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On transfer of business, the transferor applies for cancellation under Sec 29(1)(a) and can transfer unused ITC to the transferee through ITC-02 under Sec 18(3). The transferee needs its own registration.
GST
Selling or transferring the business and GST cancellation
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Provisions
Sec 18(3), CGST Act 2017; Rule 41, CGST Rules 2017; Sec 29(1), CGST Act 2017
Analysis
Transfer of a business as a going concern needs the agreement to provide for transfer of liabilities. You file ITC-02 with a CA certificate on the transfer of liabilities, the transferee accepts it on the portal, and the credit moves. Then you file REG-16 giving the transferee's GSTIN. Do ITC-02 first, since after cancellation the credit cannot move.
Close
- Sign a business transfer agreement that transfers assets and liabilities.
- Ensure the transferee has its GSTIN.
- File ITC-02 with the CA certificate and get it accepted.
- File REG-16 citing transfer and the transferee's GSTIN.
- File GSTR-10.
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