Transfer of proprietorship business from Mother to Son

[vaishali raveshiya]

Respected members,

kindly guide me how to deal with in regards to following matter in Income Tax and GST?

A business is carried on in the name of mother will be taken over by/ transfer to her son.

What procedure to be followed in GST,

whether GST is payable ot it is exempt under entry 2 of exemption list?

When to take new GST registration no, before surrender of registration no taken in the name of mother or after cancellation of it?

Whether ITC can be claimed on closing stoch after transfer of business??

Whats other impact in GST and Income Tax??

[KASTURI SETHI]

1. You are required to apply for cancellation of registration in Form REG-16 in terms of Section 29 of CGST Act, 2017 read with Rule 20 of CGST Rules, 2017.

2.As per Rule 20, you are to apply for within 30 days after the transfer of business.

3.For availing ITC apply in Form GST ITC-02 as required under Rule 41 of CGST Rules.

4. On the transfer of ongoing business no GST is payable. Such supply is exempt.

[Ganeshan Kalyani]

I fully agree with Sri Kasturi Sir's reply. GST is not applicable on the business sold as going on concern. Further new registration under GST is required to be taken by the son. The GST number of mother to be applied for cancellation. However, the authority can verify if any dues or assessment is pending or not before he proceeds sith the cancellation procedure. The son is however to apply for the carry forward of input tax credit along the the liability to his new registration number.

AI Summary

Transfer of going concern: GST not payable; new registration required and input tax credit may be carried forward. Transfer of a proprietorship as a going concern is exempt from GST and no GST is payable on the transfer. The transferor should apply for cancellation of existing GST registration using Form REG-16, subject to authority verification of dues, while the transferee must obtain a new registration and apply to carry forward input tax credit using Form GST ITC-02; ITC on closing stock can be transferred via the prescribed procedure.