About GST Cancellation

Voluntary cancellation in REG-16 final return GSTR-10 within 3 months and clearance of dues. Forms handled: REG-16, GSTR-10. Legal basis: Section 29 CGST Act.

Glossary

Plain-English glossary for this service

Voluntary versus suo motu cancellation

Voluntary cancellation under Section 29(1) is initiated by the registered person via REG-16 on grounds like discontinuance, transfer, or fall below threshold. Suo motu cancellation under Section 29(2) is initiated by the proper officer for defaults under Rule 21. The PAN-level risk profile carries lighter markings for voluntary cases, which matters for future registration under the same PAN.

REG-16 application for cancellation

REG-16 is the form a registered person uses to apply for voluntary cancellation of GST registration under Section 29(1). It captures the reason for cancellation, the effective date, details of stock and capital goods on which ITC was availed, and tax liability on such stock. The application must be filed within 30 days of the event triggering cancellation.

REG-23

REG-23 is the show cause notice issued where the proper officer proposes to reject the revocation application in REG-21. It calls upon the applicant to demonstrate, within seven working days, why the revocation should not be refused.

REG-18

REG-18 is the reply by a registered person to a show cause notice in REG-17, filed within seven working days. The reply addresses each ground cited by the proper officer, attaches supporting documents and prays for the proceedings to be dropped by an order in REG-20.

Change in Constitution Trigger

Change in Constitution Trigger is the Section 29(1)(b) ground arising on conversion of a proprietorship into a partnership, partnership into LLP, or any other change resulting in a new PAN. The old GSTIN is cancelled in REG-16 and a fresh REG-01 is filed by the new entity.

Section 107 Appeal Against Cancellation

Section 107 Appeal Against Cancellation is the first-appeal remedy filed in Form APL-01 against an order of cancellation under Section 29(2), within three months from the date of communication, condonable by a further thirty days under Section 107(4) on sufficient cause shown.

Garnishee Notice

Garnishee Notice is the notice in Form DRC-13 issued under clause (c) of sub-section (1) of Section 79 to any person from whom money is due or may become due to the defaulter, requiring such person to pay the amount to the credit of the government instead of to the defaulter.

REG-21 revocation application

REG-21 is the form for applying to revoke a cancellation order under Rule 23. The application must be filed within 30 days of the service of the REG-19 cancellation order, extendable up to 90 days by the Commissioner. Pending returns and tax liabilities must be cured before filing, and the proper officer disposes of the application within 30 days.

ITC-02 Transfer

ITC-02 Transfer is the form for transfer of unutilised input tax credit from a transferor's electronic credit ledger to a transferee's ledger in cases of sale, merger, demerger, amalgamation, lease or transfer of business. It is filed under Section 18(3) read with Rule 41 and is companion-to-REG-16 in closure scenarios.

Cancellation of Registration

Cancellation of Registration is the legal termination of a GSTIN, effected either on a voluntary application by the registered person under Section 29(1) or by the proper officer on his own motion under Section 29(2). Cancellation closes the registration prospectively but preserves all antecedent liabilities under Section 29(3).

Aggregate turnover for cancellation eligibility

Aggregate turnover under Section 2(6) is the all-India PAN-level turnover including taxable, exempt, exports and inter-State supplies, excluding inward RCM supplies. For voluntary cancellation, the dealer may apply once turnover falls below the registration threshold under Section 22 — ₹40 lakh for goods and ₹20 lakh for services in Tamil Nadu.

Suo Motu Cancellation

Suo Motu Cancellation is cancellation initiated by the proper officer under Section 29(2) without an application from the registered person, on grounds such as non-filing of returns for the prescribed continuous tax periods, fraudulent registration, or contravention of the rules. It typically carries a retrospective effective date.

Statutory Basis

Operative provisions cited on this page

Every claim on this page can be traced back to a section or rule below.

