GST or Goods and Services Tax is a comprehensive tax system introduced in India to replace all the indirect taxes. All the businesses with an annual turnover of over Rs 20 lakh must register for GST. However, certain provisions of GST come into effect when a business undergoes certain events such as death, dissolution, or reconstitution of a firm or AOP. In this article, we will discuss the liability to pay GST in such cases.
According to GST regulations, if the owner of a business dies, the legal heir, executor or administrator shall be liable to pay GST. The legal heir, executor or administrator must obtain a new GST registration within 30 days of taking over the business. He or she must also file an application for cancellation of the old registration within 30 days of obtaining the new registration. The legal heir, executor or administrator shall be liable to pay GST until the date of obtaining the new registration.
It is important to note that the legal heir, executor or administrator will have to file all the returns and comply with all the provisions of GST regulations.
If a firm or an AOP dissolves, the partners must file the final return within three months of the date of dissolution. The final return must include all the details of the stock, including the stock in transit, held on the date of dissolution. The partners shall be jointly and severally liable to pay the tax due until the final return has been filed.
If the partners fail to file the final return within three months of the date of dissolution, the tax officer may issue a notice to the partners requiring them to file the final return within 15 days of the notice. If the partners still do not file the final return, the tax officer may issue an assessment order to determine the tax due. The partners shall be jointly and severally liable to pay the tax assessed along with interest and penalty, if any.
If a firm or an AOP undergoes a change in its constitution, such as the admission or retirement of a partner, the new partnership shall apply for a new GST registration within thirty days of the date of the change. The new partnership shall also file an application for cancellation of the old registration within thirty days of obtaining the new registration.
It is important to note that the old partnership shall be jointly and severally liable to pay the tax due until the date of the change in the constitution. The old partnership shall also file all the returns and comply with all the provisions of GST regulations until the date of the change in the constitution.
In conclusion, small and medium business owners and startup founders in India must be aware of the liability to pay GST in cases of death, dissolution, or reconstitution of a firm or AOP. Complying with the GST regulations is crucial to avoid penalties, interest, and other legal consequences. Therefore, it is recommended to seek professional help to understand the relevant provisions of GST regulations and comply with them.
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