Transfer of credit on sale, merger, amalgamation, lease or transfer of a business
Rule 41 of the CGST Rules
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On sale, merger, demerger, amalgamation, lease or transfer of a business, the unutilised credit may be transferred by filing ITC-02, provided the transfer is with a specific provision for the transfer of liabilities and is certified by a practising chartered or cost accountant; on a demerger, credit is apportioned in the ratio of the value of assets.
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The exact words of the law
1,547 characters, uneditedReproduced from the CBIC text. We explain it above — but you should always be able to read it yourself.
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(1) A registered person shall, in the event of sale, merger, de-merger , amalgamation, lease or transfer or change in the ownership of business for any reason, furnish the details of sale, merger, de-merger, amalgamation, lease or transfer of business, in FORM GST ITC-02 , electronically on the common portal along with a request for transfer of unutilized input tax credit lying in his electronic credit ledger to the transferee: Provided that in the case of demerger, the input tax credit shall be apportioned in the ratio of the value of assets of the new units as specified in the demerger scheme. 1 [ Explanation : – For the purpose of this sub-rule, it is hereby clarified that the "value of assets" means the value of the entire assets of the business, whether or not input tax credit has been availed thereon.]
(2) The transfer or shall also submit a copy of a certificate issued by a practicing chartered accountant or cost accountant certifying that the sale, merger, de-merger, amalgamation, lease or transfer of business has been done with a specific provision for the transfer of liabilities.
(3) The transferee shall, on the common portal, accept the details so furnished by the transfer or and, upon such acceptance, the un-utilized credit specified in FORM GST ITC-02 shall be credited to his electronic credit ledger.
(4) The inputs and capital goods so transferred shall be duly accounted for by the transferee in his books of account.
What changed, and when
The amendment trail, newest first — because the version that applies to your case depends on the period.
2019-04-01 · Inserted
16/2019-CTdated2
Inserted (w.e.f. 01.04.2019) vide Notification No. 16/2019 -CT dated 29.03.2019
Where this comes from
Text reproduced from the Central Board of Indirect Taxes and Customs, as available on 2026-09-05. The explanation and practice notes above are GSTZone’s own, written for this hub. If you spot anything out of date, tell us and we’ll fix it — this hub is checked daily against CBIC.
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