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Transfer of gst from father to son

Harish Babu (1 Points)

04 April 2024

I already have my gstin and running business but i want merger with my father business under single proprietorship.

what is the possible way to do that?

I want to be the sole proprietorship for both the entities.

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3 Replies

RAJA P M ("Do the Right Thing...!!!") (127921 Points)
Replied 04 April 2024

No... It's not possible.

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Money Money (383 Points)
Replied 06 April 2024

Certainly! Let’s explore the options for merging your existing business with your father’s business under a single proprietorship. Here are some considerations:

Understanding the Situation:
You currently have your own business with a GSTIN.
Your father also has a separate business.
You want to merge both businesses into a single proprietorship, with you as the sole proprietor.
Legal Constraints:
Merger of Sole Proprietorship and Company: Unfortunately, the merger of a sole proprietorship firm with a company is not permissible under the law. Specifically, Section 232 of the Companies Act, 2013, does not allow such amalgamation1.
Merger of Two Sole Proprietorships: However, there is no legal prohibition against merging two sole proprietorships into one.
Steps for Merger:
To achieve your goal, consider the following steps:
Evaluate Both Businesses: Assess the financials, assets, liabilities, and operations of both your existing business and your father’s business.
Choose a Common Name: Decide on a common business name under which both businesses will operate.
Transfer Assets and Liabilities: Transfer the assets (including inventory, equipment, etc.) and liabilities (such as outstanding debts) from both businesses to the new combined entity.
Update GSTIN and Other Registrations:
Update your existing GSTIN to reflect the merged business.
Inform the GST authorities about the merger and any changes in business details.
Maintain Proper Records: Keep detailed records of the merger process, including agreements, transfer documents, and financial statements.
Notify Stakeholders: Inform customers, suppliers, and other stakeholders about the merger.
Legal Documentation:
Draft a merger agreement or memorandum of understanding (MOU) that outlines the terms of the merger.
Consult a legal professional to ensure compliance with all legal requirements.
Tax Implications:
Consider the tax implications of the merger, including capital gains, transfer pricing, and other relevant taxes.
Seek advice from a tax consultant to minimize tax liabilities.
Bank Accounts and Licenses:
Update bank accounts and licenses to reflect the new combined business.
Obtain any necessary licenses or permits for the merged entity.
Operate as a Single Proprietorship: Once all formalities are completed, you can operate the merged business as a single proprietorship.
Seek Legal Advice:
Given the legal complexities involved, it’s crucial to consult a qualified legal professional.
They can guide you through the process, ensure compliance, and protect your rights during the merger.
Remember that each case is unique, and the specific steps may vary based on your location, business type, and other factors. Seek personalized legal advice to tailor the process to your situation. Best wishes for the successful merger of your businesses! 🤝🌟

CA Raj Doshi (Practising CA) (8903 Points)
Replied 06 April 2024

Put both trade names in your Gstin. Sell stock from father Gstin to your Gstin. Once all debtors creditors of old Gstin is received and paid, then apply for cancellation and file final return.