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.