STCOK IN TRADE AND FIXED ASSETS TRANSFER TO PARTNERS

This query is : Resolved

backup 1989

backup 1989 (Querist)
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14 August 2024 GST Liability:

Stock-in-Trade Transfer:

(A) "Given that our business closed in 2022 and a major portion of the stock-in-trade was acquired before the GST implementation period, what are the GST implications for transferring this stock to a partner?
(B) How should GST be treated for stock-in-trade purchased before the GST regime was introduced?"

Fixed Assets Transfer:
(A) "For fixed assets transferred to a partner during the business closure in 2022, how should GST be applied?
(B) Are there specific considerations for assets acquired before the GST period?"

Income Tax Liability:
Stock-in-Trade Transfer:

(A) "What are the income tax implications for transferring stock-in-trade to a partner when the business closed (B) How should the fair market value be reported, and how is the potential tax liability determined?"

Fixed Assets Transfer:

"What are the income tax liabilities related to the transfer of fixed assets to a partner during the business closure? How should the transfer value be handled for assets acquired before the GST period, and what impact does this have on tax calculations?"

Final Compliance and Reporting:

Final GST Compliance:

"What final steps should be taken to ensure compliance with GST regulations when closing a business and transferring assets, particularly with stock-in-trade and fixed assets acquired before the GST implementation? Are there specific reporting requirements or adjustments needed?"

Final Income Tax Compliance:
(A) "What are the final compliance requirements for income tax when closing a business, including the transfer of assets?
(B) Are there any additional filings or adjustments needed beyond the NIL income tax return already filed?"

Surrendering PAN Card:

"What is the process for surrendering a PAN card after closing a business? I have already filed the GST surrender application. Could you guide me on how to formally surrender the PAN card? Are there specific forms or procedures to follow?"

Documentation and Procedures:
"Are there any specific documents or forms required to surrender a PAN card? What steps should be followed to ensure that the PAN is successfully deactivated and all related obligations are fulfilled?"

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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18 August 2024 Income on receipt of capital asset or stock in trade by specified person (i.e. partner) from specified entity (i.e. firm) [Section 9B]: The newly inserted section 9B provides as under: (1) Such receipt of capital asset or stock by partner to be treated as deemed transfer: Where a partner of a firm receives any capital asset or stock in trade or both from that firm on the dissolution or reconstitution of that firm, then such capital asset or stock in trade will be deemed to be a transfer in the hands of the firm. (2) Chargeable to Income Tax: Accordingly any profits and gains arising on such deemed transfer of capital asset or stock in trade shall be deemed to be the income of that firm of the year of transfer and chargeable to income tax under the head “Capital Gain” or “Profits and gains of business or profession” as the case may be. (3) Determination of Sale Consideration for the purpose of charging income tax: The fair market value of the capital asset or stock in trade on the date of such deemed transfer will be deemed to be the full value of the consideration received or accruing as a result of such deemed transfer. (4) Applicability of Section 45(1) for charging capital gain on such deemed transfer of capital asset: Consequently the normal provision of section 45(1) read with section 48 and section 49 will apply on such distribution of capital asset on its dissolution or reconstitution by the firm to its partner.

With regards to GST reverse the ITC on stock transferred.
When business operations are permanently closed or discontinued, the taxpayer can file for the cancellation of GST registration.