Capital Asset - Plant and Machinery introduced by incoming partner in partner ship firm

[anuja bhandari]

A proprietor firm unregistered in GST has plant machinery in Assets. The proprietor in individual capacity will be introduced as partner in partnership firm and will introduce the plant and machinery as capital introduction. WDV of plant and machinery is 1 crore. Plant and Machinery is purchased pre GST period by proprietor. Will GST be applicable on capital asset introduced by incoming partner?

AI Summary

GST Not Applicable to Capital Introduction in Partnership from Unregistered Proprietor, per Section 7, CGST Act 2017. A proprietor, unregistered for GST, plans to join a partnership firm, introducing plant and machinery as capital. The machinery, valued at 1 crore, was purchased before the GST era. The query concerns whether GST applies to this capital introduction. The response clarifies that under Section 7 and Schedule I of the CGST Act 2017, transfers between related persons in business, even without consideration, are considered supplies. However, since partners and partnership firms are not separate legal entities, such a transfer is treated as self-consumption and is not subject to GST.