Business Changes & Who Pays
When the business changes hands, the tax follows someone
When the business changes hands, the tax follows someone.
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GST liability does not simply disappear when a business is sold, merged, dissolved or wound up. The Act sets out, situation by situation, who inherits it – and the answer is often a person rather than an entity.
Transfer a business and the transferee can be held jointly liable for dues up to the transfer date. Amalgamate two companies and supplies between them from the effective date get pulled back into the net. Wind up a private company and directors can be personally liable, unless they show the non-recovery was not down to their neglect or breach of duty.
Partnerships are stricter still. A partner stays liable for the period they were a partner, and for a year after retiring – unless they give written intimation of retirement to the Commissioner.
Worked example
A retirement that stayed expensive for a year
| Partner exits the firm in April | Deed updated, bank mandate changed | No intimation to the Commissioner |
| Firm defaults on GST during the year | ₹12,00,000 outstanding | Recovery proceedings begin |
| Retired partner’s position | Jointly and severally liable | Liability continues for a year |
One letter to the Commissioner would have capped the exposure at the retirement date. Without it, joint and several liability means the department can pursue any partner for the whole amount.
The mistakes that cost people money
Not theoretical risks — the ones we actually see land on clients’ desks.
Retiring from a firm without written intimation to the Commissioner. The deed protects you between partners, not against the department.
Buying a business without a GST due-diligence check on the seller’s filings. Transferee liability is real.
Assuming limited liability protects directors of a private company in liquidation. Section 89 shifts the burden onto them to prove no neglect.
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Business Changes & Who Pays — the complete guide
7 pages covering all 16 provisions, with the plain-language explanation and practice notes for each. Print it, keep it, share it with your accountant.
Common questions on this
Straight answers to what people actually ask us.
Can a Director Be Personally Liable for Company GST Dues?
A director isn’t automatically personally liable for company GST dues — but Section 89 creates a specific expo…
Partner Left the Firm — Are They Still Liable for Old GST Dues?
A retired partner stays liable for a firm’s GST dues from their time as partner, and for a year after retireme…
Every provision on business changes & who pays
All 16 of them, each with a plain-language explanation and the full legal text.
CGST Act, 2017 · 10
CGST Rules, 2017 · 6
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