In certain cases, death of a key member of the business leads to automatic closure of business such as death of sole proprietor, death of one of two partners, death of a partner when partnership deed provides for dissolution on death etc. On the contrary, in certain cases death does not affect the continuity of business such as Death of a partner when partnership deed provides for continuation of business, Death of director/shareholder of Company, LLP etc.
Where the legal entity of the business remains the same, remaining persons may continue the business after making certain compliance such as updating information about partners/directors on GST portal, formation of revised partnership deed etc.
However, in case of dissolution of business, legal identity of the business comes to an end and business is either taken over by the legal heir of the deceased proprietor or remaining partners or it comes to an end.
In this article, an attempt has been made to discuss GST on dissolution of business due to death of sole proprietor.
In case of the death of the Sole proprietor, the business is taken over by his legal heir of the deceased proprietor and they may decide to either continue the business in their name or close the business.
However, with death of sole proprietor, GST compliances do not come to an end, rather, provisions specified by GST law is required to be complied by the legal heir/successor of the deceased proprietor.
Therefore, In case of death of sole proprietor, GST implication shall vary in following cases:
In case where business is taken over and continued by legal heir, various provisions are given under Central Goods and Service Tax Act, 2017 (“CGST Act”) and different issues are also clarified by CBIC vide Circular No. 96/15/2019-GST dated 28th March, 2019.
As per Section 22(3) of CGST Act, 2017, where a business is transferred due to succession to any other person on going concern basis then the successor is liable to obtain GST registration from the date of succession.
Therefore, the legal heir of the deceased person is required to obtain separate GST registration with his PAN number and from such date onwards he shall be liable for all GST Compliances.
At the time of filing application for GST registration in Form GST REG-01, “Death of the Proprietor” should be selected as reason for obtaining GST registration.
In cases where the legal successor is already registered under GST then he may continue with his existing GST registration.
After death of the proprietor, all returns and documents on GST portal shall be filed by the legal heir on behalf of the proprietor.
For this purpose, legal heirs shall be first required to file a copy of the death certificate of the proprietor and succession certificate to the jurisdictional officer as documentary evidence.
Upon verification of all documents, the proper officer shall add such legal heir/successor as “Authorised Signatory” on GSTIN of deceased proprietor.
A temporary username and password shall be created by the proper officer for successor and he can login to the GSTIN of the deceased proprietor by using such login credentials.
Thereafter, all remaining returns and forms shall be filed and Cancellation proceedings of GSTIN shall be carried out by successor by using such login credential only.
As per Section 18(3) of CGST Act, 2017, in case of transfer of business where liabilities of the business is also transferred, transferor is allowed to transfer the unutilised balance lying in electronic credit ledger to the transferee.
In case of death of the proprietor, both assets and liabilities are transferred to the successor. Therefore, balance lying in the electronic credit ledger of the proprietor can be transferred to the successor/legal heir.
Following is the procedure to be followed for transfer of ITC as per Rule 41 of CGST Rules, 2017:
As per Section 93 of CGST Act, 2017, if business of a deceased person is continued by his legal representative or any other person then such legal representative shall be liable to pay tax, interest or penalty due from such deceased person.
In case of death, legal heirs shall be liable for filing of pending returns of the deceased person and upon filing of pending returns and completing other compliance such as filing of GST ITC-02, they may proceed to apply for cancellation of GST registration of deceased person.
Any sales made by the deceased person till the date of his death should be disclosed while filing GSTR-1 and GSTR-3B by the legal heir of the deceased proprietor on his behalf.k
However, any tax, interest or penalty due from such deceased person shall be paid by his legal heir only.
As per Section 29(1) of CGST Act, 2017, in case of death of any person, GST registration of deceased person shall be cancelled on an application made by legal heir. Application for cancellation of GSTIN shall be filed in Form GST REG-16 by stating the reason “”Death of the Proprietor”.
There can be cases where business is taken over by the legal heir for completing closure proceeds but legal heirs don’t continue the business of the deceased proprietor.
Following are the provisions need to be complied in such case:
Legal Heir shall appoint himself as authorised representative for the deceased proprietor by making an application to the jurisdictional officer for the purpose of filing of remaining returns and completing GST cancellation proceedings.
As per Section 29(5) of CGST Act, 2017, every registered person whose registration is cancelled shall pay higher of the following amounts:
此类税款应针对 GST 注册注销日前一日所持有的库存或资本资产进行缴纳。
此类税款可通过电子抵免分类账或现金分类账中的余额进行支付。
因此，对于已故业主 GST 注册注销日所持有的库存，应就该库存所享有的进项税额抵免（ITC）或应缴纳的销项税额进行支付。
根据 2017 年《中央商品及服务税法》（CGST Act）第 93(1)(b) 条，若已故人士的业务停止，其法定代表人应负责支付已故人士应缴的税款、利息或罚款。此类债务可在其去世前或去世后确定。
法定继承人应在已故者遗产足以清偿债务的范围内，从该遗产中支付相关债务。
因此，已故业主的法定继承人有责任就 GST 注册注销日所持有的库存或资本货物缴纳 GST。
根据 2017 年《中央商品及服务税法》（CGST Act）第 18(3) 条，在业务连同债务一并转让的情况下，转让方可将电子抵免分类账中的余额转移给受让方。
在本案中，由于没有业务转让给法定继承人/继任者，因此电子抵免分类账中的余额无法转移给法定继承人。
根据 2017 年《中央商品及服务税法》（CGST Act）第 22(3) 条，若业务因继承而转让给他人，且属于 持续经营 ，则继任者有义务自继承之日起办理 GST 注册。
然而，若法定继承人未继续经营该业务，则已故人士的法定继承人无需办理单独的 GST 注册。
根据 2017 年《中央商品及服务税法》（CGST Act）第 29(1) 条，若发生人员死亡，已故人士的 GST 注册应在法定继承人提出申请后注销。GSTIN 注销申请应通过 GST REG-16 表格提交，并注明原因为“业主死亡”。
答：GSTIN 是基于纳税人 PAN（永久账号）的 15 位数字代码。由于继任者的 PAN 与已故人士的 PAN 不同，因此继任者需要申请新的 GST 注册，或者如果继任者已经注册，也可以将该业务合并到其现有的 GST 账号下。
答：如果相关主体的法律地位没有改变，即其 PAN 号码没有变更，则无需申请新的 GSTIN。例如，在合伙人加入、合伙人退休、董事变更、股东变更等情况下，无需申请新的 GSTIN。
Mere cancellation of GST registration on death of sole proprietor is not enough. Legal Heirs are required to discharge GST on stock and capital assets held on the date of cancellation of GST registration of deceased proprietors. Alternatively, legal heir may take over the business of the deceased proprietor and transfer GST liability of deceased proprietor and ITC lying in his electronic credit ledger to their own GSTIN.
