Claiming Input Tax Credit with GST Form ITC-01 for New Registrations

Individuals operating a standard business often possess inventory, capital goods, and completed products when they secure a GST registration. The GST previously paid on these acquired items is not eligible for Input Tax Credit (ITC) until the GST registration is active. Once registered, taxpayers can utilize the ITC for GST paid on their existing inventory of inputs, capital goods, and finished goods, effective from their registration date. GST Form ITC-01 serves as a mandatory declaration submitted via the GST portal, allowing newly registered taxpayers to claim this input tax credit on their stock.

Situations Requiring ITC-01 Filing

Declaration Form ITC-01 is essential in the following scenarios:

• When an application for GST registration is submitted within 30 days of becoming liable for GST payments. [Section 18(1)(a)]
• When an individual voluntarily opts for GST registration. [Section 18(1)(b)]
• When a person exits the composition scheme but continues registration as a regular taxpayer. [Section 18(1)(c)]
• When a previously exempt supply of goods or services transitions to become a taxable supply. [Section 18(1)(d)]

It is crucial to remember that ITC cannot be claimed if Form ITC-01 is not filed.

Permissible Input Tax Credit Categories

Input tax credit is allowable for:

• Inputs held in stock on the specified cut-off date.
• Inputs integrated into semi-finished goods on the specified cut-off date.
• Inputs contained within finished goods on the specified cut-off date.
• Capital goods on the specified cut-off date.

This applies exclusively to cases where a composition dealer shifts from the composition scheme and instances where an exempted supply becomes taxable.

ITC Claim Deadlines and Relevant Dates

Form ITC-01 must be filed within 30 days from the date an individual becomes eligible to claim ITC, such as upon grant of registration or opting out of the composition scheme.

For example, if Mr. A, a trader, chooses voluntary registration on December 29, 2018, he would be eligible to claim ITC on inputs in stock, inputs within semi-finished and finished goods, and capital goods as of December 28, 2018.

Key Considerations for Filing ITC-01

When filing ITC-01, keep these important points in mind:

• Understand which input tax credits are claimable. For instance, ITC on services is not allowed in Form ITC-01. ITC on capital goods is only applicable when a composition dealer transitions out of the scheme or when an exempt supply becomes taxable.
• Ensure invoice-wise details of ITC on purchases are available as of the cut-off date.
• Form ITC-01 must be filed within 30 days of the registration date or the date of migration to a regular scheme.
• Invoices for inputs up to one year old and for capital goods up to five years old can be claimed.
• If the ITC claim surpasses INR 2 lakhs, a certificate from a Chartered Accountant or Cost Accountant must be submitted.

Step-by-Step Procedure for Submitting Form ITC-01

Step 1: Access the GST portal.

Step 2: Navigate to the Services tab > Returns > ITC forms > ITC 01. Choose either the ‘Prepare online’ or ‘Prepare offline’ option.

Step 3: Select the specific type of ITC Claim and input the required details. Under the ‘Claim made under’ tab, choose the relevant clause and sub-clause of Section 18. The fields remain consistent across all options.

Proceed by entering the necessary invoice-wise details:

• Specify the type of goods (options include: Inputs held in stock, Inputs contained in semi-finished or finished goods, Capital goods). Taxpayers filing Form ITC-01 should maintain a detailed stock register documenting procurement and consumption of inputs.
• Provide the supplier’s GSTIN.
• Enter the invoice number and date. This date must predate the approval of registration and not exceed one year for inputs or five years for capital goods.
• Select the Unit Quantity Code.
• Provide a description of the goods (Inputs).
• Input the invoice value (this amount should reflect adjustments for any debit/credit notes associated with the invoice).
• Enter the ITC amount (CGST and SGST or IGST).

For claims under Section 18(1)(d), the date on which goods become taxable must also be specified. Click ‘Add’ to include more invoices or ‘Save’ to proceed with submission.

Step 4: After all invoices are entered, click Preview > Submit > Proceed. Once the status changes to ‘Submitted’ or ‘Proceed’ is clicked, no further modifications are allowed.

Step 5: If applicable, upload the CA certificate. For claims exceeding INR 2 lakhs, details of the Chartered Accountant or Cost Accountant, along with their certificate, must be provided. The following information is required:

1. Name of the Firm
2. Name of the CA certifying the form
3. Membership number
4. Upload the certificate (in JPEG format, up to 500 KB)
5. Date of issuance of the certificate

Step 6: File the form using DSC or EVC. After successful submission, click either ‘File using DSC’ or ‘File using EVC’ and select the authorized signatory from the dropdown menu. An ARN is generated and sent to the taxpayer via SMS or Email, and the status of GST ITC 01 updates to ‘Filed’. The ITC claimed in Form ITC-01 is then credited to the electronic credit ledger.