TREATMENT OF CLOSING STOCK WHEN PARTNERSHIP IS CONVERTED TO SOLE PROPRIETORSHIP

[MVK TAXAUDIT]

TREATMENT OF CLOSING STOCK WHEN PARTNERSHIP IS CONVERTED TO SOLE PROPRIETORSHIP UNDER TWO DIFFERENT SITUATIONS :

1. WHEN THERE IS EXCESS ITC .

2. WHEN IS THERE NO EXCESS ITC .

ALSO WHETHER PARTNERSHIP FIRM SHOULD CLEAR CLOSING STOCK BY MAKING A SALES BILL TO SOLE PROPRIETORSHIP OR IT CAN TRANSFER IT TO THE SOLE PROPRIETOR ( ONE OF THE PARTNER ) WITHOUT MAKING SALES BILL.

KINDLY ADVICE ON THE ABOVE.

[KASTURI SETHI]

See reply against Issue ID No.116073 dated 26.2.20 in this forum.

AI Summary

Treatment of closing stock on conversion: GST implications for input tax credit adjustment and invoice requirement. Treatment of closing stock under GST when a partnership converts to a sole proprietorship raises two issues: adjustment of input tax credit where there is excess ITC and the position where there is no excess ITC; and whether the partnership must issue a sales invoice to transfer closing stock to the sole proprietor or may transfer without a sales bill. The reply in this text only refers to a prior forum response (Issue ID No.116073 dated 26.2.20) for detailed guidance.