GST Liability of Directors, Partners & Trustees

Under GST, a taxable person

registered under GST is responsible for collection and payment of GST to the Government. Persons registered with GST can also register as a company, LLP or Trust. However, if a legal entity registered along with the company, all entities such as Directors, Partners or Trustees shall hold responsible for all the actions being committed in the firm. In this article, we look at such extension of GST liability on Directors, Partners and Trustees.

GST Liability of Directors in a Company

If GST or interest or penalty is not paid by a

private limited company, then every Director of the company will be liable to pay such dues. In rare cases, the liability of a Director can be relaxed only when, he/she proves that such non-recovery of GST dues is not because of his gross negligence, misfeasance or breach of duty in relation to affairs of company. Click here to read on GST on Directors Remuneration

GST Liability of Partners in LLP

In case of

LLP or partnership firm which is liable to pay any GST tax, interest or penalty, all the partners of such firm will be jointly and severally liable to pay the amount due. If any of the partners in a LLP or partnership firm retires, then such partner should give intimate the Commissioner by a notice in writing of such retirement within one month from the date of retirement. In such cases, the retiring partner shall be liable to pay tax, interest and penalty, if any up to the date of his retirement (whether determined or not prior to retirement). However, if the partner provides no further intimation to the Commissioner within 1 month from retirement date, the liability of such retired partner shall continue). In such cases, the retiring partner would be liable to pay GST, interest and penalty, if any up to the date of his/her retirement. If the partner fails to provide any such intimation to the Commissioner within 1 month from retirement date, the liability of the retired partner shall continue till the date on which the partner provides the intimation to the Commissioner.

GST Liability of Trustees in Trust

In case of a

Trust or a business carried on, for the benefit of a minor or incapacitated person then such Guardian or Trustee would be held liable for GST, interest, penalty or any other dues which such Trust or minor or incompetent person will be liable for.

GST Liability of Proprietorship

In case of a

proprietorship, the proprietor and proprietorship are one and the same. Hence, the liability falls on the proprietor to pay GST on behalf of the proprietorship. In case if the concerned individual liable to pay tax passes away and if the business still continues to operate, the person who carries out the business shall hold responsible to pay the tax, interest, penalty or any other due as due payable by the deceased person. In the case where the person (an individual) liable to pay tax passes away and the business stops to operate, the legal representative is liable to pay the tax, interest, penalty or any other dues to the government. The liability of the legal representative would be upto the extent of property or estate received from the deceased person. Click here to register Private Limited Company, Public Limited Company or One Person Company

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Frequently Asked Questions

Common questions about GST Liability for Directors, Partners and Trustees.

Directors of a private limited company will be personally liable to pay any unpaid GST, interest or penalty owed by the company. However, a director's liability can be waived if they can prove that the non-payment was not due to their gross negligence, misfeasance or breach of duty.

Yes, all partners in an LLP or partnership firm are jointly and severally liable to pay any GST, interest or penalty owed by the firm. If a partner retires, they must notify the GST Commissioner within one month to limit their liability to only the period until their retirement date.

For a trust or business carried on for the benefit of a minor or incapacitated person, the trustee or guardian will be held liable for any unpaid GST, interest, penalty or other dues owed by the trust.

In a proprietorship, the proprietor and the business are considered one and the same entity. Therefore, the proprietor is personally liable to pay any GST owed by the proprietorship.

If the deceased person's business continues to operate, the individual carrying on the business will be liable for any unpaid GST, interest, penalty or other dues. If the business stops operating, the legal representative of the deceased will be liable up to the extent of the property or estate received from the deceased.

No, a director's liability for unpaid GST can only be waived in rare cases where they can prove that the non-payment was not due to their gross negligence, misfeasance or breach of duty in relation to the company's affairs.

A retiring partner in an LLP or partnership firm must give written notice to the GST Commissioner within one month from the date of their retirement to limit their liability for unpaid GST, interest or penalty to only the period until their retirement date.

No, the article does not mention any limitation on a trustee's liability for unpaid GST, interest, penalty or other dues owed by a trust or business carried on for the benefit of a minor or incapacitated person.

No, the article clearly states that the liability of the legal representative of a deceased person liable to pay GST is limited to the extent of the property or estate received from the deceased.

The article does not make any distinction between the GST liability of directors in a private limited company versus a public limited company. The stated liability appears to apply to directors of any company registered under GST.