Demerger of business

[Archna Gupta]

Dear Experts

I have a client where demerger took place during FY 2019-20 but the appointed date of demerger was 1st April 2018 and order of NCLT was passed in August 2019.

Let's suppose there is company A whose major portion of business is demerged to new entity B. The audited balance sheet of the company was signed in November 2019 for FY 2018-19 however NCLT already passed the order in August 2019 so the balance sheet was prepared after demerger in the name of company A and B. But all GST returns for FY 2018-19 were filed in the GST no. of company A.

My query is that how we will file the GSTR-9 and 9C for FY 2018-19 because in GST returns the entire income was disclosed in Company A however in finacial statements it is divided between A and B as per order of demerger.

Please help. It is very urgent.

Regsrds

Archna Gupta

[Ganeshan Kalyani]

Sir, the transaction was already done in Company A during FY 2018-19. All GST returns are under the GSTIN of Company A. So in my view, you should file GSTR-9 & 9C under GSTIN of Company A. The demerger happened in FY 2019-20. So in my view, there should not be an issue for FY 2018-19. Even if there is any with respect to Financial statement, it will form part of reconciliation to show it to the auditor.

[KASTURI SETHI]

I concur with the views of Sh Ganeshan Kalyani Ji.

AI Summary

Demerger effect on GST filings: file annual returns under original GSTIN and reconcile with audited financial statements.
Whether the accounting separation following a corporate demerger should alter the filing of annual GST returns when transactional returns for the relevant year were filed under the transferor's GSTIN. Advisers recommend completing GSTR-9 and GSTR-9C under the GST registration that reported the transactions for that year, and addressing the post order allocation shown in audited financial statements through reconciliation with the auditor.