CGST Rule 41 of Central Goods and Services Tax Rules, 2017 – Transfer of credit on sale, merger, amalgamation, lease or transfer of a business

The Central Goods and Services Tax Act, 2017

The Central Goods and Services Tax Rules, 2017

Chapter-V Input Tax Credit

Rule 41: Transfer of credit on sale, merger, amalgamation, lease or transfer of a business.

41. (1) A registered person shall, in the event of sale, merger, de-merger, amalgamation, lease or transfer^c1 or change in the ownership of business for any reason, furnish the details of sale, merger, de-merger, amalgamation, lease or transfer of business, in FORM GST ITC-02, electronically on the common portal along with a request for transfer of unutilized input tax credit^c2 lying in his electronic credit ledger to the transferee:

Provided that in the case of demerger, 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.

¹[Explanation: – For the purpose of this sub-rule, it is hereby clarified that the “value of assets” means the value of the entire assets of the business, whether or not input tax credit has been availed thereon.]

(2) 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.

(3) The transferee shall, on the common portal, accept the details so furnished by the transferor and, upon such acceptance, the un-utilized credit specified in FORM GST ITC-02 shall be credited to his electronic credit ledger.

(4) The inputs and capital goods so transferred shall be duly accounted for by the transferee in his books of account.

References

Enforcement:

Enforced w.e.f. July 01, 2017 [Notification No. G.S.R. 663(E) dated 28.06.2017].

Amendments:

1. Inserted by Central Goods and Services Tax (Second Amendment) Rules, 2019 vide Notification No. 16/2019-Central Tax dated 29th March, 2019, w.e.f. 29.03.2019.

Circulars:

c1. Transfer or change in the ownership of business will include transfer or change in the ownership of business due to death of the sole proprietor. In case of death of sole proprietor if the business is continued by any person being transferee or successor, the ITC which remains un-utilized in the electronic credit ledger is allowed to be transferred to the transferee as per provisions and in the manner stated in Circular No. 96/15/2019-GST dated 28.03.2019.

c2. For ITC in case of demerger, hived off or business in transferred as a going concern, ratio of value of assets, determination/ calculation of ITC amount, unutilized ITC balance etc., refer Circular No.133/03/2020-GST dated 23.03.2020.