What If GST Registration Cancelled: Is ITC Payback an Option?

There is always a doubt as to how a taxpayer can withdraw its remaining tax balance left with the government in case he chooses to cancel its GST registration. Many times it is left with the government while there are some options which may be considered. Let’s go through some example and study their case related to the ITC return:

A computer shop owner had a query regarding its ITC as he wants to shut down its business due to losing and wants to cancel the registration. He had 50 thousand or more in its credit ledge account and he is in question as to how he can withdraw this ICT from its account and get back his money.

The most considerable answer for this question might be that he must apply for cancellation of registration under Section 29(1) of the CGST Act, 2017 read with Rule 24(4) of CGST Rules, 2017. As per Section 29(5) of the CGST Act 2017, the registered taxpayer must pay a considerable amount when the registration is cancelled, by the means of debit in the electronic cash ledger which must be equal to the credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock, or capital goods or plant and machinery, on the day immediately preceding the date of such cancellation or the output tax payable on such goods, whichever is higher.

In another case of taking back the input tax credit for the goods not sent, there are two queries which have to be solved. 1st query states, Can one claim a refund of output tax which has already been paid? and in the 2nd query, it is asked, Does ITC, claimed against the said sale, have to be reversed?

Now coming to the answer of both these questions, there is a straight provisions including an issuance of credit note in accordance with Section 34 of the CGST Act, 2017 read with Rule 53 of the CGST Rules, 2017, seeking reduction of output tax liability in accordance with Section 43 of the CGST Act, 2017 read with Rule 73 of the CGST Rules, 2017. Also one must not that the ITC is not available with respect to the destroyed goods as mentioned in the provision with Section 17(5) (h) of the CGST Act, 2017.

Read Also: Step By Step Guide: GST Registration Online for New User on GST Portal

Subodh Kumawat

Subodh has done with numerous professional degrees ranging from Human Rights to Banking along with MBA in HR Marketing. He is also interested in the field of tax-related articles and blog as per the industry based norms. Having expert knowledge in diverse sectors, he assures facts and figures along with testimony, in his articles. Working in SAG Infotech, he is a trusted author among the readers globally.

View Comments

  • We have ITC credit on purchases but have stopped operations and there has been no sale. Can we apply for cancellation of GST registration? What do we with the ITC credit?

  • Dear Sir
    My registration has been cancelled and i have Rs 5lacs as ITC and Output tax as Rs 32lacs. Can i transfer my ITC to my another GST Number having Different State?

  • we are purchase from party 2018 Jan. and we claim input and all ok but now the GST department
    telling you paid tax for avail GST input due to cancel GST form the seller for suomoto from 2017.
    but the party filed a return up to march 2019.

  • we have not taken credit of gst in gstr 3b, we have taken purchase in our books. and not gst registration is surrendered paying tax in last period. how can we take refund of gst not claimed in gstr 3b

  • My GSTIN was cancelled during August 2021 by Deptt. due to the non-filing of pending returns, which came to our knowledge only during Nov.2021. On appeal, GSTIN was again validated on Nov.21. Sir, how can I claim ITC earned on my purchases during Sept./Oct,2021?

  • How can claim the refund of balance lying in Electronic credit ledger.The provision regarding refund under inverted duty structure and export not applicable in my case.

    • "When the taxpayer wants to claim a refund for any reason, for which there is no specific refund application available in the refunds section. Then taxpayer needs to click on “Any Other” ground of reason and specify his reason in the refund application while filing a refund."

  • Dear Sir/Madam,

    I have decided to wind up our shop due to losses, we have also stock of 7-8 lacs. Can I claim a refund of my ITC?? without transferring of stock or without selling of Stock??

  • I have Cancelled my GSTN but there has been a credit in my Credit Ledger, how can I now reverse my Balance ITC in Ledger even after cancellation of my GSTN

  • Hello,

    I had a business registered with GST since April 2019 I have not filed any return since the business was closed, my ITC in the credit ledger is around 6 lacs is there any way possible that I can claim the refund or encash the balance ITC.
    Please email me with respect to the matter mentioned.

    Regards

  • We are going to wind up our business but we have gst input tax credit on purchases made and there are stock with us
    can we get the refund of input tax credit available in the gst portal

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