CGST Section 29(1)Anchor

Cancellation or suspension of registration at the instance of the taxpayer

Sub-section (1) of Section 29 provides that the proper officer may, either on his own motion or on an application filed by the registered person or by his legal heirs in the event of death, cancel the registration in such manner and within such period as may be prescribed. The five recognised triggers under clauses (a), (b) and (c) are discontinuance of business, transfer of business on account of amalgamation, demerger, sale, lease or otherwise, change in constitution of the business, the person no longer being liable to be registered under Section 22 or Section 24, and the taxable person opting out of voluntary registration obtained under Section 25(3). The operative form is REG-16.

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CGST Section 29(2)

Suo motu cancellation by the proper officer

Sub-section (2) empowers the proper officer to cancel registration from such date, including any retrospective date, as he may deem fit, where a registered person contravenes the provisions of the Act or the rules, fails to furnish returns for the prescribed continuous tax periods under clause (b) or (c), discontinues voluntary registration without supply for six continuous months, or has obtained registration by means of fraud, wilful misstatement or suppression of facts. The first proviso bars cancellation without affording an opportunity of being heard. The second proviso enables suspension of registration pending the cancellation proceeding.

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CGST Section 29(5)

Reversal of input tax credit on closing stock at cancellation

Sub-section (5) of Section 29 obliges every registered person whose registration is cancelled to pay, by way of debit in the electronic cash ledger or electronic credit ledger, an amount equivalent to the input tax credit in respect of inputs held in stock, inputs contained in semi-finished or finished goods held in stock, and capital goods or plant and machinery, on the day immediately preceding the date of cancellation, or the output tax payable on such goods, whichever is higher. The computation is made in the manner prescribed under Rule 44.

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CGST Section 29(3)

Liabilities of the cancelled person survive cancellation

Sub-section (3) is a clarificatory provision which states that cancellation of registration shall not affect the liability of the person to pay tax and other dues under the Act or to discharge any obligation under the Act or the rules made thereunder for any period prior to the date of cancellation, whether such tax and dues are determined before or after the date of cancellation. The cancellation closes the registration for prospective compliance but preserves all assessment, recovery, refund and prosecution avenues for the antecedent period.

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CGST Section 29(4)

Cancellation under State or Union Territory GST law deemed cancellation under CGST

Sub-section (4) provides that the cancellation of registration under the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act, as the case may be, shall be deemed to be a cancellation under this Act. This avoids any need for a duplicate cancellation application across the dual-administration architecture. A single application channelled to the jurisdictional officer of either administration suffices and the cross-administration acceptance follows by operation of law.

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CGST Section 30

Revocation of cancellation of registration

Section 30 permits a registered person whose registration has been cancelled by the proper officer on his own motion to apply for revocation. The substituted sub-section (1), effected by the Finance Act 2023 with effect from 1 October 2023, prescribes a window of ninety days from the date of service of the cancellation order, with extensions of thirty days by the Joint or Additional Commissioner and a further thirty days by the Commissioner on sufficient cause shown. Sub-section (2) requires the proper officer to either revoke the cancellation or reject the application, after giving the applicant an opportunity of being heard.

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CGST Section 18(5)

Reversal of credit on inputs and capital goods at cancellation

Sub-section (5) of Section 18 is the cognate provision read with Section 29(5). It prescribes that where any registered person ceases to pay tax under Section 10 or his registration is cancelled, he shall pay an amount equivalent to the credit of input tax in respect of inputs held in stock and capital goods, on the day immediately preceding the date of such switch or cancellation. Rule 44 of the CGST Rules operationalises the computation, prescribing the proportionate basis for inputs and the remaining-life basis of sixty months for capital goods.

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CGST Section 45Anchor

Final return on cancellation

Section 45 obliges every registered person who is required to furnish a return under sub-section (1) of Section 39 and whose registration has been cancelled to furnish a final return within three months of the date of cancellation or date of order of cancellation, whichever is later, in the form and manner prescribed. The operative form is GSTR-10. The final return is independent of and additional to the periodic returns due up to the effective date of cancellation. Non-furnishing attracts a late fee under Section 47(2) and a recovery trigger under Section 62.

