Demerger of one segment of X (entity) to Y(other entity)

[DAMINI TALWAR]

NCLT approved the demerger of one segment of X on 13-09-2023, and Books of the demerger segment of X to Y were transferred on 31-03-2023. GST registration of Y was obtained in Oct'22 and Turnover as per GST return of Y for FY 2022-23 was NIL, but Y is having turnover of lakhs as per Audited FS for FY 2022-23 due to business transfer activity on 31-03-2023. So pls advise about the treatment of this transaction in GSTR 9 & 9C of X & Y for FY 2022-23.

AI Summary

Demerger Raises GST Turnover Reporting Issues: Turnover to be Reported Under X Until Effective Date per Section 87 CGST A discussion on the demerger of a segment from one entity, X, to another, Y, raised questions about the treatment of turnover in GST returns for the fiscal year 2022-23. The National Company Law Tribunal approved the demerger on September 13, 2023, with the transfer occurring on March 31, 2023. Y's GST registration was obtained in October 2022, showing no turnover, though audited financial statements indicated significant turnover due to the business transfer. The reply advised that turnover should be reported under X until the effective demerger date, then under Y, according to Section 87 of the CGST.