TMI BlogEligibility of ITC where there is a change in the constitution of a registration taxable person - [Section 18(3)]X X X X Extracts X X X X X X X X Extracts X X X X ..... tered person shall be allowed to transfer the input tax credit which remains unutilised in his electronic credit ledger to such sold, merged, demerged, amalgamated, leased or transferred business in such manner as may be prescribed. Following condition also consider while transfer of the business sale, demerger, merger, amalgamation, lease or transfer of a business. The transferor shall also submit a copy of a certificate issued by a practicing chartered accountant or cost accountant certifying that the sale, merger, de-merger, amalgamation, lease or transfer of business has been done with a specific provision for the transfer of liabilities. The transferee shall, accept the details so furnished by the transferor and, upo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person (transferee) shall, accept the details so furnished by the registered person (transferor) and, upon such acceptance, the unutilised input tax credit specified in FORM GST ITC-02A shall be credited to his electronic credit ledger. Clarification in respect of transfer of input tax credit in case of death of sole proprietor ( Circular No. 96/15/2019-GST dated 28 th March, 2019 ) In case of death of sole proprietor if the business is continued by any person being transferee or successor, the input tax credit which remains un-utilized in the electronic credit ledger is allowed to be transferred to the transferee The transferee or the successor, as the case may be, shall be liable to be registered with effect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proprietor. Clarification in respect of apportionment of input tax credit (ITC) in cases of business reorganization under section 18 (3) of CGST Act read with rule 41(1) of CGST Rules Issue 1:- In case of demerger, proviso to rule 41 (1) of the CGST Rules provides that the input tax credit shall be apportioned in the ratio of the value of assets of the new units as specified in the demerger scheme. However, it is not clear as to whether the value of assets of the new units is to be considered at State level or at all-India level. Clarification:- Proviso to sub-rule (1) of rule 41 of the CGST Rules provides for apportionment of the input tax credit in the ratio of the value of assets of the new units as specified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich date shall be relevant to calculate the ratio of value of assets, as prescribed in the proviso to rule 41 (1) of the CGST Rules, 2017 ? Clarification:- According to s ection 232 (6) of the Companies Act, 2013 , The scheme under this section shall clearly indicate an appointed date from which it shall be effective and the scheme shall be deemed to be effective from such date and not at a date subsequent to the appointed date . The said legal provision appears to indicate that the appointed date of demerger is the date from which the scheme for demerger comes into force and it is specified in the respective scheme of demerger. Therefore, for the purpose of apportionment of ITC under rule sub-rule (1) of rule 41 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in State of M.P., i.e. 30/60 = 0.5 and not on the basis of all-India ratio of value of assets, i.e. 40/100=0.4. Similarly, unutilized ITC of XYZ in State of U.P. will be transferred to ABC in ratio of value of assets in State of U.P.,i.e. 10/40 = 0.25. The ITC balances of transferor X in the State of Maharashtra under CGST, SGST and IGST heads are 5 lakh, 5 lakh and 10 lakh respectively. Pursuant to a scheme of demerger, X transfe₹ 60% of its assets to transferee B. Accordingly, the amount of ITC to be transferred from A to B shall be 60% of 20 lakh (total sum of CGST, SGST and IGST credit) i.e . 12 lakh. - Manuals - Ready reckoner - Law and practice - Reference Guide - Quick Commentary Tax Management India - taxmanagem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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