The transfer or succession of a firm is a common occurrence in business, and numerous tax regulations have addressed this issue as well. Transfer or succession of a firm may occur in a number of situations, including merger, demerger, amalgamation, or the death of the owner, among others. The provisions of the GST in the event of the proprietor’s death have been covered in this article. When a business owner passes away, there are two possible outcomes: either the business is shut down or it is carried on by the owner’s legal heir or successor. Both eventualities are covered in depth in this article.
The legal heir shuts down the company
Prior to requesting the cancellation of the GST registration, the legal heir should first make arrangements for the following papers and information:
- Owner’s Death Certificate
- Identity Proofs of the DeceasedIdentification documentation showing the legal heir’s connection to the deceased business owner
- GST certificate of a dead owner’s business. Read our guide on How to Download GST Registration Certificate to understand the stepwise process.
- Status of the owner’s GST return filing
- Following the arrangement of the aforementioned papers, the legal heir must submit an application for the “Change of Authorized Signatory” to the jurisdictional GST officer in order to file pending returns and submit a GST cancellation request. Changes to the authorized signatory will be made by the GST officer, who will also issue a temporary link for updating data.
The cancellation procedure might begin when the signatory has been altered. You can learn more about cancellation procedure at: Procedure for cancellation of GST registration by tax officer
Stepwise Procedure to apply for GST Registration Cancellation in case of death of proprietor
- Step 1 is to submit all outstanding GST returns and pay any taxes that are owed up until the date of the proprietor’s passing.
- Step 2: Submit a FORM GST REG-16 request to cancel your registration.
- Step 3: If the application is accepted, the GST officer will issue an order for cancellation in Form GST REG-19, with the effective date being the day the application was submitted for cancellation.
- Step 4: Submitting Form GSTR-10. The final return must be electronically filed on the GST site using Form GSTR-10 by the legal heir. FORM GSTR-10 must be submitted no later than 3 months after the date of cancellation or the date of the cancellation order, whichever comes first.
The business is continued by the legal successor
If the proprietor’s legal heir desires to carry on the business after business owners’ passing, he or she must complete the steps below:
Application for New GST Registration
As of the date of succession, the legal successor must apply for a new GST registration in his name.
- The GST Portal’s electronic form GST REG-01 must be used to submit a registration application.
- “Death of the proprietor” must be listed as the reason for seeking registration.
- The deceased’s death certificate will be uploaded alongside the other paperwork needed for GST registration.
For understanding steps in detail of new GST registration on death of proprietor, you can contact our GST Experts at: 8881-069-069.
How to transfer input tax credit in case of death of proprietor?
The single proprietor’s death certificate and the succession certificate must first be provided as documentary proof to the jurisdictional GST officer by the successor or legal heir. After then, the competent officer will add the successor as the single proprietor’s authorized signature. Keep in mind that if the successor is a minor, his or her legal guardian would be the designated signature. After deducting any taxes, interest, or other amounts due under the Act, the remaining balance in the dead person’s electronic cash ledger may be claimed as a refund in accordance with Section 54 of the CGST Act.
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