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.

[Pradeep Reddy Unnathi Partners]

Please refer Sec 87 of the CGST. Turnover shall be reported in the original company X till the effective date of de-merger.

If the effective date is 31.03.2023.

For 9 & 9C- pls disclose turnover of demerged unit of X till 31.03.2023 in X's 9C and any transaction which occurs after said date can be disclosed in 9 & 9C of Y. Hope this clarifies.

If the effective date is 13.09.2022.

For 9 & 9C- pls disclose turnover of demerged unit of X till 13.09.2022 in X's 9C and any transaction which occurs after said date can be disclosed in 9 & 9C of Y. Hope this clarifies.

AI Summary

Turnover reporting requires allocation to the transferor until the demerger effective date, then to the transferee.
Turnover from a demerged unit must be reported in the transferor's GSTR 9 and GSTR 9C up to the demerger's effective date, with transactions after that date reported in the transferee's GSTR 9 and GSTR 9C; the allocation follows the CGST turnover allocation provision on demergers.