When a business is transferred fully, merged, demerged, amalgamated or changes its constitution, the old registration is cancelled in Form GST REG-16 and the new owner or entity carries on under its own registration. We check that the transferee is registered first, move the unused credit on Form GST ITC-02, settle the dues, file the application and the final return GSTR-10.
Section 29(1) of the CGST Act lets the officer cancel a registration, on the registered person's application, where the business has been "transferred fully for any reason", amalgamated with another legal entity, demerged or otherwise disposed of (clause (a)), or where there is any change in the constitution of the business (clause (b)). The application is made in Form GST REG-16 within 30 days of the event (Rule 20), and the portal asks for the transferee's registration particulars with a copy of the transfer deed or the court order.
Sale, lease or transfer / Merger, demerger or amalgamation by order / Change of constitution
Point, What it says, Basis
What Rule 41 allows: On sale, merger, demerger, amalgamation, lease or transfer or change in ownership of a business for any reason, the registered person furnishes the details in Form GST ITC-02 with a request to move the unused credit in his electronic credit ledger to the transferee.
The transferee's registration decides the real order of work.
Documents are collected after payment, through the application.
No tax invoices after you apply: From the date you apply, your registration is deemed suspended and you cannot issue a tax invoice (Rule 21A). Invoicing moves to the transferee's own registration from the date of transfer, so time the application with the handover.
The transferee has no registration yet, so the officer queries the application (Circular 69/43/2018-GST, para 5)
Route and transferee check: We confirm the situation fits cancellation and that the new owner or entity is registered.
Item, Amount, Note
If the business is transferred fully, yes: that is a ground for cancellation under section 29(1)(a), and you apply in Form GST REG-16. If only a part of the business is transferred, the registration continues. Under section 85 you and the buyer remain liable for dues up to the transfer.
Yes. If the new entity has not got registered before the application, the officer can query it and reject it after a hearing (Circular 69/43/2018-GST, paras 5 and 6). The transferee is liable to register from the date of transfer (section 22(3)).
Within 30 days of the event (Rule 20). Circular 69/43/2018-GST asks officers to read this liberally where the business is transferred piece by piece and the date is hard to fix, and not to reject only for delay. Do not rely on it: file with the handover.
It can move to the new owner. You furnish Form GST ITC-02 on the portal with a request to transfer the unused credit and an accountant's certificate that the deal provides for transfer of liabilities; the transferee accepts and the credit enters its ledger (Rule 41). Do this before you apply for cancellation.
In the ratio of the value of assets of the new units, as the demerger scheme specifies. "Value of assets" means the value of the entire assets of the business, whether or not credit was taken on them (Rule 41(1) and its Explanation).
Yes, where the change of constitution changes the permanent account number, which it does for a new company or LLP. The new entity registers under its own number first, and you cancel the old registration with Form GST REG-16 and move credit on ITC-02. Where the number does not change, such as a partner joining a firm, the registration is usually amended instead.
Both, jointly and severally, up to the time of transfer, even if the amount is fixed after it (section 85(1)). Cancellation does not wipe the dues out (section 29(3)). Settle who bears what in the deed.
A regular taxpayer files GSTR-10 within 3 months of the cancellation date or the order date, whichever is later (section 45, Rule 81). Composition taxpayers, input service distributors, non-resident taxable persons and tax deductors or collectors file none.
No. When you apply, the registration is deemed suspended from the later of the application date or the date you seek, and you cannot issue a tax invoice or charge tax meanwhile (Rule 21A). Time the application with the date from which the transferee invoices under its own registration.
We have not found a portal fee for Form GST REG-16, and we confirm that on the portal before filing. Tax, interest and late fee are paid to the government and are not our fee.
No. StampMitra is a filing assistance platform. We prepare and file the application, the credit transfer request and the returns. The decision is the officer's. For the drafting of the transfer deed or a merger scheme, take advice from a lawyer or chartered accountant.