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GST on capital withdrawn by partners in form of good

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Rajveer Basniwal

21 Points Posted on 13 March 2022

We are winding up a partnership firm doing jewellery business. The firm is not having money to pay to its partners. Jewellery stock value : 1.11 Cr. (Business Stock) Partners capital payable: 1.26 Cr. The partners are ready to accept payment in goods form (Jewellery Stock). In such case, it is not sale. It is drawing of capital by Partners in form of goods. Is GST payable on such closing stock, being given to partners for returning their capital? Does GST department raise any objection for doing so? (Business stock drawn by partners as drawings).

Replies (4)

Quick Summary

A jewellery partnership firm is winding up and unable to pay partners cash. The partners are willing to accept their capital as jewellery stock. The core question is whether GST is payable on this stock withdrawal, as it's considered drawings rather than a sale. The discussion also touches upon potential objections from the GST department and alternative solutions like selling the stock to outsiders first.

CA Surya Sekar

CFO

486 Points Posted on 13 March 2022

If funds are transferred from Partnership bank to partners bank then only there won't be any GST ..

If stock is taken then GST is applicable..

Sell the jewellery to outsiders and withdraw the capital