Chapter XVI - Liability to pay in certain cases
Section 87
Section 87: Liability in case of amalgamation or merger of companies
Section 87 treats merging companies as distinct for GST until the merger order date, even where the order has earlier retrospective effect.
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Need advice on Section 87?
This article is for general information. Refer to the Central Goods and Services Tax Act, 2017 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) When two or more companies are amalgamated or merged in pursuance of an order of court or of Tribunal or otherwise and the order is to take effect from a date earlier to the date of the order and any two or more of such companies have supplied or received any goods or services or both to or from each other during the period commencing on the date from which the order takes effect till the date of the order, then such transactions of supply and receipt shall be included in the turnover of supply or receipt of the respective companies and they shall be liable to pay tax accordingly.
(2) Notwithstanding anything contained in the said order, for the purposes of this Act, the said two or more companies shall be treated as distinct companies for the period up to the date of the said order and the registration certificates of the said companies shall be cancelled with effect from the date of the said order.
Introduction
A merger order with an earlier effective date does not automatically erase GST supplies between the companies before the order date.
Key takeaways
Inter-company supplies
Supplies and receipts between the companies from the retrospective effective date to the order date remain in their respective turnover.
Distinct status
For GST, the companies are treated as distinct until the order date despite retrospective language.
Registrations
Their registration certificates are cancelled with effect from the order date.
Inter-company supplies
Supplies and receipts between the companies from the retrospective effective date to the order date remain in their respective turnover.
Distinct status
For GST, the companies are treated as distinct until the order date despite retrospective language.
Registrations
Their registration certificates are cancelled with effect from the order date.
Practical checklist
Do
- Compare the order’s effective date and order date.
- Reconcile inter-company invoices between those dates.
- Plan GST registration cancellation from the order date.
Avoid
- Assume a private contract, merger date or restructuring automatically removes statutory GST liability.
Frequently asked questions
Does retrospective merger date remove GST on earlier inter-company supplies?
Section 87 says those supplies remain in turnover until the order date.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026