Company / LLP registration Jaipur Answered

How do I convert my sole proprietorship into a private limited company and carry over GST, the bank loan and my customer contracts?

Asked by Rakesh, Jaipur 14 Aug 2026 1 answer 2 min read

The question

I run a marble export business in Jaipur as a proprietor with ₹6 crore turnover, a ₹1.2 crore working-capital loan and an IEC. I want to bring in my son as a shareholder and convert to a private limited company. How is this done and what moves across automatically?
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1 answer

ERPCA
ERPCA Expert Desk Verified answer

Practising chartered accountants at ERPCA · 14 Aug 2026

In short

Nothing moves automatically; the company is a new person in law, so each registration and contract is transferred in its own way. Done in the right sequence it takes four to six weeks.

Structure: incorporate the company through SPICe+, then sell the business as a going concern to it under a business transfer agreement, with the company issuing you shares as consideration. If you hold at least 50% of the voting power for five years and all assets and liabilities go across, section 47(xiv) treats the transfer as not giving rise to capital gains.

GST: the transfer of a business as a going concern is an exempt supply (entry 2 of Notification 12/2017), so no GST on the sale itself. The company takes a fresh GSTIN; you file Form ITC-02 to move unutilised input credit from the proprietorship, then cancel the old registration. A fresh IEC is needed in the company's name; the DGFT portal links it to the new PAN.

Bank loan: the lender will novate the facility to the company after fresh sanction and documentation, usually with your personal guarantee continuing. Customer and supplier contracts need an assignment letter or a short novation signed by the counter-party; export orders in hand should be re-confirmed in the company's name before shipment so the shipping bill, FIRC and GST refund all line up.

Also: new PAN and TAN, Udyam re-registration, transfer of employees with PF continuity, and a new current account before the first export.

Next step

Fix the transfer date as the first day of a month, close the proprietorship books to that date with an audited balance sheet, and let the company take over from day one of the next month.

General guidance on the facts given, not an engagement. Law as on the date of the answer.

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