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DEAR SIR,

ONE CLIENT CONSTITUTION CHANGE FROM PARTNERSHIP TO PROPRIETOR

SO HOW CAN I TRANSFER BALANCE ITC FROM PARTNERSHIP FIRM TO PROPRIETORSHIP FIRM

WHEN I CAN CANCEL PARTNESHIP FIRM GSTIN NUMBER (BEFORE ITC CLAIM OR AFTER ITC CLAIM)

PLEASE GUIDE STEP BY STEP PROCEDURE

Reply

Dear Sir,

As per provision of section 18 sub section 3 of CGST Act,2017 read with Rule 41 of CGST Rules,2017, if there is change in constitution of a registered person, in case of sale, merger, demerger, amalgamation, lease or transfer of the business for any reason, then input tax credit lying in the credit ledger of the registered person can be transferred to another registered person by furnishing the details in FORM GST ITC-02 regarding change in constitution along with request to transfer the input tax credit in the credit ledger.

Form GST ITC-02 is to be submitted by the transferor (in above case partnership firm is transferor) along with a certificate issued from practicing chartered Accountant or Cost Accountant certifying that the sale, merger, demerger, amalgamation, lease, transfer of the business has been done along with the transfer of liabilities.

After the transferor have submitted the Form GST ITC-02, transferee (in the above case proprietorship firm is transferee) needs to accept the details furnished by the transferor then unutilized credit can be transferred in his electronic credit ledger.

According to the above provisions, your client should first claim unutilized ITC and after that apply for cancellation of GST of partnership firm. 
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