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Forms Library

Forms used in this engagement

REG-16Application for Cancellation of Registration

Voluntary cancellation application capturing the reason for cancellation, the requested effective date, and the closing stock and capital-goods particulars with the consequent input tax credit reversal liability

Within thirty days of the event triggering cancellation Common Portal — routed to the jurisdictional Range Officer

REG-17Show Cause Notice for Cancellation

Notice issued by the proper officer setting out the reasons for proposed suo motu cancellation and requiring the registered person to show cause why the registration should not be cancelled

Issued before any suo motu cancellation order Jurisdictional Range Officer

REG-18Reply to Show Cause Notice for Cancellation

Registered person's reply to the REG-17 show cause notice, carrying the defence on each ground cited, supporting documents, and the request to drop proceedings

Within seven working days of REG-17 Common Portal — by the registered person

REG-19Order for Cancellation of Registration

Cancellation order passed by the proper officer specifying the effective date of cancellation, any retrospective date adopted, and the outstanding tax, interest and penalty liabilities

Within thirty days of receipt of REG-18 or expiry of the reply window Jurisdictional Range Officer

REG-20Order for Dropping of Cancellation Proceedings

Order dropping the suo motu cancellation proceedings where the REG-18 reply is found satisfactory by the proper officer

Within thirty days of REG-18 Jurisdictional Range Officer

REG-21Application for Revocation of Cancellation

Application by a registered person whose registration has been cancelled on the proper officer's own motion, seeking revocation after furnishing all pending returns up to the effective date of cancellation

Within ninety days of the cancellation order, extendable by thirty plus thirty days Common Portal — by the registered person

REG-22Order for Revocation of Cancellation

Order passed by the proper officer approving the revocation application after considering the merits and the compliance of returns precondition under Rule 23

Within thirty days of REG-21 Jurisdictional Range Officer

REG-23Show Cause Notice for Rejection of Revocation

Show cause notice issued where the proper officer is not satisfied with the REG-21 application; requires the applicant to demonstrate why revocation should not be refused

Issued before any rejection of the revocation application Jurisdictional Range Officer

REG-24Reply to Show Cause Notice for Rejection of Revocation

Reply by the registered person to the REG-23 notice, carrying additional submissions and supporting documents to defend the revocation request

Within seven working days of REG-23 Common Portal — by the registered person

GSTR-10Final Return

Return capturing closing stock of inputs, semi-finished and finished goods, capital goods particulars, and the input tax credit reversal liability or output tax payable on such stock, whichever is higher, on the day immediately preceding cancellation

Within three months of the date of cancellation or order of cancellation, whichever is later Common Portal — by the registered person

DRC-03Voluntary Payment Form for Cancellation Dues

Form used to deposit the reversal computed in Table 11 of GSTR-10, any output tax shortfall, interest under Section 50, and late fee, voluntarily before recovery proceedings are initiated

Concurrent with GSTR-10 filing or pre-Section 73 / 74 notice stage Common Portal — by the registered person

APL-01Appeal Against Cancellation Order

First appeal to the Appellate Authority against an order of cancellation passed by the proper officer, where revocation under Section 30 is not the preferred remedy

Within three months of the order, condonable by a further thirty days under Section 107(4) Common Portal — Appellate Authority designated under Section 107

Statutory Deadlines

Compliance deadlines that matter

Miss any of these and the next consequence kicks in automatically.

