The GST Act for Indirect Taxation in India, has a continuously changing landscape, with compliance being one of several enormously important concerns of all businesses who are subject to GST; particularly those businesses that provide their services within various states. As an example, obtaining GST Registration should, in most instances, be a relatively straightforward undertaking from the time your business has gained enough volume of sales or services to begin the process of GST registration. However, once you decide you no longer want to operate or have your GST registration cancelled, the whole scenario becomes immensely complex. Many business owners, freelancers, consultants, digital marketers, IT specialists, etc. who hold their own GST registrations usually inquire: Is it required to file GSTR-10 after cancelling your GST registration? This question is quite valid when initially acquiring a GST registration was based solely on providing services in multiple states (with turnover being under the required limit). Section 24 of the CGST Act required all businesses to obtain an interstate supply service registration regardless of turnover (with some exceptions, as will be discussed in this document). When a service provider either ceases their activities or no longer meets the requirements needed to be registered as a provider, the cancellation of that registration does not happen solely through the filing of an application for cancellation. There is also an element of continuing compliance through the submission of what's known as a Final Return (GSTR-10). It is important to know if you have to submit GSTR-10, who is required to submit it, and what the consequences will be if you do not submit it; and how all of these relate to the overall process for cancellation of GST Registration to avoid future compliance issues, legal notices & penalties. This comprehensive guide will detail all of the legal requirements, the steps involved in the process, and the strategy involved with GST Registration Cancellation for service providers engaged in interstate supply in India.
Understanding GST Registration for Interstate Service Providers
Interstate supply of goods was initially subject to compulsory GST registration pursuant to section 24 of the CGST Act under the GST Law. Even though an entity might have an annual turnover below the basic exemption limit (e.g. ₹20 lakh or ₹10 lakh for special category states), if it provided services across state lines, the provision for GST Registration was applicable.
Examples of interstate supply of services include:
• A digital marketing consultant located in Uttar Pradesh supplying services to a client located in Maharashtra
• A software developer located in Delhi invoicing a company in Karnataka
• A freelancer located in Rajasthan performing consulting services for a client located in Gujarat
Accordingly, the obligation to register for GST was based on interstate supply of services rather than the amount of turnover generated.
A business that has registered is required to:
• File GST Periodic Returns
• Maintain accurate books of account and records
• Comply with provisions of the GST law until the service registration has been cancelled
The business will be entitled to apply for cancellation of registration as a result of shutdown of operation, or cessation to provide services to parties outside of their home state.
What Is GST Registration Cancellation?
A GST Registration Cancellation is a formal process that allows you to deactivate your GSTIN by applying through the GST portal. This can occur for the following reasons:
• You no longer conduct business.
• You transferred your business.
• You have changed your business structure.
• You no longer require GST registration.
• You are below the threshold and qualify for exemption.
There are three ways that a GST registration can be cancelled:
1. Voluntary cancellation by the taxpayer.
2. Suo moto cancellation by the GST officer due to non-compliance.
3. Cancellation due to business closure or transfer.
A cancellation application will be submitted in GST REG-16 and, once approved, your GSTIN will be nullified effective from the date indicated on the cancellation letter.
However, once a cancellation is approved, your compliance obligations do not cease.
Legal Basis for GST Registration Cancellation in India
GST registration can be cancelled as per Section 29 of the CGST Act in the following circumstances:
1) Discontinuation of business;
2) Full transfer of business;
3) Change in nature of constitutional entity such as sole proprietorship to a company;
4) No longer liable to register as a taxpayer;
5) Voluntarily registered but income below the set threshold; or
6) Death of proprietor.
Cancellation can also be permitted for an inter-state service supplier if:
1. Supply of inter-state services has stopped;
2. Turnover has dropped below threshold;
3. Business has closed / ceased operation; or
4. Services have become exempt from GST purposes.
What Is GSTR-10?
Taxpayers having their GST registration cancelled or surrendered must file a Final Return via GSTR10 to report the following:
• Closing Stock
• Inputs in Stock
• Capital Goods
• Tax on Stock
GSTR10 is specifically meant to help ensure that all input tax credit (ITC) related to closing stock and capital goods is appropriately reversed upon cancellation of GST registration.
