Does the GST portal now cancel registrations on its own?

No. The new Rule 20 applies only after you apply for cancellation in FORM GST REG-16. If your application meets the conditions, the portal cancels the registration electronically instead of sending it to an officer. A registration you never applied to cancel is not touched by this rule.

Is the ₹2.5 lakh a turnover limit?

No. It is output tax, not sales. It counts central tax, State or UT tax, integrated tax and cess declared in GSTR-1 (as amended in GSTR-1A) or the Invoice Furnishing Facility, on supplies to registered persons only. At 18% GST, ₹2.5 lakh of tax is about ₹13.9 lakh of taxable B2B sales in a month.

Which returns must I file before I can apply?

Every return due on or before the day you apply, for periods up to the date you want cancellation from, including CMP-08 for composition filers. If you have filed GSTR-1 or used the IFF for a period, you also need that period's GSTR-3B. Applying on 13 July 2026, for example, needs the May 2026 GSTR-3B.

How long do I have to apply after closing the business?

Thirty days from the event that warrants cancellation. The notification makes an exception only for the death of a sole proprietor.

Is Rule 20 the same as Rule 14A or Rule 14B?

No. They are three separate rules. Rule 14A is the fast route for registering a low-risk new business, Rule 14B lets a small e-commerce seller register in another State using the platform's warehouse, and Rule 20 is cancellation on the taxpayer's own request. Each uses a ₹2.5 lakh monthly limit, for a different purpose.

Automatic GST Cancellation 2026: The ₹2.5 Lakh Test

Q: What if my output tax went above ₹2.5 lakh in one month?

You can still get electronic cancellation if you file the final return, FORM GSTR-10, within 3 days of the due date of the remaining returns, where GSTR-10 applies, and have filed all other returns and paid all dues. If you do not, the application goes to the proper officer.

If you have heard that GST registrations will now be "cancelled automatically if your tax stays under ₹2.5 lakh a month", the headline is half right. The new Rule 20, in force from 1 November 2026, lets the GST portal cancel a registration without an officer, but only after you apply for cancellation in FORM GST REG-16, and only if the application meets conditions on returns, dues and a ₹2.5 lakh test that is easy to misread as turnover.

This post goes through what the notification says, what the test counts, what you must file before you can apply, and what happens to an application that misses the automatic route.

This is based on Notification No. 05/2026–Central Tax, dated 26 October 2026, as printed on CBIC's copy. That copy is marked "to be published in the Gazette" and leaves the G.S.R. number blank. It also has lettering slips: the two conditions in Rule 20(5) print as (c) and (d)(b) where (a) and (b) are meant. Check the gazetted version, and the GST portal's own advisories, before you apply. This is not legal advice.

The short version

Rule 20 is replaced from 1 November 2026. It is the rule for cancelling at your own request, for example when you close the business or fall below the registration limit.
You still apply. FORM GST REG-16, within 30 days of the event that makes you want to cancel. Nothing in the rule cancels a registration you did not apply to cancel.
The portal cancels without an officer when your returns are filed, your dues are paid, and either the ₹2.5 lakh test is met or you file GSTR-10 within 3 days.
Otherwise an officer decides. That route has fixed timelines of 15 days at each step.
The amended REG-16 form itself starts on 1 December 2026, a month after the rule.

What the ₹2.5 lakh test counts

The test sits in Rule 20(5). It is met when the output tax liability you declared stays within ₹2.5 lakh. Four details decide whether you pass.

It is tax, not sales. The test adds up central tax, State or Union Territory tax, integrated tax and compensation cess. A business selling ₹10 lakh of goods at 18% in a month has ₹1.8 lakh of output tax. To reach ₹2.5 lakh at 18% you need about ₹13.9 lakh of taxable B2B sales in the month. At 5% it is ₹50 lakh.

Only supplies to registered persons count. The liability is the one declared in GSTR-1, as amended in GSTR-1A, or through the Invoice Furnishing Facility, in respect of supplies made to registered persons. Sales to customers without a GSTIN are not in the figure.

It is checked month by month, not added up. The rule says the liability must not exceed ₹2.5 lakh "in any of the months" from the date of registration until you submit the application. Read plainly, that means no single month since you registered was over the line, and it is not a running total of ₹2.5 lakh. One heavy month years ago can therefore take you off the test.

One bad month is not the end. Rule 20(5) gives a second way in. If the test is not met, the application still goes through the portal when you file FORM GSTR-10 within 3 days of the due date of the remaining returns, where GSTR-10 applies to you, along with the other conditions.

