Published 11 October 2026
A business that closes, is sold, converts into a company or loses its proprietor does not stop being a registered person on its own. The GSTIN stays live, returns keep falling due, and late fees keep running until the registration is cancelled. Cancellation also has a price: the credit sitting in the stock on the last day has to be paid back. This guide sets out how a registered person, or a legal heir, applies for cancellation and what follows.
The law is in section 29 of the CGST Act, discussed in Registration, and What Goes Wrong. This guide covers the procedure in rules 20, 21A and 22 of the CGST Rules and the final return. Cancellation started by the officer is a different procedure, and is mentioned only where the two meet.
Who may apply, and on what grounds
Section 29(1) allows cancellation “on an application filed by the registered person or by his legal heirs, in case of death of such person”. The grounds are:
- the business “has been discontinued, transferred fully for any reason including death of the proprietor, amalgamated with other legal entity, demerged or otherwise disposed of”;
- “any change in the constitution of the business”;
- the person “is no longer liable to be registered under section 22 or section 24 or intends to optout” of a voluntary registration.
FORM GST REG-16 offers these as reasons. They are discontinuance or closure, ceasing to be liable, transfer by amalgamation, merger, demerger, sale or lease, a change in constitution leading to a change of PAN, death of the sole proprietor, and “Others (specify)”.
Rule 20 excludes two classes: persons registered under rule 12 as tax deductors or collectors, and UIN holders. The portal’s FAQ confirms that these cannot file REG-16. Nor can a person against whom the officer has already started cancellation proceedings. The portal blocks that application, and the person answers the officer’s notice instead.
Thirty days, and what REG-16 asks for
Rule 20 requires the application “within a period of thirty days of the occurrence of the event warranting the cancellation”. REG-16 must include:
- the inputs held in stock, inputs in semi-finished or finished goods, and capital goods held on the date from which cancellation is sought;
- the liability on them;
- any payment made against that liability.
The person “may furnish” supporting documents with it.
In Circular No. 69/43/2018-GST, the CBIC accepted that the event is sometimes hard to date, for example when a business is wound down piecemeal. It said that “the 30-day deadline may be liberally interpreted” in such cases.
The REG-16 instructions ask the person to file the return for the tax period in which the cancellation date falls first. Where no taxable supplies have been made since registration, the instructions allow an application saying so instead.
The stock reversal under section 29(5)
Section 29(5) requires a payment equal to the credit on inputs, inputs in semi-finished and finished goods, and capital goods or plant and machinery held “on the day immediately preceding the date of such cancellation”, or the output tax on those goods, “whichever is higher”. For capital goods, the comparison is between the credit taken, “reduced by such percentage points as may be prescribed”, and the tax on their transaction value.
Rule 44 sets the method:
- For inputs, the credit is worked out “proportionately on the basis of the corresponding invoices”.
- For capital goods, credit is attributed to the remaining useful life in months, taking the useful life as five years.
- Where invoices are not available, the amount is estimated on “the prevailing market price”. Rule 44(5) requires that estimate to be “duly certified by a practicing chartered accountant or cost accountant”.
Tables 10 and 11 of REG-16 record the amount and any debits from the electronic cash or credit ledger. Circular 69 clarifies that paying at the REG-16 stage “should not be a prerequisite for applying”. The amount may instead be paid with the final return. Once a cancellation date is sought, the ledger balances can be used only for liabilities up to the final return. The portal accepts REG-16 with nil stock.
Suspension from the date of application
Under rule 21A(1), the registration “shall be deemed to be suspended from the date of submission of the application or the date from which the cancellation is sought, whichever is later”. During suspension the person “shall not make any taxable supply” and need not file returns under section 39. The Explanation says this means the person issues no tax invoice and charges no tax. The portal shows the GSTIN as “Suspended”. It allows returns only for periods before the suspension, and disables core amendments.
The portal’s FAQ gives the date of suspension simply as the date the application was filed. Rule 21A(1) takes the later of that date and the date from which cancellation is sought.
What the officer does
Rule 22(3) requires the officer to issue an order in FORM GST REG-19 within thirty days of the application. The order cancels the registration “with effect from a date to be determined by him”. It directs payment of any arrears, including the section 29(5) amount.
Circular 69 says applications “should be immediately accepted”. The effective date should be the date the applicant sought, and it “cannot be a date earlier to the date of application”. There are two exceptions: an incomplete application, and a transfer or merger where the transferee is not yet registered.
Where something is missing, the officer raises a query in FORM GST REG-03, answered in REG-04; REG-05 is the rejection order. Rule 22 itself provides for none of these steps. The forms have named cancellation applications since 2017, and Notification No. 18/2025-Central Tax substituted them from 1 November 2025, adding that an application is liable for rejection if section 29 proceedings are started. The working procedure, with a written query, seven working days to reply and a hearing, is in Circular No. 69/43/2018-GST. The portal lets the applicant withdraw REG-16 while it is still “Pending for Processing”.
