Sale of a going concern by a business house will not attract Goods and Services Tax (GST), as per an order by the Authority for Advance Ruling (AAR).
The Karnataka bench of the AAR gave its ruling based on an application filed by Rajashri Foods Pvt Ltd which wanted to sell one of its units along with fixed and current assets as well as liabilities, including bank loans, for a lump sum consideration.
EY India Partner Abhishek Jain said: “The ruling should aid in offering clarity to GST implications on conventional hiving off/demerger transactions”.
AMRG & Associates Partner Rajat Mohan said, “This ruling categorising the transaction of transfer of running business as a supply of service would be a nightmare for corporate’s undertaking mergers and acquisitions, as it would entice higher compliance on account of GST and would also force amalgamating company for proportionate reversal of common input tax credits.”
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This ruling provides much-needed clarity on GST treatment for business transfers. The nil rate on going concern sales reduces compliance burden significantly. Similar to how jollibee 777 link streamlines gaming transactions, tax clarity aids M&A efficiency. Corporate India can proceed with demergers without GST uncertainty.
This ruling brings much-needed clarity to GST implications on business transfers. The ‘going concern’ exemption aligns with international tax principles and will streamline M&A transactions. Similar compliance frameworks exist in gaming sectors – like how regulated platforms such as ph22 slot download maintain operational standards while ensuring regulatory compliance. Businesses will appreciate this predictable tax treatment.