Identify the correct exit route
Under CGST Rule 6(3), a registered person intending to withdraw voluntarily must file FORM GST CMP-04 electronically before the withdrawal date. Under Rule 6(2), an eligibility failure instead triggers regular tax liability and tax invoicing for taxable supplies from that event and an intimation in CMP-04 within seven days. A later portal submission does not turn an earlier disqualifying event into a voluntary exit.
Read the applicable text: CBIC: CGST Act, sections 10 and 18 CBIC: CGST Rules 6 and 40.
Set the outward-supply cut-off
Document the effective date, the decision or event and the filing acknowledgement. Reconcile open orders, advances and dispatches so the actual supplies fall on the proper side of the cut-off under applicable time-of-supply and invoicing rules. Rule 6(7) deems a withdrawal or denial for one registration to apply to the other registrations on the same PAN. Map the effective dates and operational changes across the affected GSTINs.
Build the stock-credit calculation separately
Section 18(1)(c) addresses eligible inputs in stock, inputs contained in semi-finished or finished goods and eligible capital goods on the day immediately preceding regular tax liability. Take and retain that statutory snapshot. Section 18(2) bars taking credit under section 18(1) after one year from issue of the relevant supply tax invoice. Under Rule 40(1), reduce the capital-goods tax by five percentage points per quarter or part from the invoice or other receipt document date. A practising chartered accountant or cost accountant must certify the declaration where the combined claim across the stated tax heads exceeds ₹2 lakh. Rule 6(6) provides 30 days from the withdrawal date, or from the CMP-07 order date in an order case, to furnish ITC-01. Rule 40(1)(b) separately refers to 30 days from eligibility and permits a notified extension. Check the applicable dates and retain the preceding-day stock snapshot, even if the stock is physically counted later.
Keep the evidence usable
Retain a stock movement bridge, source tax invoices and evidence of the goods and tax attributable to the eligible population. The illustrations focus on eligible input stock and dates, assume no special extension, and do not treat all book stock or input services as creditable. Check any order-driven denial and its distinct dates separately.
Six worked illustrations
All facts and amounts are fictional. Calculations illustrate the stated assumptions, not a predetermined legal outcome.
Illustrative example 1: Voluntary filing in advance
A taxpayer plans regular treatment from 1 December 2026 and files CMP-04 on 26 November, five days earlier. Keep the supported filing and effective dates separate.
Illustrative example 2: Loss of eligibility
A disqualifying event occurs on 8 November. Seven days later is 15 November. A CMP-04 filed on 14 November is six days after the event; it does not defer regular liability to 14 November.
Illustrative example 3: Record the thirty-day interval
Assume withdrawal effective 10 November and no extension. Thirty days after the effective date is 10 December. Calendar the ITC-01 deadline and complete the evidence review earlier.
Illustrative example 4: Take the preceding-day stock snapshot
If regular liability begins on 1 December, use 30 November. A later count of 120 eligible units includes 15 received on 1 December. With no other movements, the snapshot contains 105 units.
Illustrative example 5: Exclude post-switch receipts
On the supported snapshot 80 eligible units carry ₹90 of input tax per unit. A further 20 arrive after the snapshot. The illustration’s transitional input tax is ₹7,200; consider the later receipt under the applicable regular rules separately.
Illustrative example 6: Reconcile one older invoice
Otherwise identified stock input tax totals ₹28,000. Of this, ₹6,000 relates to an invoice issued more than one year before the proposed taking of credit. Removing that amount leaves ₹22,000, subject to the other tests.
Ten-step verification table
| Step | Action | Evidence |
|---|---|---|
| 1 | Identify voluntary withdrawal or eligibility failure | Decision, rule and event evidence |
| 2 | Confirm the effective date | Timeline and documented basis |
| 3 | Submit CMP-04 within the applicable timing | Portal acknowledgement |
| 4 | Review same-PAN registrations | Registration list and Rule 6(7) check |
| 5 | Update the outward invoice controls | Cut-off checklist and sample invoices |
| 6 | Freeze the statutory stock snapshot | Stock ledger and movement bridge |
| 7 | Identify eligible inputs and capital goods separately | Item and invoice register |
| 8 | Review invoice age and applicable reductions | Section 18 and Rule 40 calculation |
| 9 | Check ITC-01 deadline and certification | Declaration support and acknowledgement |
| 10 | Reconcile regular returns and closing exceptions | Cut-off working and evidence pack |
Sixteen practitioner FAQs
1. Must voluntary CMP-04 be filed before the exit date?
Yes. Rule 6(3) requires filing before withdrawal.
2. Is the seven-day period the voluntary deadline?
No. It is the Rule 6(2) intimation timing following a disqualifying event.
3. Can liability begin on the date CMP-04 is filed after a breach?
Rule 6(2) refers to the event date; filing does not postpone liability.
4. Which stock date should support section 18(1)(c)?
Use the day immediately preceding regular liability.
5. Can current inventory records replace the snapshot?
Bridge later counts back to the statutory date.
6. Do input services enter this stock-credit category?
Section 18(1)(c) specifies eligible inputs and capital goods, not all service costs.
7. Is all finished goods value eligible?
Identify eligible input tax on the inputs contained in the stock, not its gross book value.
8. Does a supplier invoice older than one year require review?
Yes. Section 18(2) bars taking the credit after one year from the date the supply tax invoice was issued.
9. Do capital goods have their own adjustment?
Yes. Apply the prescribed reduction and conditions where relevant.
10. Can a later purchase be included in transitional stock?
Exclude it from the snapshot and apply the ordinary rules separately.
11. Does the exit affect other GSTINs under the same PAN?
Review Rule 6(7) for deemed withdrawal or denial across those registrations.
12. Can a bill of supply continue after effective exit?
Apply normal invoicing requirements to taxable supplies from the applicable cut-off.
13. Does a portal confirmation establish that all stock credit is valid?
No. Substantiate entitlement, quantity and documents.
14. Are officer-ordered denial dates always the same as voluntary withdrawal?
No. Review the order and Rule 6 separately.
15. Is ITC-01 the same filing as CMP-04?
No. They serve different purposes.
16. What evidence supports a disputed cut-off?
Preserve the reason and effective date, filing acknowledgements, stock movements and transaction documents.
Official sources
CBIC: CGST Act, sections 10 and 18 CBIC: CGST Rules 6 and 40 India Code: CGST Act, section 18(1)(c) and (2)