Transfer of Input Tax Credit

Transfer of Input Tax Credit

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Transfer of Input Tax Credit

A registered taxpayer can apply for transfer of matched input tax credit that is available in the Electronic Ledger to another business organization in case of transfer of business by way of sale of business/ merger/ demerger by the filing of ITC declaration in Form GST ITC – 02. In this article, we look at the procedure for transfer of input tax credit through the GST portal in detail.

GST ITC-02 Filing

GST ITC-02 can be filed for transfer or matched input tax credit in case of the following circumstances:

  • In case any registered institution undergoes sale, merger, de-merger, amalgamation, lease or transfer, the institution or organization must file an ITC declaration for transfer of ITC in the Form GST ITC-02.
  • The acquired/ transferer institution should have matched Input Tax Credit available in the Electronic Credit Ledger, that is effective from the date of merger/ acquisition/ amalgamation/ lease/ transfer.
  • The transferee and the transferor should have GST registration.
  • It is mandatory for the transferor to file all GST returns in the past periods.
  • All the pending transactions for the action of merging should either be accepted, rejected or modified and all liabilities of the returns filed by the transferor must be paid.
  • The transfer of business has to be with an accurate provision of transfer of liabilities which will be the stayed demands of tax, or with any litigation /recovery cases. It has to be accompanied by the certificate that is issued by the Chartered Accountant or Cost Accountant.

Transfer of ITC

Given below are the ITC that can be transferred by filing the form GST ITC – 02.

  • Matched ITC balance available in the transferor’s Electronic Credit Ledger.
  • The ITC appearing under major heads such as Central tax, State/ UT tax, integrated tax, and CESS can be transferred by filing form GST ITC – 02.

Transfer of Matched Unutilized ITC by the Transferor

Given below are the steps to transfer the matched the unutilized ITC by filing Form GST ITC – 02.

Step 1: Log on to the official 

The transferor or the acquiring entity has to log on to the GST Portal. The GST Home page is displayed.

Step 2: Enter the Credentials

The user has to enter all the credentials to log in to the GST Portal. The taxpayer’s dashboard gets displayed on the screen.

Step 3: Click on the ITC Forms

GO to Services tab, click on Return option an then click on ‘ITC Forms’. The GST ITC forms page is displayed on the screen.

Step 3-Transfer of Matched Unutilised Input Tax Credit
Step 3-Transfer of Matched Unutilised Input Tax Credit

Step 4: Click on the Prepare Online button

From the GST ITC – 02 tile, click on the Prepare Online option. The transferor has to choose to transfer all or partial ITC and has to fill the amount of matched ITC that has to be transferred.

Step 5: Enter the GSTIN 

The transferor has to enter the GSTIN of the transferee. Following this, the amount of matched ITC to be transferred for each major head under the Details of ITC to be transferred section. The amount entered has to be less than or equal to the amount of ITC that is available in the Electronic Credit Ledger.

Step 5-Transfer of Matched Unutilised Input Tax Credit
Step 5-Transfer of Matched Unutilised Input Tax Credit

Step 6: Enter the details

Under section ‘Particulars of Certifying Chartered Accountant or Cost Accountant’, the following details have to be entered.

  • Name of the certifying accounting firm
  • Name of the certifying Chartered Accountant / Cost Accountant in the certifying firm
  • Membership number of the certifying firm
  • Date of the certificate issued by the certifying accounting firm

Step 7: Attach the Certificate

The transferor has to attach the copy of the certificate either in JPEG/ PDF format and the attachment should not exceed 500 KB.

Step 8: Click on Save

Click on ‘Save’ to upload the data and attachment to the GST Portal. The statement box given below has to be checked to declare that the furnished information is true and correct

Step 9: Select the Authorized Signatory

From the drop-down list, the authorized signatory has to be selected.

Step 10: File Form GST ITC – 02

Form GST ITC – 02 has to be filed using DSC or the EVC option. If the DSC option is selected, ensure that it is signed using the DSC of the selected authorised signatory. If EVC option is selected, the system sends an OTP to the authorized signatory’s registered mobile number that has to be entered in the pop-up after selecting this option.

Step 11: Click on Proceed option

The Proceed option has to be clicked on the Warning pop-up message.

Step 11-Transfer of Matched Unutilised Input Tax Credit
Step 11-Transfer of Matched Unutilised Input Tax Credit

Step 12: Enter the OTP

An OTP is sent that has to be entered and then click on Verify option.

Once it is verified, the displays a confirmation message on the successful filing of the Form GST ITC – 02. This confirmation also contains the system generated ARN. A copy of the form GST ITC – 02 can be downloaded by clicking on the Downloads button.

Transfer of Matched Unutilized ITC by the Transferee

Once the transferor has filed Form GST ITC – 02 to transfer the matched unutilized ITC, the transferee needs to login to the GST Portal and has to either accept or reject the ITC transfer. Here are the steps to process the ITC transfer. 

Step 1: Login to the Portal

The transferee has to login to the GST Portal and is required to enter the credentials.

Step 2: Click on ITC 02

From the Servies tab, click the ‘User Services’ and then select ‘ITC 02 – Pending for actions’ options.

Step 2-Transfer of Matched Unutilised Input Tax Credit
Step 2-Transfer of Matched Unutilised Input Tax Credit

Step 3: Click the ARN

The transferee is directed to a new page from which the user has to click on the ARN link.

Step 4: Accept/ Reject

By clicking on the ARN link, details of all the matched ITC to be transferred against the major head will be displayed. The user has to either accept or reject the request.

Step 4-Transfer of Matched Unutilised Input Tax Credit
Step 4-Transfer of Matched Unutilised Input Tax Credit

Step 5: Accepting the Request

If the request has been accepted, the system displays a confirmation message and then prompts the user to proceed with filing the response.

Step 6: Check the Declaration Statement

The declaration statement given below has to be checked to state that the information is true and correct.

Step 7: Select the Authorized Signatory

From the drop-down list, the authorized signatory has to be selected.

Step 8: Filing the Form

The form has to be filed using DSC or the EVC option. If the DSC option is selected, ensure that it is signed using the DSC of the selected authorised signatory. If EVC option is selected, the system sends an OYP to the authorized signatory’s registered mobile number that has to be entered in the pop-up after selecting this option.

Step 11: Click on Proceed option

The Proceed option has to be clicked on the Warning pop-up message.

Step 12: Enter the OTP

An OTP is sent that has to be entered and then click on Verify option.

Once it is verified, the system displays a confirmation message on successfully completing the ITC transfer process. This confirmation page also contains the system generated ARN.

Step 13: Click the option Back

By clicking on the option ‘Back’, the user returns to ITC-02 Pending for actions screen. The transferee can now view the changed status Accepted.

Step 13-Transfer of Matched Unutilised Input Tax Credit
Step 13-Transfer of Matched Unutilised Input Tax Credit

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