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Rule 41 of the CGST Rules, 2017

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GST›CGST Rules, 2017›Chapter V, Input Tax Credit

At a glance

Entitlement and conditions

Rule 41(1), proviso and ExplanationFor a demerger, credit follows the value-of-assets ratio of the new units specified in the scheme. Value includes the entire business assets, whether or not input tax credit was availed.

Bars, duties and time limits

Rule 41(2)–(4)The transferor supplies a practising chartered accountant or cost accountant’s certificate confirming specific provision for transfer of liabilities. The transferee accepts the details on the portal to receive the credit and must account for the transferred inputs and capital goods in its books.

Procedure, powers and definitions

Rule 41(1)Sale, merger, demerger, amalgamation, lease, transfer or ownership change requires electronic FORM GST ITC-02 with the business-transfer details and request to transfer unutilised ledger credit.

A registered person transferring a business requests transfer of unutilised credit through FORM GST ITC-02. The transaction must include a specific provision transferring liabilities, supported by the prescribed professional certificate. A demerger uses the asset-value ratio in the scheme, including assets on which credit was not taken. The transferee must accept the details and account for transferred inputs and capital goods.^[1]

Quick facts

Rule 41, CGST Rules, 2017

Transfer of credit on sale, merger, amalgamation, lease or transfer of a business

Provision
Act	Central Goods and Services Tax Rules, 2017
Chapter	V, Input Tax Credit
Rule title	Transfer of credit on sale, merger, amalgamation, lease or transfer of a business
Amendments
Last amendment	1 April 2019: Inserted (w.e.f. 01.04.2019) vide Notification No. 16/2019-CT dated 29.03.2019
Amendments	1 footnote in the CBIC text (table)
Related provisions
Sections	Section 18 of the CGST Act, 2017, Section 49 of the CGST Act, 2017
Forms named	FORM GST ITC-02
Structure 41(1)Transferor filing 41(1) proviso and ExplanationDemerger apportionment arithmetic 41(1)Selected head balance constraint 41(2)Certificate and submission 41(3)Transferee acceptance 41(3)Posting of accepted transfer 41(4)Transferee accounting for inputs 41(4)Transferee accounting for capital goods
Source
Law text	CBIC tax information portal, served on 17 September 2026^[1]
Questions reviewed	Prashant Prakash, 23 September 2026

Text

The text below is the rule as served by the CBIC tax information portal on 17 September 2026, with the portal's own amendment footnote markers (shown as small numerals before a bracket) and its footnotes.^[1] The Rules as published in the Gazette of India is the legal source.

Rule 41, verbatim (show)

Rule 41. Transfer of credit on sale, merger, amalgamation, lease or transfer of a business.-

(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.

1. Inserted (w.e.f. 01.04.2019) vide Notification No. 16/2019-CT dated 29.03.2019

Questions to answer on the file

Questions a reviewer answers from the engagement file, grouped by the part of the rule they come from. They describe what the rule asks; they do not decide it.

Transferor filing 41(1)

Questions to answer on the file5 questions

Was the transferor registered at the transfer event?
Does the furnished transfer filing use FORM GST ITC-02?
Were these ITC transfer details furnished on the common portal?
Were these same details furnished electronically?
Did that filing include the transfer request to the transferee?

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Demerger apportionment arithmetic 41(1) proviso and Explanation

Questions to answer on the file3 questions

What is the entire asset value transferred to this new unit in the relevant State under the scheme?
What is the entire pre-demerger asset value of the transferor in that same State?
What is the transferor unutilised credit pool at FORM GST ITC-02 filing?

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Selected head balance constraint 41(1)

Questions to answer on the file2 questions

What amount is proposed for transfer under the tax head?
What unutilised credit balance is available under that same head at filing?

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Certificate and submission 41(2)

Questions to answer on the file5 questions

Was an ITC certificate issued for this transfer?
Which profession does its issuer belong to: chartered accountant or cost accountant?
Was the issuer practising in that profession at the certification event?
Does the certificate attest a specific provision for transfer of liabilities in this transaction?
Did the transferor submit a copy of this certificate?

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Transferee acceptance 41(3)

Questions to answer on the file2 questions

Did the transferee accept the furnished transfer details?
Was that acceptance on the common portal?

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Posting of accepted transfer 41(3)

Questions to answer on the file5 questions

Did the transferee accept the transfer details?
Was this acceptance on the common portal?
What unutilised credit amount is specified for this transferee in FORM GST ITC-02?
What amount was credited to that transferee ledger for this accepted transfer?
Does the actual ledger-posting event occur upon or after this transferee acceptance?

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Transferee accounting for inputs 41(4)

Questions to answer on the file3 questions

Were these inputs transferred in the business transaction?
Did the transferee record those inputs in its books of account?
Are those accounting entries duly made for the transferred inputs?

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Transferee accounting for capital goods 41(4)

Questions to answer on the file3 questions

Were these capital goods transferred in the business transaction?
Did the transferee record those capital goods in its books of account?
Are those accounting entries duly made for the transferred capital goods?

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Amendment history

The CBIC text carries 1 footnote. The table gives each in the source's own terms. Effective dates are as the footnotes state them.^[1]

Amendments to Rule 41 as footnoted in the CBIC text
Note	Change
1	Inserted (w.e.f. 01.04.2019) vide Notification No. 16/2019-CT dated 29.03.2019^[2]

Provisions connected to Rule 41
Provision	Connection	Words that tie them
Section 18 of the CGST Act, 2017	Section 18 of the CGST Act, 2017 prescribed by this provision	18(3) "transferred business in such manner as may be prescribed"
Section 49 of the CGST Act, 2017	this provision requires Section 49 of the CGST Act, 2017	41(3) "electronic credit ledger"

Circulars and notifications

Circulars and notifications in the CBIC repository that cite this rule, newest first, by number, date and subject. A listing here does not say what an instrument decides; read the instrument.

Circulars (2)

Number	Date	Subject
Circular No. 133/03/2020-GST	23 March 2020	Seeks to clarify issues in respect of apportionment of input tax credit (ITC) in cases of business reorganization under section 18 (3) of CGST Act read with rule 41(1) of CGST Rules
Circular No. 96/15/2019-GST	28 March 2019	Seeks to clarify issues in respect of transfer of input tax credit in case of death of sole proprietor.

Notifications (2)

Number	Date	Subject
Notification No. 16/2019-Central Tax	29 March 2019	Seeks to make Second Amendment (2019) to CGST Rules.
Notification No. 03/2019-Central Tax	29 January 2019	Seeks to amend the CGST Rules, 2017.

See also

Section 18 of the CGST Act, 2017: availability of credit in special circumstances
Section 49 of the CGST Act, 2017: payment of tax, interest, penalty and other amounts

References

Central Board of Indirect Taxes and Customs. "Rule 41. Transfer of credit on sale, merger, amalgamation, lease or transfer of a business". Central Goods and Services Tax Rules, 2017, CBIC tax information portal, with amendment footnotes 1 to 1. Retrieved 17 September 2026.
Notification No. 16/2019-Central Tax, dated 29 March 2019: Seeks to make Second Amendment (2019) to CGST Rules. Cited in CBIC footnote 1.

External links

CGST Rules, 2017, Rule 41 on the CBIC tax information portal