Skip to content

CA Intermediate · Taxation · Registration

Meera Consultants, a Delhi firm, is registered under regular scheme and has stopped business permanently on 10 August. It wants to cancel its registration voluntarily. Which statement is correct as per the CGST Act, 2017 and rules?

On cancellation the registered person must pay an amount equal to the higher of the input tax credit on inputs in stock, in semi-finished or finished goods and on capital goods (reduced as prescribed) or the output tax on those goods. The lower amount is not the test.

  1. ARegistration is cancelled automatically, and no tax is payable on stock
  2. BOn cancellation, it must pay an amount equal to the higher of ITC on inputs held in stock and capital goods (adjusted as prescribed) or the output tax payable on such goodsCorrect
  3. CIt must pay the lower of the ITC and the output tax on stock
  4. DIt must pay only the ITC on capital goods, not inputs in stock

Explanation

On cancellation, the person must pay an amount equal to the credit in respect of inputs held in stock, inputs in semi-finished or finished goods and capital goods or plant and machinery, or the output tax on them, whichever is higher. The lower option reverses the rule. Inputs in stock are also covered, so the last option is wrong.

Did you get it right without looking?

One question tells you little. A timed set on Registration shows your real accuracy, how long you take and where you lose marks.

Practise RegistrationFree diagnostic mock

More Registration questions