Guide to Filing Form ITC-02 on the GST Portal for Input Tax Credit Transfer
Form GST ITC-02 is essential for transferring unutilized Input Tax Credit (ITC) balances between GSTINs during business restructuring events like mergers or acquisitions. This guide explains the purpose of ITC-02, detailing who must file it and why it's necessary. It also provides a clear, step-by-step process for filing the form on the GST portal, covering prerequisites, required information, and subsequent actions for both the transferor and transferee.
The GST ITC-02 form facilitates the transfer of an unutilized Input Tax Credit (ITC) balance from one GSTIN to another, typically during business mergers or acquisitions. This guide outlines the purpose of ITC-02 and provides instructions for its electronic filing on the GST portal.
Understanding Form GST ITC-02 and its Filers
When a business undergoes a transfer, such as through a sale, merger, or demerger, a registered taxpayer can transfer the remaining unutilized input tax credit from their electronic credit ledger to the new business entity. This transfer is executed by submitting a declaration in Form GST ITC-02. The transferor is responsible for filing this form, and the transferee must subsequently act on it. Currently, no specific deadline for filing ITC-02 is defined by the Act or associated rules. Comprehensive details regarding GST implications during business transfers are available in relevant articles.
Reasons for Filing ITC-02
The post-GST era has seen numerous business restructuring activities like amalgamations, mergers, and demergers. In such scenarios, the entity transferring its business may hold an unutilized ITC balance in its electronic credit ledger. This ITC can only be transferred to the new business by filing Form GST ITC-02. Upon successful submission of ITC-02, the transferor's unutilized credit is moved to the electronic credit ledger of the transferee.
Structure and Required Information of ITC-02
Form GST ITC-02 requires specific details for completion:
| Sr.No. | Contents | Details |
|---|---|---|
| 1 | Basic details | Provide fundamental information, including the GSTIN, trade name, and legal name for both the transferor and the transferee. |
| 2 | ITC transfer details | Specify the total available ITC and the exact amount of ITC intended for transfer under each primary head (e.g., CGST, SGST, IGST). |
| 3 | CA/Cost Accountant details | Include information about the certifying Chartered Accountant or Cost Accountant. |
Step-by-Step Guide to Filing ITC-02 on the GST Portal
Before initiating the filing of Form GST ITC-02, several prerequisites must be met:
- Both the transferor and transferee businesses must possess valid GST registrations.
- The transferor must have an available ITC balance in their electronic credit ledger.
- The transferor should have submitted all necessary GST returns for previous periods.
- All outstanding transactions related to the merger or business transfer should be processed (accepted, rejected, or modified). Furthermore, all liabilities stemming from the transferor's past returns must be settled.
- The business transfer must include adequate provisions for transferring liabilities associated with stayed tax demands, litigation, or recovery. A Chartered Accountant or a Cost Accountant must certify these provisions.
The process for transferring unutilized ITC involves two main stages:
- The transferor submits Form GST ITC-02, declaring the unutilized ITC amount.
- The transferee then either accepts or rejects this transfer via the GST portal, a process detailed in the subsequent section.
The following steps are to be performed by the transferor:
Step 1: Access the GST Portal Log in to the official GST Portal.
Step 2: Navigate to ITC Forms From the main menu, go to Services > Returns > ITC Forms to access the ITC-02 section. Click on the ‘Prepare Online’ button displayed on the ITC-02 tile.
Step 3: Input Transferee Information Enter the GSTIN of the transferee. The system will automatically populate the unutilized ITC amount from the electronic credit ledger into the form. The transferor can choose to transfer either the full amount or a partial amount of ITC under each main head.
Step 4: Provide Certifying Professional's Details Input the following details for the certifying Chartered Accountant or Cost Accountant:
- Name of the firm providing certification.
- Name of the individual certifying Chartered Accountant or Cost Accountant.
- Membership number of the certifying professional.
- Date when the certificate was issued.
Attach a copy of the certificate and then click ‘Save’. A confirmation message will appear, indicating that the details have been successfully saved.
Step 5: Submit the Form Select the declaration checkbox and choose the authorized signatory from the provided drop-down list. Submit the form using either the Digital Signature Certificate (DSC) or Electronic Verification Code (EVC) option. After clicking ‘Proceed’ on any warning messages and entering the One-Time Password (OTP), click ‘Verify’. A final confirmation message will be displayed upon successful submission.
Post-Filing Actions for Form ITC-02
After the transferor has filed Form GST ITC-02, the transferee is required to either accept or reject the ITC transfer. The transferee should follow these steps:
Step 1: Access Pending Actions Log in to the GST portal and navigate to Services > User Services > ITC-02 Pending for action. The form associated with the transfer will open.
Step 2: Review Details Click on the Application Reference Number (ARN) to view the details that were filed by the transferor.
Step 3: Accept or Reject Transfer The transferee can then choose to either accept or reject the proposed ITC transfer. If ‘Accept’ is chosen, a confirmation pop-up will appear. The transferee must select the declaration checkbox, choose the authorized signatory, and proceed to file using DSC or EVC. Upon successful acceptance, a confirmation message will be displayed, and the status on the ‘ITC-02 pending for action’ screen will update to ‘Accepted’.