Change in Constitution

[varsha jain]

Hello Sir, there is change in Constitution from Proprietorship to Partnership firm. Section 18(3) talks about Certification by CA/ CMA While filing ITC-02. i want to know whether the amt of ITC to be transfered to new firm is to be Certified or just that the Firm is taking over all the liabilities of Proprietorship is to be certified.

or can the Proprietorship firm sell all its Stock at cost (with GST) to new Partnership Firm?

[KASTURI SETHI]

1. C.A.'s certificate is required.

2. In terms of Para 4(c) of Schedule II to the CGST Act, 2017, transfer of business as a going concern is not treated as supply and thus, the same stands excluded from the scope of supply of goods.

In view of above, stock cannot be sold.

[Ganeshan Kalyani]

Whether PAN is going to be changed.

[DR.MARIAPPAN GOVINDARAJAN]

As per section 18(3) the proprietorship can transfer the entire ITC to the partnership. The certificate is required while filing ITC - 02. The transfer is, I think, on going concern basis. Then the stock is also to be transferred. What about the terms of transfer from proprietorship to partnership?

[varsha jain]

Sir what needs to be Certified...

(1) is it the amount of ITC that is to be certified

or

(2) the fact that the Firm is taking over all the liabilities of Proprietorship is to be certified.

[KASTURI SETHI]

Amount of ITC which is unutilized and to be transferred, is to be certified.

[DR.MARIAPPAN GOVINDARAJAN]

Amount of ITC matched and amount of ITC to be transferred are to be certified.

AI Summary

Input tax credit transfer requires certification of unutilized ITC when a proprietorship converts into a partnership.
A CA/CMA certificate is required when filing ITC-02 to certify the amount of unutilized ITC to be transferred on change of constitution from proprietorship to partnership; transfer as a going concern is excluded from supply under Schedule II para 4(c), so stock should be transferred as part of the going concern, and matching the amount of ITC to be transferred must be documented.