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Question ID : 36885

ITC reversal in case of conversion of firm to company

A firm is converting into a company. It will transfer stock to the new company. It has substantial ITC on that stock. As per exemption notification, "Services by way of transfer of a going concern" are exempt services. Will this mean that firm will have to reverse ITC? ITC only on expenses of transfer or entire ITC on stock will have to be reversed?

Posted by Gaurav S Kenkre on Dec 07, 2018

Filed Under GST

Answer ID : 76043

Sec 18 (3) specifically allows for conversion of firm into company where the assets, as well as liabilities, would be transferred. Credit can also be transferred to the new company with intimation to the revenue. This is not under schedule III. No need to reverse any credit.

Posted by Madhukar N Hiregange on Dec 09, 2018