Is GSTR-10 Mandatory for Service Providers?
Yes, in Most Cases
In the majority of situations, if you have either voluntarily cancelled your registration or had your GST registration cancelled by the Government, then as a result you are required to file a GSTR-10.
However, there are some important differences between the different types of people required to file a GSTR-10 form.
Who Must File The GSTR-10?
Only those persons who are required to file a GSTR-10 form include:
• Any person who is not registered for GST, but has had their registration cancelled by the Government;
• Any person providing services for interstate supply;
• Any person who has voluntarily cancelled their GST registration.
Who Does Not Have to File GSTR-10?
The following persons do not have to worry about filing a GSTR-10:
• Any person registered for GST as a composition scheme;
• Any input service distributor (ISD);
• A non-resident taxable person; or
• A person who is deducting taxes under TDS/TCS under the GST Act.
If you are registered as a Regular Taxable Person because you provide services for interstate supply and you have had your GST registration cancelled, you will still need to file a GSTR-10 even if you have no physical stock.
Why Is GSTR-10 Required Even for Service Holders?
Service providers tend to think GSTR-10 only applies to retailers who have stock. This is an incorrect assumption. Service providers can also have:
1. Capital Goods (i.e. Laptops, computers, machinery etc)
2. Office furniture
3. IT Infrastructure
4. Unused Input Tax Credits
According to the GST Act ITC must be reversed on:
1. Any closing stock
2. Capital Goods (As per the prescribed formula)
By filing GSTR-10:
1. You will ensure proper accounting of ITC reversals
2. The Government receives its taxes
3. You comply with the GST Act
Time Limit for Filing GSTR-10
GSTR-10 must be filed within three months from:
Failure to file within the prescribed time can result in:
Late Fees and Penalties
If GSTR-10 is not filed within the due date:
Continuous non-compliance may lead to legal proceedings and recovery actions.
What If You Had No Stock as a Service Provider?
Among service providers, this is the main question they often have.
Many interstate service providers argue:
“We don't sell product(s), we only actually provide services, we don't have stock therefore we shouldn't need to file GSTR-10”
However, if you provide only services and have:
• Claimed Input Tax Credit (ITC) on your capital goods, such as laptops or equipment,
• Your unutilized ITC balance
• Any outstanding liability,
The Government requires that GSTR-10 be filed to officially:
• Cancel/Reverse ITC for any capital goods you still hold (if applicable)
• Settle any outstanding liability
• Close your GST account
So yes, service providers generally must file GSTR-10 unless they are specifically exempt from doing so.
Step-by-Step GST Registration Cancellation Process
The GST Registration Cancellation process includes:
Step 1: Login to GST Portal
Access the GST portal using credentials.
Step 2: File Application for Cancellation (Form GST REG-16)
Provide:
Step 3: Verification by Officer
GST officer reviews the application.
Step 4: Cancellation Order Issued
Order issued in Form GST REG-19.
Step 5: File GSTR-10
Within three months of cancellation.
This structured compliance ensures smooth GST Registration Cancellation in India.
Practical Scenario: Interstate Service Provider
If a freelance digital marketing consultant in Lucknow has registered for GST because of interstate service, then, after two years, he has the option to:
• Stop doing interstate work
• Provide only local services to customers whose annual taxable turnover is less than the annual threshold.
• Quit altogether.
That consultant will then apply to cancel their GST registration using a professional.
Once the cancellation has been approved:
• The consultant is required to file GSTR-10.
• Capital goods purchased with Input Tax Credit (ITC) must still be declared even if there is nothing left of physical stock.
• An ITC reversal must be calculated.
If the consultant does not file the GSTR-10, he may get compliance notices in the future.
Important Compliance Considerations for Service Providers
In order to cancel your GST registration as a service holder, make sure you have the following in place:
1. All outstanding GSTR-1 and GSTR-3B filings to date
2. Any unpaid GST obligations have been settled
3. Any applicable ITC reversals are accurately calculated
4. No missed deadlines with the filing of GSTR-10 forms
5. Tracking of all records for use if needed in the future
Using a professional GST Registration Cancellation service will help you to avoid making mistakes or incurring penalties.