What you must file and pay first

Rule 20(2) blocks the application until the returns are up to date. You cannot submit REG-16 unless:

Every return due on or before the day you apply has been filed for periods ending on or before the date you want cancellation from. That includes FORM GST CMP-08 for composition filers.
For any period where you filed GSTR-1 or used the IFF, the GSTR-3B for that period is filed too.

The notification gives two examples. Applying on 13 July 2026 means you need the GSTR-3B for May 2026, because June's is not yet due. If you already filed June's GSTR-1 on 11 July 2026, you also need June's GSTR-3B before you apply.

After you apply, your registration is suspended until the cancellation is complete, and you must file the remaining returns up to the date of the application, or the date you asked for, by their normal due dates. Check GST due dates for November 2026 for the returns that fall due while a closure is pending.

Tax, interest, fee, penalty and any other amount you owe must also be paid for the portal route. The REG-38 confirmation says cancellation does not remove your liability for any period before the cancellation date, whether it is worked out before or after.

What happens after you apply

Portal route. If the conditions in Rule 20(5) are met, the portal cancels the registration from the date you asked for, and tells you in FORM GST REG-38.

Officer route. If a return or CMP-08 is missing, or an amount is unpaid, or you needed GSTR-10 and did not file it in time, the application goes to the proper officer. From there:

Step	Time allowed	Form
Officer finds the application in order and cancels	15 days from receipt	REG-19
Officer finds it deficient and issues a notice	15 days from receipt	REG-03
You reply to the notice	15 days from the notice	REG-04
Officer approves after your reply	15 days from your reply	REG-19
Officer rejects after your reply	15 days from your reply	REG-05
You do not reply in time	Deemed rejected	REG-05A
Officer takes no action within 15 days	Deemed approved	REG-19

If the officer cancels the registration, the order form (REG-19) says a regular filer must file the final return, GSTR-10, within three months of the order, where it applies. The 3-day window applies only to the portal route above, when the ₹2.5 lakh test is not met.

After cancellation, the officer can still propose an earlier effective date by show-cause notice. You get 30 days to reply, and a changed date cannot be changed again. The forms for this (REG-34 to REG-37) are inserted from 1 April 2027.

Three rules, three ₹2.5 lakh limits

The same figure shows up in other rules this year, and it is easy to mix them up:

Rule 14A is the fast route for registering a new, low-risk business.
Rule 14B, new in this notification, lets a seller registered in one State register in another by using an e-commerce operator's warehouse, if its monthly output tax on supplies to registered persons stays within ₹2.5 lakh. See the 57th GST Council meeting post.
Rule 20 is cancellation at your own request, and the subject of this post.

The Council post's line that registration and cancellation "become more automatic" covers all three. They are different rules with different conditions, so a limit quoted for one does not apply to the others.

This notification also replaces Rule 21, which lists cases where an officer can cancel a registration, such as returns not filed for a set period. That is a separate route, and we have not covered it here.

Dates to keep in mind

Date	What starts
1 November 2026	Rule 20 as substituted; the rest of the notification unless stated otherwise
1 December 2026	Amended FORM GST REG-16 and the related rule 44 changes
1 April 2027	REG-34 to REG-37, and the new Rule 21A and Rule 22

The notification does not say how the GST portal will treat REG-16 applications filed in November, before the amended form arrives. Read the portal's current advisory before you apply.

What to do if you are thinking of cancelling

Name the event and the date. Closure, falling below the registration limit, or a change that means you no longer need the registration. The 30-day clock starts then.
Get every return filed. Use the calendar above, or the late fee calculator, to see what a missed return costs before you file it.
Check your monthly output tax on B2B sales across every month since registration. If any month was over ₹2.5 lakh in tax, plan to file GSTR-10 within 3 days of the last return's due date.
Clear dues, then apply in REG-16.
If you are keeping the registration, there is nothing to do. This rule does not cancel anyone's GSTIN on its own. To confirm a GSTIN you already hold is valid, use the GSTIN validator.

Sources

This post reflects Notification No. 05/2026–Central Tax as printed on CBIC's copy of 26 October 2026, read on 3 November 2026. Rule 20 starts on 1 November 2026, the amended REG-16 on 1 December 2026, and REG-34 to REG-37 on 1 April 2027. The CBIC copy is not the final gazette text, so re-check it against the gazetted version and the GST portal before you rely on it for your own application.