Transfer of Business

[Kaustubh Karandikar]

XYZ (Proprietor) is converting his business from Proprietor to Private Limited Company as a ‘Going Concern’. The effective date of such transfer will be from 01.04.2023. The GST liability of the proprietor for the month of March’23 which is payable on 20^th April’23, needs to be paid by the Private Limited Company since the transfer includes transfer of all asset and liabilities including the taxes w.e.f. 01.04.23 or by the Proprietor since the invoices for March’23 are issued by the proprietor?

[Amit Agrawal]

"Practical Suggestion":

Let the proprietor pays the subject gst liability of March, 2023 by filing Form GSTR-3B of the proprietorship frim.

As said liability would got shifted to Pvt. Ltd. co. before making such payment, payment so made by the proprietor, should be shown as payment made on behalf of the Pvt. Ltd. Co. (i.e. not by the proprietor per se from his own funds) in respective books of accounts.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Kaustubh Karandikar]

thanks amit ji for your practical solution to the issue. In my view, since the invoices are issued by the proprietory concern, GST liability against the same will be paid by them through GSTR - 3B but the same will be accounted by Pvt. Ltd. Company in their books of accounts.

AI Summary

GST liability allocation: proprietor files GSTR-3B and records payment as made on behalf of successor company. The proprietorship should discharge the GST liability for supplies invoiced before the transfer by filing its return and making payment, while treating that payment in the proprietorship's books as made on behalf of the private limited company so the transferee records the tax expense and corresponding credit in its accounts.