![]()
Transfer of Input Tax Credit (ITC) in GST: Understanding FORM GST
ITC-02
Introduction:
In the dynamic business environment, changes in the ownership or constitution
of businesses are common. Such changes may arise from mergers, demergers,
sales, amalgamations, leases, or other transfers. Under the GST regime, it is
crucial to understand the process of transferring the unutilized Input Tax
Credit (ITC) during such events. This article provides a detailed guide on the
transfer of ITC using FORM GST ITC-02.
Legal Framework:
The legal foundation for the transfer of ITC is laid out in Section 18(3) of
the Central Goods and Services Tax (CGST) Act, 2017, and elaborated in Rule 41
of the CGST Rules, 2017.
Section 18(3) of the CGST
Act, 2017: This section allows for the transfer of unutilized
ITC in cases of changes in the business's constitution due to events such as
sale, merger, demerger, amalgamation, lease, or transfer. The transfer of ITC
is permissible when there are specific provisions for transferring liabilities.
Rule 41 of the CGST
Rules, 2017: Rule 41 prescribes the process for
transferring ITC, including the requirement to submit FORM GST ITC-02
electronically. The rule also mandates the submission of a certificate from a
Chartered Accountant or Cost Accountant certifying the transfer of liabilities.
Step-by-Step Guide to
Using FORM GST ITC-02
1. Filing FORM GST
ITC-02:
The transferor must
furnish the details of the business transfer in FORM GST ITC-02 on the GST
common portal. This form includes a request for the transfer of unutilized ITC
lying in the electronic credit ledger.
Details Required:
·
GSTIN of both the transferor and
transferee.
·
Legal names and trade names (if any) of
both parties.
·
Specific details of the ITC to be
transferred, including amounts related to Central Tax, State Tax, Union
Territory Tax, Integrated Tax, and Cess.
2. Apportionment in the
Case of Demerger:
·
If the business undergoes demerger, the
ITC must be apportioned in the ratio of the value of assets of the new units as
specified in the demerger scheme.
·
The term "value of assets"
refers to the total value of all business assets, regardless of whether ITC has
been claimed on them.
3. Certification by
Chartered Accountant or Cost Accountant:
The transferor must
submit a certificate from a practicing Chartered Accountant or Cost Accountant.
This certificate confirms that the transfer of business includes specific
provisions for the transfer of liabilities.
The certificate must
include:
·
Name of the firm issuing the certificate.
·
Name and membership number of the
certifying Chartered Accountant or Cost Accountant.
·
Date of issuance of the certificate.
4. Acceptance by the
Transferee:
·
The transferee must log in to the GST
portal and accept the details furnished by the transferor.
·
Upon acceptance, the unutilized ITC
specified in FORM GST ITC-02 will be credited to the transferee's electronic
credit ledger.
5. Accounting for
Transferred Inputs and Capital Goods: The transferee is
required to account for the transferred inputs and capital goods in their books
of account.
Form GST ITC -02
[See Rule – 41(1)]
Declaration for transfer of ITC in case of sale, merger,
demerger, amalgamation, lease or transfer of a business under sub-section (3)
of section 18
|
1.
|
GSTIN of transferor
|
|
|
2.
|
Legal name of transferor
|
|
|
3.
|
Trade name, if any
|
|
|
4.
|
GSTIN oftransferee
|
|
|
5.
|
Legal name of transferee
|
|
|
6.
|
Trade name, if any
|
|
7. Details of ITC to be transferred
|
Tax
|
Amount of matched ITC
available
|
Amount of matched ITC to be
transferred
|
|
1
|
2
|
3
|
|
Central
Tax
|
|
|
|
State Tax
|
|
|
|
UT Tax
|
|
|
|
Integrated
Tax
|
|
|
|
Cess
|
|
|
8. Particulars of certifying Chartered Accountant or Cost
Accountant
a) Name of the Firm issuing certificate
b) Name of the certifying Chartered Accountant/Cost Accountant
c) Membership number
d) Date of issuance of certificate to the transferor
e) Attachment (option for uploading certificate)
9. Verification
I hereby
solemnly affirm and declare that the information given hereinabove is true and
correct to the best of my knowledge and belief and nothing has been concealed
there from.
Signature
of authorised signatory Name
Designation/Status
Date ---dd/mm/yyyy
Conclusion
The transfer of ITC using
FORM GST ITC-02 is a crucial procedure for ensuring seamless business
transitions. By following the steps outlined in Rule 41 of the CGST Rules,
businesses can efficiently manage the transfer of their tax credits. Ensuring
proper documentation and certification is key to compliance and avoiding any
legal complications.
Disclaimer: All the
Information is based on the notification, circular and order issued by the
Govt. authority and judgement delivered by the court or the
authority information is strictly for educational purposes and on the
basis of our best understanding of laws & not binding on anyone.
Click here