Trigger event	Days	Form	Consequence
Business discontinued, transferred, amalgamated, demerged or sold	30 days	REG-16	Continued GSTIN exposure to Section 47 late fee on nil returns and progression to Rule 21A suspension and Rule 22 suo motu cancellation
Change in constitution of business resulting in a new PAN	30 days	REG-16	Old GSTIN remains live and accrues compliance defaults while new entity operates under a separate registration
Voluntary registrant no longer liable under Section 22 or 24 chooses to exit	30 days	REG-16	Exposure to nil-return cascade and risk of suo motu cancellation with retrospective date under Section 29(2)
Death of the proprietor where the legal heir does not wish to continue	30 days	REG-16 by legal heir	Section 93 liability of the legal representative for arrears and continued compliance defaults
Effective date of cancellation falls due — final return obligation	90 days	GSTR-10	Section 47(2) late fee accrues per day; non-filer notice under Section 46 escalates to Section 62 best-judgment assessment
Stock-in-hand on the day immediately preceding cancellation	90 days	Table 11 of GSTR-10	Reversal under Section 29(5) and Section 18(5); shortfall converts into recovery under Section 79
Capital goods held on the day immediately preceding cancellation	90 days	Table 11 of GSTR-10	Remaining-life-of-sixty-months proportionate reversal; under-reversal exposes the taxpayer to Section 73 / 74 demand
Service of cancellation order by the proper officer under Rule 22	90 days	REG-21	Window closes; only first extension by Joint or Additional Commissioner is available, then a final extension by the Commissioner
First extension request to Joint or Additional Commissioner	30 days	REG-21 with reasons recorded	If sufficient cause not shown, the revocation route closes and a fresh REG-01 with attendant compliance trail becomes the only path
Second extension request to the Commissioner	30 days	REG-21 with detailed cause	Final administrative window closes; remedy lies only in writ jurisdiction or Section 107 appeal where the cancellation order itself is challenged

Comparison

Voluntary (Section 29(1)) vs Suo Motu (Section 29(2))

Aspect	Voluntary (Section 29(1))	Suo Motu (Section 29(2))
Operative provision	Sub-section (1) of Section 29 of the CGST Act 2017 read with Rule 20 of the CGST Rules	Sub-section (2) of Section 29 of the CGST Act 2017 read with Rule 21 and Rule 22 of the CGST Rules
Initiating party	Registered person files Form REG-16 of his own motion on the common portal	Proper officer initiates of his own motion through a show-cause notice in Form REG-17
Permissible grounds	Closure of business, transfer on amalgamation or sale, change in constitution, turnover falling below threshold, or death of proprietor	Contravention of Rule 21 grounds — non-filing of GSTR-3B for six months, non-commencement, registration by fraud or violation of Section 25
Lock-in period	Proviso to Rule 20 imposes a one-year lock-in for those registered under Section 25(3) before voluntary cancellation can be sought	No lock-in applies; the proper officer may proceed once Rule 21 grounds are made out
Pre-cancellation procedural step	Filing of Form REG-16 with reasons, effective date, stock declaration and ITC reversal working	Issuance of Form REG-17 show-cause notice with seven working days for the assessee to reply in Form REG-18
Effective date treatment	Date sought by the assessee in Form REG-16, ordinarily the date of cessation of business and prospective in character	Date determined by the proper officer in Form REG-19, which may be retrospective from the date of contravention under the proviso to Section 29(2)
Pre-condition of pending returns	All pending GSTR-1 and GSTR-3B up to the date sought as cancellation date must be furnished before REG-16 is processed	Pending returns must be furnished as part of the REG-18 reply to defeat the show-cause and obtain REG-20 dropping
ITC reversal at cancellation	Sub-section (5) of Section 29 read with Rule 44 requires reversal on inputs in stock, semi-finished and finished goods, and capital goods on the cancellation date	Same Section 29(5) and Rule 44 framework applies; the reversal is computed as on the effective date fixed in REG-19, which may be retrospective
Final return obligation	Section 45 read with Rule 81 requires filing of Form GSTR-10 within three months of the cancellation date or the order date, whichever is later	Identical Section 45 obligation attaches; the three-month clock runs from the REG-19 order date irrespective of any retrospective effective date
Revocation pathway	Section 30 revocation does not apply to a voluntary cancellation; relief lies in filing fresh registration under Section 25	Section 30 read with Rule 23 allows revocation within thirty days of the REG-19 order, extendable on reasoned application before the Joint Commissioner under the proviso
Appellate remedy on adverse outcome	Rejection of REG-16 through REG-05 may be carried in first appeal under Section 107 of the CGST Act before the Appellate Authority	REG-19 order is appealable under Section 107; in parallel, Article 226 writ before the Madras High Court is available where natural justice has been denied
Working-capital and onward exposure	Limited to the Section 29(5) reversal and Section 45 final-return obligations; no penalty exposure where compliance is timely	Onward exposure includes late fee under Section 47 on pending returns, interest under Section 50 on unpaid tax, and recipient-side ITC consequences for the cancelled period