GST cancellation on request under substituted rule 20: electronic approval, the three-day GSTR-10 window and the revised FORM GST REG-16

Rule 20 of the Central Goods and Services Tax Rules, 2017 (CGST Rules), which governs cancellation of registration on the taxpayer’s own request, has been substituted with effect from 1 November 2026 by Notification No. 05/2026-Central Tax dated 26 October 2026. An application in FORM GST REG-16 that meets the conditions is now cancelled electronically by the common portal, without the proper officer, and the cancellation is communicated in a new FORM GST REG-38. GSTN Advisory No. 683 dated 1 November 2026 explains how the portal applies the rule. A revised FORM GST REG-16 follows from 1 December 2026.

Before the application can be filed

The application is still due within thirty days of the event warranting cancellation, with details of stock and capital goods, the liability on them and any payment made. The thirty-day limit does not apply on the death of a sole proprietor, and sub-rule (13) applies the rule to the legal heirs of a deceased proprietor as if the proprietor had applied.

Sub-rule (2) makes the returns a condition of filing the application itself. No application can be submitted unless every return, including the statement in FORM GST CMP-08 where applicable, that falls due on or before the date of submission for a period ending on or before the date from which cancellation is sought has been furnished. Where GSTR-1 or the Invoice Furnishing Facility (IFF) has been furnished for a tax period, the GSTR-3B for that period must also have been furnished. The rule carries two illustrations: an application on 13 July 2026 needs the May 2026 GSTR-3B, and a taxpayer that filed the June 2026 GSTR-1 on 11 July 2026 must file the June GSTR-3B before applying.

Returns for the remaining period, up to the date of submission or the date from which cancellation is sought, are to be furnished by their own due dates under sub-rule (3). From submission, the registration stands suspended until the proceedings are complete, under sub-rule (4).

Cancellation by the portal

Sub-rule (5) provides for electronic cancellation where the returns under sub-rules (2) and (3) have been furnished in time, all tax, interest, fee, penalty and other amounts payable have been paid, and one of two conditions holds:

(a) the output tax liability on account of central tax and State tax or Union territory tax integrated tax and compensation cess, declared by the registered person in the details of outward supplies in FORM GSTR-1, as amended in FORM GSTR-1A, if any, or using the Invoice Furnishing Facility in respect of supply made to registered persons, does not exceed two lakh fifty thousand rupees in any of the months from the date of registration till the date of submission of application for cancellation

or (b) the registered person has filed GSTR-10 within three days from the due date of furnishing the returns referred to in sub-rule (3), wherever applicable.

The registration is then cancelled from the date sought, by REG-38.

Two features of clause (a) matter in practice. The test is monthly, over the whole life of the registration, not a single cumulative figure. And it counts only tax on supplies made to registered persons, as declared in GSTR-1, GSTR-1A or IFF. A retailer selling mostly to consumers may be within the limit despite a large total liability; a wholesaler with one large B2B month years ago is outside it and needs the GSTR-10 route.

How the portal applies it

Advisory No. 683 describes the stages. The system first checks the returns due up to the effective date. Where some returns up to that date are not yet due, the application moves to “Pending for Returns Filing”, and if they are not filed by their due dates it is assigned to the jurisdictional officer.

Once the returns are in, composition taxpayers, non-resident taxable persons, OIDAR taxpayers and Input Service Distributors are cancelled electronically. For regular, casual and SEZ taxpayers the system checks output tax liability; where it exceeded ₹2.5 lakh in any tax period, the application moves to “Pending for Final Return”, and GSTR-10 must be filed within three days of the due date of the returns in the earlier stage or, where that stage does not apply, of the date of submission.

The advisory describes the test differently from the rule. It speaks of output tax liability “for each tax period”, while clause (a) speaks of tax on supplies to registered persons, month by month. Where they differ, the rule governs; a taxpayer near the limit should work the figure on the rule’s basis and keep the working.

Three days is short. The final return should be prepared before the application is filed, so that it can go in as soon as the trigger date is reached. Missing the window does not reject the application; it sends it to the officer.

Where the officer still decides

Under sub-rule (6), the application goes to the proper officer where any return or CMP-08 statement is not furnished, or any amount payable is unpaid. The officer has fifteen days to cancel the registration by an order in FORM GST REG-19, or to issue a notice of deficiencies in FORM GST REG-03. The applicant replies in FORM GST REG-04 within fifteen days, and the officer then has fifteen days to approve in REG-19 or reject in FORM GST REG-05.

No reply means deemed rejection, communicated in FORM GST REG-05A. Inaction by the officer, within fifteen days of the forwarded application or of the reply, means deemed approval, communicated in REG-19.

On GSTR-10 in this route, the advisory refers to filing within 90 days from the effective date of cancellation under the existing process, while the amended REG-19 says the final return is due within three months of the date of the order, where applicable. The two are counted from different dates; the order actually received should be read for the date it states.

Changing the effective date afterwards

Sub-rules (14) to (20) allow the officer, after cancellation, to change the effective date to an earlier date under section 29(3) of the CGST Act. The notice is in FORM GST REG-34 and the reply in FORM GST REG-35 within thirty days; the order drops the proceedings (REG-36) or changes the date (REG-37). With no order within sixty days of the notice, the proceedings are deemed dropped. A date once changed cannot be changed again. The forms REG-34 to REG-37 are inserted only from 1 April 2027.

FORM GST REG-16 from 1 December 2026

The notification amends FORM GST REG-16 from 1 December 2026. The reasons for cancellation are recast. “Ceased to be liable to pay tax” becomes “No longer liable to be registered under section 22 or section 24, or opting out of voluntary registration under section 25(3)”, “closure” and “Others (specify)” are omitted, and transfers are split between death of the proprietor and any other reason, including amalgamation, demerger or other disposal. The applicant can opt to file a NIL return for the period after the last return filed up to the date from which cancellation is sought. Tables 10 and 11 on stock and the input tax credit to be reversed are substituted.

The new instructions say that, where invoices for stock are not available, the amount is estimated under rule 44(3) on the prevailing market price, and that capital goods and plant and machinery are valued at invoice value reduced by 1/60th per month or part of a month from the date of invoice. The date from which cancellation is sought cannot be earlier than the date of filing of returns for the last tax period. Composition taxpayers, Input Service Distributors, non-resident taxable persons, TDS and TCS registrants, OIDAR suppliers and UIN holders need not fill tables 10 and 11.

Rule 44 is amended from the same date: sub-rule (4) now refers to FORM GST REG-16 alongside the earlier form, and the words “sub-section (5)” are omitted from sub-rule (1).

The effective date and earlier periods

The effective date should be settled before applying. It decides which returns must be filed first, and from 1 December it cannot precede the last return filed. Cancellation also leaves earlier periods open: REG-38 itself records that it does not affect tax and other dues for any period before the date of cancellation, whether determined before or after it.

This article is intended for educational purposes only and should not be construed as professional advice. It is based on the law as understood on the date of publication; laws and regulations are subject to change, and it may not reflect later developments. Readers are advised to consult a qualified tax professional on their specific situation before taking any action based on it. CA. Mohit Gaba takes no responsibility for any action taken or decision made on the basis of this article.