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Proprietary to Firm GST on goods

vinay (Trainee CMA) (238 Points)

04 April 2023

Am converting my Proprietary to Firm. Am holding goods used as raw material for providing output service. How to transfer under GST? Whether sales or stock transfer? if sales is it taxable?

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2 Replies

Pankaj Rawat (GST Practitioner) (55037 Points)
Replied 05 April 2023

As per Notification 12 CT rate Transfer business is exempted Supply.

Yes you can transfer your proprietary business Stock, ITC, Assets,Liability to your Firm.

Before canceling the GSTN of Proprietary business obtain the GSTN for Firm .

While filing application in Reg-01 for registration mention reason to obtain registration "Transfer of Business" & it will ask you for GSTN of Transferor (propriety business).

Any ITC lying in Electronic Credit Ledger of Proprietary business can be transferred to transferee (Firm) by filing ITC02 in Proprietory business & accept the same in transferee (firm) (Rule 41).

While filing application for cancellation of Proprietary business give reason transfer of Buiness.

lastly prepare the BTA (Business Transfer Agreement between Proprietary business & Firm.

CA Mayank A Jain (Chartered Accountant in Practice) (1061 Points)
Replied 05 April 2023

There is no GST implication on sale of business as a going concern. Consequently, the stock held by the proprietorship firm could be taken by the partnership firm without paying any GST.