Cancellation of GST Registration or Transfer of Business in Case of Death of a Sole Proprietor

Cancellation of GST Registration or Transfer of Business in Case of Death of a Sole Proprietor

Losing a loved one is never easy, and dealing with their affairs can be complex. If the deceased was a sole proprietor registered under GST, questions about the business’s future arise. This article clarifies the options available and simplifies the steps involved in GST compliance after a sole proprietor’s death.

Options Available:

• Cancellation of GST registration: Legal heirs can choose to close the business and cancel the GST registration.
• Transfer of business: Legal heirs or new owners can continue the business by transferring the GST registration.

Documents Required (Cancellation):

• Identity proof of legal heir and deceased proprietor
• Succession certificate
• Death certificate
• No objection certificate (if multiple heirs)

Steps for Cancellation:

1. Apply for change of authorized signatory to file pending returns and cancel registration.
2. File pending GST returns and pay due taxes (including GST on ITC in stock).
3. File Form GST REG-16 for cancellation, stating reason and effective date.
4. File final return (Form GSTR-10) within 3 months of cancellation.

Steps for Transfer:

1. Obtain legal heirship/succession certificate.
2. Transfer assets and liabilities to the successor’s name.
3. Apply for change of authorized signatory (visit jurisdiction officer with documents).
4. Apply for new GST registration (Form GST REG-01) with successor’s PAN.
5. Apply for ITC transfer (Form GST ITC-02) on the GST portal.
6. Successor confirms ITC transfer with their new registration.
7. Cancel deceased’s GST registration (Form GST REG-16).
8. Successor files final return (Form GSTR-10) within 3 months of cancellation.
9. Update invoices, letterheads, etc., with new GSTIN.

Transfer of Input Tax Credit & Tax Liability:

• ITC transfer is allowed if liabilities are also transferred (Rule 41).
• Successor inherits tax dues of the deceased (Section 93(1)).

Transferring ITC to Successor:

1. Submit death certificate and succession certificate to jurisdictional GST officer.
2. Officer adds successor as authorized signatory (legal guardian for minors).
3. Successor applies for new GST registration.
4. GST portal sends temporary login credentials to successor’s email.
5. Successor logs in using temporary credentials and changes password.
6. Successor files Form GST ITC-02 using deceased’s registration.
7. Successor accepts ITC transfer on their new registration.
8. Cancellation of deceased’s registration proceeds.

Remember:

• This is a general guide, consult a tax professional for specific advice.
• Deadlines and procedures may change, stay updated with GST regulations.

We hope this article provides clarity and eases the complexities of managing GST after a sole proprietor’s death. Remember, support systems are available during this difficult time. Focus on grieving and handling personal matters, and let professionals guide you through the legal and financial aspects.