Question ID :
Transfer of Input credit on change in constitution
A Partnership Firm is going to be converted into Proprietorship concern (One of the Partner will become proprietor) In this case whether it will be possible to transfer whole balance of GST credit lying in Credit Ledger
to Proprietorship Firm.
Answer ID :
Jun 25, 2021
Transfer of Unutilised ITC of Partnership to Prorietorship:
After completing the filing of the pending returns, the taxpayer can transfer the unutilised ITC of the partnership firm.
Following are the steps for transferring unutilised ITC to the partnership firm:-
Form GST ITC-02 has to be filed by the partnership business to transfer the unutilised ITC to the electronic credit ledger of the proprietorship firm.
Partnership entity shall also file a copy of a certificate issued by a practising Chartered Accountant or Cost Accountant certifying that the business has been transferred with a specific provision for the transfer of liabilities.
The proprietorship firm shall accept the information so provided by the partnership firm on the GST portal and, upon such approval, the unutilised ITC specified in Form GST ITC-02 shall be credited to its electronic credit ledger.
The inputs and capital goods, thus transferred, shall be adequately accounted for in its books of account by the proprietorship firm.
Transfer of Balance in Electronic Cash Ledger
There is no provision under the GST Act to transfer balance in electronic cash ledger from one entity to another entity. Hence, the taxpayer has to file the Form RFD-01 with a refund type of either “Refund of Excess Balance in Electronic Cash Ledger” or “Refund on Account of Any Other Reasons” to get the refund of balance in electronic cash ledger.
CA. JHA SHANKAR KUMAR on
Jun 27, 2021
Answer ID :
Can be done provided outgoing partner agrees otherwise outgoing partner's capital credit with ITC at profit sharing ratio
Hari Beldona on
Aug 30, 2021