follow cost+profit method.

For example, a printer sends a bill of Rs. 6,000 for printing 600 brochures. The printer sends a simple bill of Rs. 6,000 only without any GST. Then the registered person will calculate GST @12% on Rs. 6,000 and pay Rs.720 to the government.

The complications arise when you are paying items at MRP (which include GST). Say, you (registered business) are buying biscuits of Rs. 500 (MRP which includes GST) from a small roadside shop (URD). Your total purchases from URD in the day exceeds the Rs. 5000 limit and RCM applies.

How to pay tax via RCM in such cases?

Back-calculation

You can back calculate from Rs. 500 (say 400 taxable value) and pay Rs. 400 to URD and GST 100 to govt and claim ITC. But the URD will not accept less payment. Also, as per GST act, you cannot collect GST under RCM from the service provider/supplier.

Pay GST on Rs. 500

If you pay GST on Rs. 500, it will be double taxation.

As per most CAs, one should simply calculate GST on Rs. 500, pay and claim the same as ITC.

Effect

This will increase working capital, compliances, classification disputes etc. for registered businesses. Registered businesses may prefer to deal with other registered dealers only to ease business processes and reduce complications. This could hamper the business of unregistered dealers. In order to maintain market share they might be required to voluntarily register or at least assist their registered customers in GST compliance (such as identify HSN Codes, applicable GST rates etc.)

ADVANCE RECEIPT ENTRY

Under GST Regime, Advance Receipt from Register or Unregister Party create our Tax Liability. In this document we will cover how to pass advance receipt entry.

Scenario A :
Receipt of Advance and Sales or Service Bill has been raised in same month

Scenario B :
Receipt of Advance and Sales or Service bill in different month

Scenario A : Company Received 118000 Rs as Total Amount of Advance including Tax amount (GST@18%)on 1st July and on 10th July Bill has been raise for 200000+36000 Tax = 236000 Rs

Masters : Party Master : Enable Bill wise option in Party Master, State and Registration Type,


Stock Master :

If advance has been received against stock please mention GST Rate and HSN Code of Stock

Service Ledger :

If advance has been received against service ledger please configure SAC and GST Rate for ledger.

Why Nature of Transaction has been set as Not Applicable???
See all service or exp ledger we need to set as Nature of Transaction as Not applicable because same ledger can be used for within same state service or interstate service or exp. Same ledger can be used from registered dealer and can be used for unregister dealer. Hence it is suggestible to keep as notapplicable. Tally will automatic will understand the nature once state has and registration mention at Party level. You can fix your nature of Transaction only when the nature of entry is always fix.

Entry 1 :

Passing Advance Receipt Go to Receipt voucher>>click on Advance Receipt by clicking Select Stock against your advance has been received (Note this will not affect physical balance of stock) If it is against any service then click on ALT+L (Show Ledger)ALT+V>>Select Bank>>Party Name>>


Above entry if final advance receipt entry. Please select proper bill reference as advance receipt After passing entry please check GSTR1 Report

Cancellation of registration under GST- Why & How?

In case you want to cancel your GST registration because GST does not apply to you or because you are shutting down your business or profession. Or there is some other valid reason due to which you want to cancel your GST registration, this article will guide you through the process.

Topics:

• What is meant by cancellation of registration?
• Consequences of cancellation
• Who can cancel the GST registration?
• Cancellation when turnover is less than 20 lakhs
• Cancellation by taxpayer in other cases
• Forms for cancellation
• Cancellation by tax officer
• Revocation of cancellation of registration

Attention GST registered taxpayers! 31st March 2018 is deadline to opt into Composition for FY 2018-19

For: Any GST registered taxpayer who want to opt for the Composition scheme for FY 2018-19;

31st March 2018 is the deadline to file the intimation in Form GST CMP-02 to opt into composition scheme for the FY 2018-19.

Follow our Step-by-step Guide to file CMP-02

Also, furnish statement in form ITC-03 within 60 days of commencement of the FY 2018-19 to declare the ITC claim that has to be reversed on inputs/capital goods in stock, in semi-finished or in finished goods.

What is meant by cancellation of registration?

Cancellation of GST registration simply means that the taxpayer will not be a GST registered person any more. He will not have to pay or collect GST.

Consequences of Cancellation

• The taxpayer will not pay GST anymore
• For certain businesses,  registration under GST is mandatory. If the GST registration is cancelled and business is still continued, it will mean an offence under GST and heavy penalties will apply.

Who can cancel the GST registration?

