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Transfer of Business

SSG (1936 Points)

19 May 2020

The assessee is running trading of cloth business under proprietorship business. Now he wants to transfer his business to another proprietor ship firm. The transferee firm already has gst no. and running similar business.

What is the procedure of transfer of business in this case and what forms needs to be filed by transferor and transferee under GST. On date of transfer i.e. 1st april 2020, the transferor firm has stock of Rs. 4 lacs but no GST ITC available as per records.

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5 Replies

jashwanth (CA-PRACTICE) (400 Points)
Replied 19 May 2020

You need to apply for cancellation of gst registration and need to pay gst on the stock held like sale.cancel all your licenses and business registration so in future you will not be liable for kyour business and you should also terminate all agreement with vendors and with clients so in future you will not be liable for anything.Make an sale agreement with the purchaser of business.

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SSG (1936 Points)
Replied 19 May 2020

Only the proprietor will change. The business will run as such. Please advise the procedure.

Pankaj Rawat (GST Practitioner) (55030 Points)
Replied 19 May 2020

As per Notification 12/2017 CT (R) such transfer of business is Exempted supply in GST.
The Transferor Proprietor need to file Application for cancellation & the reason therein need to provide " Change in Constitution" thereafter it will ask you the GSTN of Transferee , provide the GSTN of Transferee Proprietor.

When the business is transferred as going concern then tax is not required to pay on Stock.

Note : For income tax purpose prepare business transfer deed.

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SSG (1936 Points)
Replied 20 May 2020

Thanks Mr. Pankaj. In this case do transferor firm need to file any other GST Form apart from form for cancellation of GST no.?

Pankaj Rawat (GST Practitioner) (55030 Points)
Replied 22 May 2020

DEAR SSG

NO........ AS ITC 02 IS APPLICABLE IN THIS CASE TO TRF. THE CREDIT BALANCE IN CREDIT LEDGER, BUT SINCE YOU HAVE ALREADY CLEAR THAT THERE IS NO BALANCE IN ELECTRONIC CREDIT LEDGER AVAILABLE SO NOT REQUIRED TO FILE ITC02

NOTE : FOR SAFER SIDE CAN INTIMATE DEPARTMENT BY PUTTING MAIL FOR THE SAME

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