13 April 2019
Dear Sir, Kindly advice me the below point. Please note that our firm was a partnership firm till 31.08.18. From 01.09.18 we have converted to private limited co. Please advice me whether we have to charge GST on the stocks lyeing in partnership while transfering to private limited company. Is there any GST rules are there under GST act. Thanks
14 April 2019
As per Schedule-2 of CGST/SGST Act, sale of stock or other assets where such stock/other assets moved from existing firm to new firm (in case of re-structuring of business) shall not be deemed as supply of goods in the course or furtherance of business subject to the condition that existing firm ceases to be a taxable person after such re-structuring.
CGST Exemption Schedule for services as set out in CGST Rate Notification-12/2017 has provided an entry for exemption of Services by way of transfer of a going concern, as a whole or an independent part thereof.
By combined reading of both the provisions, it is inferred that transfer of a going concern as a whole or an independent thereof shall not be taxable under GST.
Further, if there are unutilized input tax credits under GST lying at the time of such conversion of partnership firm, these credits are allowed to transfer into new entity.
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