TaxTMI 
TaxTMI 
Compliance Requirements for Continuation of Business After Proprietor’s Demise
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....ompliance Requirements for Continuation of Business After Proprietor’s Demise<br> Query (Issue) Started By: - Preeti Gupta Dated:- 25-7-2025 Last Reply Date:- 26-7-2025 Goods and Services Tax - GST<br>Got 3 Replies<br>GST<br>Dear Sir/Madam, The proprietor of a jewellery shop passed away in the month of April 2025. At the time of death, the business held a gold jewellery stock of approximately 1....
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.....5 kg. There is no balance available in the GST credit ledger. Out of the three legal heirs-two sons and one daughter-one heir intends to take over and continue the business along with the existing stock and other assets. We seek your guidance on the applicable compliance requirements under GST and other relevant laws to ensure a smooth transition and continuation of the business. Reply By YAGA....
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....Y andSUN: The Reply: LEGAL NOTE ON GST COMPLIANCE & SUCCESSION OF BUSINESS ON DEATH OF PROPRIETOR Upon the demise of the sole proprietor in April 2025, and considering the intent of one legal heir to continue the business along with the existing gold jewellery stock (approx. 1.5 kg) and other assets, the following compliance steps are mandated under the GST regime and relevant laws: * Cancella....
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....tion of GST Registration: Under Section 29(1)(a) of the CGST Act, 2017, the GST registration of the deceased must be cancelled. The legal heir shall file Form GST REG-16 citing "Death of Proprietor" as the reason. Supporting documents such as the death certificate and legal heirship proof must be attached. * New Registration by Legal Heir: The legal heir intending to continue the business is....
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.... required to obtain a new GST registration under Rule 8 of the CGST Rules, 2017 via Form GST REG-01. The application should indicate succession of business. * Transfer of Business as Going Concern: As per Section 18(3) and Rule 41, the business succession amounts to a transfer as a going concern. Accordingly, such transfer is not treated as supply under Schedule II, Entry 4(c) of the CGST Act,....
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.... provided it includes business assets and liabilities. Since no ITC is available in the electronic credit ledger, filing of Form ITC-02 is not required in this case. * Intimation to Authorities: Formal intimation of the death and business succession must be made to the jurisdictional GST officer. Necessary updates must also be made with local authorities, professional tax, shops and establishm....
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....ents, hallmarking registration (if applicable), and other regulatory bodies. * Income Tax Compliance: Under Section 159 of the Income-tax Act, 1961, the legal heir is required to file the final return of income for the deceased up to the date of death. Any tax liabilities of the deceased shall be recoverable from the estate in the hands of the legal heirs. * Banking and Documentation: A ne....
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....w bank account must be opened in the name of the successor. Closure of the old account and update of KYC with regulatory and financial bodies is necessary. Succession documentation-such as family settlement deed or affidavit-should be retained. Reply By Sadanand Bulbule: The Reply: Plz also refer the following: Special provisions regarding liability to pay tax, interest or penalty in certain ca....
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....ses. 93. (1) Save as otherwise provided in the Insolvency and Bankruptcy Code, 2016 (31 of 2016), where a person, liable to pay tax, interest or penalty under this Act, dies, then-- (a) if a business carried on by the person is continued after his death by his legal representative or any other person, such legal representative or other person, shall be liable to pay tax, interest or penalty due....
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.... from such person under this Act; and (b) if the business carried on by the person is discontinued, whether before or after his death, his legal representative shall be liable to pay, out of the estate of the deceased, to the extent to which the estate is capable of meeting the charge, the tax, interest or penalty due from such person under this Act, whether such tax, interest or penalty has be....
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....en determined before his death but has remained unpaid or is determined after his death. Reply By Sadanand Bulbule: The Reply: The following is worth reading: 2025 (7) TMI 1609 - BOMBAY HIGH COURT - Sunil Thampy Nair Versus State of Maharashtra. Demand on the petitioner's deceased wife - Recovery proceeding against immovable properties of the deceased - Section 93 of the Central Goods and Serv....
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....ices Tax Act, 2017 (CGST) - HELD THAT:- The impugned order dated 22 December 2023 is set aside with liberty to proceed against the legal representatives in the above terms. Consequential Form GST DRC-16 order dated 30 July 2024 will not survive and is set aside. Petition disposed off.<br> Discussion Forum - Knowledge Sharing ....