Eligibility of ITC where there is a change in the constitution of a registration taxable person - [Section 18(3)] - GST Ready Reckoner - GST

Eligibility of ITC where there is a change in the constitution of a registration taxable person Eligibility of ITC where there is a change in the constitution of a registered person due to Sale, Merger, Demerger, Amalgamation, Lease or transfer of the business As per Section 18(3) of CGST Act read along with rule 41 of CGST Rules , Where there is a change in the constitution of a registered person:- sale, merger, demerger, amalgamation, lease or transfer of the business with the specific provisions for transfer of liabilities, the said registered 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, upon such acceptance, the un-utilized credit specified in FORM GST ITC-02 shall be credited to his electronic credit ledger. The inputs and capital goods so transferred shall be duly accounted for by the transferee in his books of account. The registered person(transferor) input tax credit shall be apportioned in the ratio of the value of assets of the new units as specified in the de-merger scheme. Value of Assets means the value of the entire assets of the business, whether or not input tax credit has been availed thereon. Transfer of credit on obtaining separate registration for multiple places of business within a State or Union territory [Rule 41A] A registered person who has obtained separate registration for multiple places of business in accordance with the provisions of rule 11 of CGST Act and who intends to transfer, either wholly or partly. The unutilised input tax credit lying in his electronic credit ledger to any or all of the newly registered place of business, shall furnish within a period of thirty days from obtaining such separate registrations, the details in FORM GST ITC-02A electronically on the common portal. The input tax credit shall be transferred to the newly registered entities in the ratio of the value of assets held by them at the time of registration. The value of assets means the value of the entire assets of the business whether or not input tax credit has been availed thereon. The newly registered 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. Important Notifications Circulars Clarification in respect 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. ( Circular No. 96/15/2019-GST dated 28 th March, 2019 ) Clarification in respect of apportionment and transfer of ITC in the event of merger, demerger, amalgamation or change in the constitution/ownership of business u/s 18(3) of CGST Act read with rule 41(1) of CGST Rules . [ Circular No.133 03/2020-GST dated 23.03.2020 ]