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Transfer of asset by partner to firm.

mvramana (Student) (285 Points)

31 January 2022

Please suggest...
Capital asset contributed by partner as a investment . Whether GST applicable ??

Partner having separate GSTN.
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9 Replies

Eswar Reddy S (CFO- at NHTF) (58221 Points)
Replied 31 January 2022

GST is not applicable .But you need to check other provisions like was it a stock to partner entity ?

Was the stock in trade converted to capital asset before making investment in partnership firm ?
Income provisions have to be complied to plan GST

1 Like

mvramana (Student) (285 Points)
Replied 31 January 2022

Sir,

It is partner's asset.

Eswar Reddy S (CFO- at NHTF) (58221 Points)
Replied 01 February 2022

If it's asset then there is no supply of goods or services.So It is not liable for GST

sabyasachi mukherjee (26339 Points)
Replied 01 February 2022

The term GST STANDS GOODS AND SERVICE TAX.
PARTNERS ASSET TO FIRM FOR SOME CONSIDERATION IS NOT CONSIDERED AS CAPITAL GAIN NEITHER GST IS APPLICABLE .
REASON 1. THE ASSET ARE NOT IN THE BOOKS OF THE FIRM OR HELD AS STOCK IN TRADE
REASON 2. IF STOCK IN TRADE CONVERSION TO CAPITAL ASSET THEN IT IS CERTAINLY WORTH MENTIONING.

1 Like

CA Altamush Zafar (GST Consultant) (15930 Points)
Replied 01 February 2022

If the asset is of nature of goods or services being transferred to a partnership firm then GST will become applicable. The firm will be eligible for ITC subject to section 16 and 17. Consideration not required since related parties.

1 Like

sabyasachi mukherjee (26339 Points)
Replied 01 February 2022

I beg to differ

CA Akshay Hiregange (Partner - Audit & Assistance) (4515 Points)
Replied 01 February 2022

Concept of mutuality comes into picture, i.e. whether partner and partnership firm must be seen as two separate persons in the eyes of GST law? For example, profit of a partnership firm liable in whose hands?

Considering the retrospective change in Section 7(1)(aa) impact too. But generally, for services rendered, firm is required to pay tax. Partner having separate GSTIN maybe for other taxable supplies in his own name.

It could be covered under 'related persons' for the purpose of GST, 'Schedule I' would kick in, and supply of 'goods' (including assets as goods definition is very wide) could be subject to GST.

Although this seems unnatural, this may need to be further studied.

sabyasachi mukherjee (26339 Points)
Replied 02 February 2022

All are assumptions.
First the partner must have gstin no. and firm has obviously got gstin no.
In this context the underlying provisions . Sec 7(1) of GST ACT HAS SUCH PROVISIONS.