Cancellation of sole proprietorship

This query is : Resolved 

Querist : Anonymous (Querist) 27 April 2013

Dear Sir,

My client who was running his business as a sole proprietor is no more and hence his legal heir is willing to cancel the Proprietorship registered under my client's name.

Kindly suggest the steps to be followed for closing a proprietorship business. Will the cancellation of VAT registration alone do the needful for cancellation.

Dhanabal. A

MJ Krishnamurthy (Expert)
27 April 2013

Mr Dhanbal,
You have to file the returns under concerned vat Act uptodate and clear any arrears of tax.If your client's heir is selling the business to some other person and even otherwise a final accounts have to be drawn. You should ascertain the stock held on the closing date and declare the way it is disposed off.if you sell all the stock by raising invoices and collecting tax you may include it in the last return.If a part or whole of the stock is waste and not saleable you have to calculate its value and the paid during purchase. This input tax claimed earlier has to be reversed in the last return.In many state Acts sale of business as a whole is exempt from tax.
All the statutory forms received from the department and original registration certificates under VAT,CST and PT Acts are to be surrendered,with due acknowledgement.

Querist : Anonymous (Querist) 29 April 2013

Thanks a lot sir for sharing the valuable information.

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
10 June 2013

You have to file the returns up to the death and thereafter if the same business is continued then through an affidavit it can be transferred in the name either wife or the son or other family members.

If the business is not to be carried on then just surrender the VAT and Municipal licence and close the firm.

On other matters I agree with the expert

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