Tax liability on stock transfer due to change in business constitution

[DINESH TIWARI]

Sir

If i change a proprietorship business into the partnership business under GST; there is neither change in Place of Business nor any Closing Stock or Plant and Machinery moved from their places.

So i want to ask that, is there any immediate liability of GST on Plant and machinery and Closing Stock imposes on previous firm.

Please guide me on it.

[YAGAY andSUN]

going concern does not attract taxes.

[Ganeshan Kalyani]

GST is PAN based. If PAN is same then there is no change liability .

[KASTURI SETHI]

Change of proprietorship into partnership mean a new entity and afresh registration is required under GST. PAN will be changed. Stock whatever including plant and machinery though remain in the same premises will qualify to the definition of 'supply'. Such transfe/disposal requires invoice and payment of tax for which ITC would be available to the new partnership firm.

[CASusheel Gupta]

In case, business is transferred as going concern it is not treated as supply as per clause 4(c) of schedule II. U need to file ITC-02 to transfer unutilised ITC from old concern to new concern.

CA Susheel Gupta

8510081001, 9811004443

[YAGAY andSUN]

We endorse the very view of CA Susheel Gupta.

[KASTURI SETHI]

I agree with the views of Sh.Sushil Gupta Ji, an expert.

[KASTURI SETHI]

I also agree with M/s. Yagay And Sun, Sirs. They have been right from the day one i.e. initially.

[Guest]

Sir

I am composition dealer and have a partnership firm. now i want to convert the same in proprietor ship and want to continue as composition dealer. then what is tax liability under the same for closing stock

AI Summary

Going concern treatment: transfer of business as a going concern generally not treated as supply, avoiding immediate GST liability. Where a change from proprietorship to partnership is treated as transfer of a business as a going concern, it is not a supply and attracts no immediate GST; if the change creates a new taxable person (for example, different PAN or new registration), transfers of closing stock and plant and machinery qualify as supply requiring invoices and tax, with the recipient able to claim input tax credit and the transferor able to move unutilised ITC by filing ITC-02.