Can GST Authorities Cancel Registration on Their Own?
Yes, the registration can be suspended by the authorities. Reasons include:
• Failure to file returns continuously
• Non-operational business
• Fraudulent registration
GSTR-10 must be filed even in these instances.
Impact of Not Filing GSTR-10 After GST Registration Cancellation
Failure to file GSTR-10 can result in:
Late Fees
• ₹100 per day CGST
• ₹100 per day SGST
• Maximum ₹5,000
2. Department Notices
• Demand notices for not filing may be sent by authorities
3. Penalties & Legal Action
• Continuing to not comply may result in more penalties
4. Difficulty Obtaining Future Registrations
• Having a history of non-compliance may hinder future registration
5. Blocking of Directors or Promoters
• Repeated violation may hinder other business activities by directors/promoters.
Consequences of Improper GST Registration Cancellation in India
Failure to handle cancellation of GST registration in India adequately may result in:
• Outstanding liability assessments
• Demand notices and interest
• Legal inquiries
• Negative compliance history
This is why most businesses prefer to hire a professional service for cancelling their GST registration to guarantee the filing of accurate documents and to assure proper documentation of all transactions.
Common Mistakes to Avoid During GST Registration Cancellation Process
1. Assuming GSTR-10 Is Not Required for Service Providers
This is the most common misconception.
2. Ignoring Input Tax Credit Reversal
If ITC was claimed on capital goods, proportionate reversal may apply.
3. Delaying Final Return
Waiting beyond the 3-month window results in penalties.
4. Incorrect Stock Declaration
Even small tools or office assets must be considered.
5. Not Clearing Outstanding Returns Before Cancellation
All regular returns (GSTR-1, GSTR-3B) must be filed before applying for cancellation.
Special Scenario: Interstate Service Provider with Zero Stock
Suppose you are:
And you have:
Even in such cases, GSTR-10 filing is required to formally declare “Nil stock” and close compliance records.
Common Misconceptions
Myth 1: Service providers don’t need to file GSTR-10.
Reality: Regular taxpayers must file it upon cancellation.
Myth 2: If there’s no stock, no return is needed.
Reality: Capital goods and ITC still require disclosure.
Myth 3: Cancellation approval ends compliance.
Reality: Final return filing is mandatory.
Conclusion
The requirements for navigating GST compliance extend beyond registration, as well as cancellation at the end of your GST journey. Service providers registered for interstate supply (supply across state borders) may have been required to obtain a GST registration regardless of their turnover. Regardless of the reason for exiting (i.e. stopping service, moving to intrastate operations, or shutting down completely), compliance with GST will not be complete simply by submitting a cancellation application. One critical step in the GST registration cancellation process is filing your GSTR-10 forms, which means all of the input tax credits (if applicable) will be reversed, and all GST liabilities will have been settled prior to cancellation. Failure to complete this final step could expose your company to monetary penalties, receivables from the regulator, and ongoing compliance risks that may affect the ability to register in the future, or damage your company’s financial credibility. Thus, the importance of understanding the procedures and legal requirements of the GST registration cancellation process in India cannot be overemphasized. Engaging professional assistance in GST registration cancellation can greatly help you to reduce errors and avoid penalties while also providing you with peace of mind. It should be noted that responsible compliance will protect your company’s reputation and provide you with a clear and transparent exit from the GST system.
(FAQ)
1. Is GSTR-10 mandatory after GST Registration Cancellation for service providers?
Yes, if you were registered as a regular taxpayer and your registration is cancelled, filing GSTR-10 is mandatory.
2. What if I had no stock at the time of cancellation?
You still need to file GSTR-10 and declare capital goods and ITC details, even if no physical stock exists.
3. Is GSTR-10 required for composition taxpayers?
No, composition taxpayers are not required to file GSTR-10.
4. What is the due date for filing GSTR-10?
Within three months from the date of cancellation order or cancellation date, whichever is later.
5. What happens if I fail to file GSTR-10?
Late fees apply, and you may receive compliance notices from the GST department.
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