Explore GST Cancellation & Export Taxation: Learn about voluntary & officer-initiated cancellations, benefits to businesses, and efficient refund mechanisms.
Introduction
GST cancellation offers businesses the option to exit the system under specific circumstances, promoting efficiency and taxpayer-friendly practices. Voluntary cancellation can be sought when a business is dormant or fails to meet turnover criteria. Alternatively, a GST officer can cancel registration for non-compliance. This article explores the process of voluntary and officer-initiated GST cancellation, providing insights into how it benefits businesses and simplifies taxation. Additionally, we’ll delve into the zero-rated supply of goods and services for exports under GST and how the Indian government facilitates the export industry through efficient refund mechanisms.
GST Cancellation
GST registration can be voluntarily cancelled in two scenarios: if the business is dormant or if it doesn’t meet the required turnover criteria. Additionally, a GST officer can cancel the registration if the business is found to be non-compliant under GST regulations. After cancellation, the individual or entity is relieved from the obligation of filing GST returns and is no longer required to collect or pay GST. This cancellation offers flexibility to businesses facing inactivity or struggling with compliance issues, streamlining the taxation process. It ensures that businesses can exit the GST system without unnecessary burdens, promoting a more efficient and taxpayer-friendly environment.
Voluntary GST Cancellation
When a person or entity holding GST registration decides to cancel it, they must submit a cancellation request in Form GST REG-16 to the GST Department. Upon receiving the application, the GST Officer will review it, and if satisfied, issue an order to terminate the GST registration using Form GST REG-19.
There are several common reasons for voluntary GST registration cancellation. These include discontinuing or closing the business, transferring the business due to amalgamation, merger, de-merger, lease, or other relevant reasons, changing the constitution of the business resulting in a PAN change, the turnover falling below the GST registration threshold, or in the case of the death of a sole proprietor.
By opting for voluntary GST registration cancellation, business owners can save themselves from the hassle of monthly GST return filings and avoid penalties or late-filing fees. This process offers flexibility to businesses, enabling them to manage their GST obligations efficiently and appropriately based on their current circumstances.
Cancellation by GST Officer
In the realm of GST, a GST officer possesses the authority to initiate the cancellation process of a GST registration if sufficient justification exists for such an action. This process commences with the issuance of a show-cause notice in Form GST REG-17.
The situations that may trigger GST registration cancellation by an officer include continuous failure to file GST returns by a taxpayer, voluntary GST registration without commencing business within six months, violation of GST Act or Rules, obtaining registration through deception or malicious misrepresentation, and engaging in tax evasion or improper input tax credit claims.
Before cancelling the GST registration, the GST officer must inform the taxpayer in question through Form GST REG-17, providing specific reasons for the proposed cancellation. The taxpayer is then afforded a reasonable opportunity to be heard, and if a hearing is scheduled, a date and time are communicated.
Should the taxpayer adequately respond to the notice, and the proper authority is satisfied with the response, the case may be dismissed, and an order in Form GST REG-20 may be issued. However, if the response is found unsatisfactory, the GST officer may proceed with issuing an order in Form GST REG-19, leading to the cancellation of the GST registration. This process ensures that taxpayers have a fair chance to present their case and that cancellations are carried out with proper justifications in compliance with GST regulations.
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GST on Exports: How Will It Be Levied?
Under GST, the export of goods or services is categorised as a zero-rated supply, meaning no GST is levied on such transactions. Previously, duty drawback was available for the tax paid on inputs for exporting exempted goods, but the process was cumbersome. However, under GST, duty drawback is only available for customs duty paid on imported inputs or central excise paid on specific petroleum or tobacco products used as inputs or fuel for captive power generation.
To address confusion about refunding tax paid on inputs, the Indian government released a guidance note clarifying that exporters dealing with zero-rated goods can claim refunds through two options:
Option 1: Supply goods or services under bond or Letter of Undertaking without paying integrated tax and claim a refund of unutilised input tax credit.
Option 2: Exporters who fulfil prescribed conditions can claim a refund of IGST paid on supplied goods or services. The shipping bill acts as a deemed application for this refund, and the exporter must file the export manifest or report to finalise the claim.
The Department is also making efforts to facilitate the export industry by relaxing factory stuffing procedures and granting necessary permissions, boosting the Indian export sector under GST.
Conclusion
GST implementation would enable the Indian export industry to offer globally competitive prices by streamlining the process of claiming input tax credit and ensuring the availability of input tax credit on services.
Vakilsearch offers legal services to help businesses with GST cancellation. Our team of experienced professionals can ensure compliance, file returns, pay liabilities, and apply for cancellation. We also advise on common challenges and help overcome them. Our expert services make the GST cancellation process smooth and hassle-free for Indian export businesses in 2023.
FAQs
Is it mandatory to register GST for export?No, it is not mandatory to register for GST for exports. Exports are considered zero-rated supplies under GST, and businesses can choose to export goods or services without registering for GST. |
Which tax is exempted for export?Under the GST (Goods and Services Tax) system, exports are categorised as zero-rated supplies, meaning no GST is levied on them, making them tax exempted. |
Can I cancel the GST anytime?Yes, you can cancel your GST registration voluntarily at any time if your business is dormant or doesn’t meet the turnover criteria. Additionally, a GST officer can cancel the registration if your business is found to be non-compliant with GST regulations. |
Can I get a new GST after cancellation?Yes, you can apply for a new GST registration after the cancellation of your previous registration, provided you meet the necessary eligibility criteria and requirements set by the GST authorities. |