Cancellation of GST registration can be done by-

*** Application for cancellation, in case of voluntary registrations made under GST, can be made only after one year from the date of registration.

Let us take up each case.

Cancellation when Turnover is less than 20 lakhs

Every person who was registered under old laws had to mandatorily migrate to GST. Many such persons are not liable to be registered under GST.

For example, the threshold under VAT in most states was 5 lakhs whereas it is 20 lakhs under GST. However, do make sure you are not making inter-state supplies since registration is mandatory for inter-state suppliers except for service providers.

Such a taxpayer can submit an application electronically in FORM GST REG-29 at the common portal.

The proper officer shall, after conducting an enquiry as required will cancel the registration.

Here are the steps of cancelling on GST Portal-

Step 1

Log in to the GST Portal and click the Cancellation of Provisional Registration

Step 2

• The Cancellation page opens.
• Your GSTIN and name of business will show automatically.
• You are required to give a reason for cancellation.

You will be asked if you have issued any tax invoices during the month.

Simply fill up the details of authorized signatories, place. Finally, sign off with EVC with you are a proprietorship or a partnership.  LLPs & Companies must mandatorily sign with DSC.

Note: Taxpayers who have not issued tax invoice can avail above service. If the taxpayer has issued any tax invoice then FORM GST REG-16 needs to be filed.Refer below.

Cancellation by taxpayer in other cases

Why does a taxpayer wish to cancel his registration?

1. The business has been discontinued
2. The business has been transferred fully, amalgamated, demerged or otherwise disposed —The transferee (or the new company from amalgamation/ demerger) has to get registered. The transferor will cancel its registration if it ceases to exist.
3. There is a change in the constitution of the business   (For example- Private limited company has changed to a public limited company)

Forms for cancellation

All those who cannot follow the above method must file an application for cancellation in FORM GST REG 16. The legal heirs of the deceased taxpayer will follow the same procedure as below.

• Application for cancellation has to be made in FORM GST REG 16.
• The following details must be included in FORM GST REG 16-
  • Details of inputs, semi-finished, finished goods held in stock on the date on which cancellation of registration is applied
  • Liability thereon
  • Details of the payment
• The proper officer has to issue an order for cancellation in FORM GST REG-19 within 30 days from date of application. The cancellation will be effective from a date determined by the officer and he will notify the taxable person

Cancellation by tax officer

Why will the officer cancel registration?

The registration can be cancelled, if the taxpayer-

(a) Does not conduct any business from the declared place of business OR

(b) Issues invoice or bill without supply of goods/services (i.e., in violation of the provisions) OR

(c) Violates the anti-profiteering provisions (for example, not passing on benefit of ITC to customers)

Procedure

• If the proper officer has reasons to cancel the registration of a person then he will send a show cause notice to such person in FORM GST REG-17.

• The person must reply in FORM REG–18 within 7 days from date of service of notice why his registration should not be cancelled.

• If the reply is found to be satisfactory, the proper officer will drop the proceedings and pass an order in FORM GST REG –20.

• If the registration is liable to be cancelled, the proper officer will issue an order in FORM GST REG-19. The order will be sent within 30 days from the date of reply to the show cause.

Revocation of cancellation of registration

What is revocation of cancellation?

Revocation means the official cancellation of a decision or promise. Revocation of cancellation of registration means that the decision to cancel the registration has been reversed and the registration is still valid.

When is revocation of cancellation applicable?

This is applicable only when the tax officer has cancelled the registration of a taxable person on his own motion. Such taxable person can apply to the officer for revocation of cancellation within thirty days from the date of the cancellation order.

Procedure

• A registered person can submit an application for revocation of cancellation, in FORM GST REG-21, if his registration has been cancelled suo moto by the proper officer.

• He must submit it within 30 days from the date of service of the cancellation order at the Common Portal.

• If the proper officer is satisfied he can revoke the cancellation of registration by an order in FORM GST REG-22 within 30 days from the date of receipt of the application. Reasons for revocation of cancellation of registration must be recorded in writing.

• The proper officer can reject the application for revocation by an order in FORM GST REG-05 and communicate the same to the applicant.

• Before rejecting, the proper officer must issue a show cause notice in FORM GST REG–23 for the applicant to show why the application should not be rejected. The applicant must reply in FORM GST REG-24 within 7 working days from the date of the service of notice.

• The proper officer will take decision within 30 days from the date of receipt of clarification from the applicant in FORM GST REG-24.

Note: Application for revocation cannot be filed if the registration has been cancelled because of the failure to file returns. Such returns must be furnished first along with payment of all dues amounts of tax, interest & penalty.