FORMS GST REG-17 and REG-18 are the officer’s show cause notice and the reply when the officer proposes cancellation on his own motion under section 29(2). They are not part of an application. The difference matters later. Only a registration cancelled on the officer’s own motion can be revoked under section 30, as explained in Getting a Cancelled Registration Back.
The final return, GSTR-10
Section 45 requires every person “who is required to furnish a return under sub-section (1) of section 39” and whose registration is cancelled to file a final return. It is due “within three months of the date of cancellation or date of order of cancellation, whichever is later”. Rule 81 prescribes FORM GSTR-10. Composition taxpayers, input service distributors, non-resident taxable persons and TDS or TCS registrants do not file one. Circular 69 confirms this.
GSTR-10 lists the stock and capital goods item by item, with invoices where available. It sets the tax already paid with REG-16 against the balance payable.
If GSTR-10 is not filed, Circular 69 describes the sequence. A notice in GSTR-3A comes first. If the return is still not filed, there is a best-judgement assessment under section 62 in ASMT-13. Circular 69 said that order is deemed withdrawn if the return is filed within thirty days. Since 1 October 2023, section 62(2) allows sixty days from service of the order, and a further sixty days on payment of an additional fee of one hundred rupees for each day of delay beyond the first sixty. Interest and late fee remain payable either way. Filing the Final Return, GSTR-10 sets out the procedure.
Section 29(3) keeps alive all liability “for any period prior to the date of cancellation”, whenever determined. Returns for past periods remain due. The portal FAQ says they can still be filed after cancellation.
Transfers, mergers and changes of PAN
The transferee registers first. Under section 22(3), a transferee or successor of a business transferred as a going concern is liable to register “with effect from the date of such transfer or succession”. In an amalgamation or demerger sanctioned by a court or tribunal, section 22(4) runs liability from the date of the Registrar of Companies’ certificate.
The REG-16 instructions say the application “shall be made only after” the new entity is registered. The transferor gives the transferee’s GSTIN in REG-16.
Unused credit can move with the business. Rule 41 requires FORM GST ITC-02, filed by the transferor, with a chartered accountant’s or cost accountant’s certificate that the transfer was made “with a specific provision for the transfer of liabilities”. The credit moves when the transferee accepts it on the portal.
Death of a sole proprietor
Rule 22(5) applies the cancellation procedure to “the legal heirs of a deceased proprietor, as if the application had been submitted by the proprietor himself”. The portal’s FAQ describes the steps:
- The legal heir visits the jurisdictional officer with the death certificate and a succession certificate.
- The officer adds the heir as authorised signatory.
- Login credentials go to the heir’s email.
- The heir files REG-16, selecting “Death of Sole Proprietor”, with the date of death and proof.
A minor heir acts through a guardian. An heir who continues the business needs a new registration, and can move the credit to it through ITC-02. Under section 93, tax due from the deceased is payable by the legal representative. Where the business is discontinued, it is payable out of the estate, “to the extent to which the estate is capable of meeting the charge”.
Documents and declarations
| Document | Who provides it | Source |
|---|---|---|
| Stock and capital goods statement with tax payable (REG-16 Table 10) | Registered person | Rule 20, REG-16 |
| Debit entries for any tax paid (Table 11) | Registered person | REG-16 |
| Particulars of the last return filed, with ARN | Registered person | REG-16, Circular 69 |
| Address for future correspondence, email and mobile | Registered person | REG-16 |
| Certificate of a CA or cost accountant where stock invoices are unavailable | Practising accountant | Rule 44(5) |
| Transferee’s GSTIN; court order or transfer deed | Transferor | REG-16, Circular 69 |
| CA or cost accountant’s certificate for ITC-02 | Practising accountant | Rule 41(2) |
| Death certificate and succession certificate | Legal heir | Portal FAQ |
| Verification that the information is “true and correct” | Authorised signatory | REG-16 |
REG-16 also asks for the latitude and longitude of the address for future correspondence. Neither rule 20 nor the portal manual calls for geocoding or a physical verification as part of a cancellation application. The portal manual’s document-upload step for REG-16 states no file-size limit.
The forms
| Form | Purpose |
|---|---|
| REG-16 | Application for cancellation |
| REG-03 / REG-04 | Officer’s query and the applicant’s reply |
| REG-05 | Rejection of the application |
| REG-19 | Order of cancellation |
| ITC-02 | Transfer of unused credit to a transferee |
| GSTR-10 | Final return |
The procedure in order
- Fix the event and its date. Apply within thirty days.
- In a transfer, merger or change of PAN, get the new entity registered first.
- File the return for the period in which the cancellation date falls.
- Value the stock and capital goods under rule 44. Obtain a certificate if invoices are missing.
- File REG-16 with the reason, date, stock and payment details. Verify it and note the ARN.
- Stop issuing tax invoices from the date of suspension.
- Answer any REG-03 in REG-04.
- Receive REG-19, normally within thirty days.
- File ITC-02 where credit is to move to a transferee.
- File GSTR-10 within three months of the later of the cancellation date and the order date, paying any balance.
The next guide covers the other direction: getting back a registration that the officer cancelled.