Transferring Input Tax Credit Between GST Registrations in the Same State (Form GST ITC-02A)

This article explains the process for businesses to transfer unutilized Input Tax Credit (ITC) between their different Goods and Services Tax Identification Numbers (GSTINs) located within the same state. Under GST law, distinct business entities within the same state can either register an 'additional place of business' by amending their primary registration or obtain entirely separate GST registrations. When a new registration is secured, the establishment receives a unique GSTIN and maintains distinct electronic ledgers under GST. This guide focuses on how a new establishment can initially claim ITC by using Form GST ITC-02A.

Understanding Form ITC-02A and Its Applicability

Form GST ITC-02A allows a principal place of business (transferor) to transfer any remaining unutilized Input Tax Credit to a newly formed branch (transferee). This transfer must occur within 30 days of the new registration and should be based on the ratio of the value of assets held by each establishment, regardless of whether ITC was claimed on those assets. The transferor is responsible for filing Form GST ITC-02A to facilitate this transfer.

Purpose of Utilizing Form GST ITC-02A

The mechanism for ITC transfer using Form GST ITC-02A is similar to how an Input Service Distributor (ISD) allocates ITC, but it applies specifically to entities within the same state or Union Territory and is determined by asset distribution.

It is common for a head office (principal place of business) to purchase capital goods, inputs, or input services intended for a new branch before that branch is formally established within the same state. In such situations, the head office would have already claimed ITC on these purchases. Since the new branch ultimately consumes or uses these goods and services, the associated ITC rightfully belongs to it. Therefore, Form GST ITC-02A serves as the mechanism to transfer such unutilized ITC to the newly registered branch.

Format of Form GST ITC-02A Explained

Form ITC-02A requires details for both the transferor and the transferee, including their GSTINs, legal names, and trade names. It also includes a table for specifying the ITC amounts to be transferred.Key aspects of this table include:

• Tax/Cess: The relevant tax or cess values must be entered.
• Amount of matched ITC available: The figures in this column are automatically populated by the system.

It is crucial to note that simply having an unutilized balance in the Electronic Credit Ledger is insufficient. The ITC must also be 'matched,' meaning the supplier must have uploaded the corresponding invoice details in GSTR-2A. ITC cannot be transferred if it is only eligible as per GSTR-2B but not matched.

• Amount of matched ITC to be transferred: This amount must be calculated according to the asset value ratio mentioned previously and then manually entered into this column.

Guide to Filing Form GST ITC-02A on the GST Portal

The transferor of ITC needs to complete the following steps:

• **Step 1: Access the ITC-02A page.**Log in to the GST portal using valid credentials. Navigate to Services > Returns > ITC Forms.Then, select 'Transfer ITC' on the 'GST ITC-02A' tile.The system will display the 'Declaration of transfer of ITC in case of obtaining separate registration within a State or Union Territory' page.
• **Step 2: Input ITC transfer details.**Enter the transferee's GSTIN, which will automatically populate their legal and trade names. Proceed to enter the desired amounts in the 'Amount of matched ITC to be transferred' column, then click 'Save.'A confirmation message, 'Details saved successfully,' will appear.
• **Step 3: Review the draft Form ITC-02A.**Click the 'Preview Draft GST ITC-02A (PDF)' button to review the completed draft form.A summary page will be displayed for verification.
• **Step 4: Submit Form ITC-02A.**Check the declaration box, select an authorized signatory from the dropdown menu, and choose either 'File ITC with EVC' or 'File ITC with DSC,' as applicable.If 'File ITC with DSC' is chosen, select the digital signature and click 'Sign.'If 'File ITC with EVC' is chosen, enter the One-Time Password (OTP) sent to the registered email address and mobile number. A warning message will appear; click 'Proceed.'A success message with the Acknowledgment Reference Number (ARN) will be displayed, and the filed form can be downloaded as a PDF. The transferor's Electronic Credit Ledger will be debited by the transferred amount.

Actions Following the Filing of Form GST ITC-02A

After successful filing of ITC-02A, the transferee (branch) will automatically receive an email and SMS notification. The branch must then either accept or reject the transfer by following these steps:

• **Step 1: Log in to the GST portal.**Access the GST portal with valid credentials. From the homepage, go to Services > Returns > ITC Forms.
• **Step 2: Act on the transferred ITC.**Click the 'Take Action' button under the 'GST ITC-02A' tile.A list of ARNs with 'Accepted,' 'Rejected,' or 'Pending for Action' statuses will be displayed. Choose the ARN that requires action.The transferee GSTIN must verify the following details:
• The transferor entity's GSTIN/UIN, legal name, date of ITC-02A filing, and ARN.
• The amount of matched ITC being transferred, as entered by the transferor.

After verification, if the details are correct, click 'Accept.' If not, click 'Reject.'

• If accepted, a confirmation message states, 'You have successfully accepted declaration of transfer of ITC in GST ITC-02A. Kindly proceed for filing.'
• If rejected, a confirmation message states, 'You have rejected the declaration of transfer of ITC in GST ITC-02A. Kindly proceed for filing.'
• **Step 3: Submit the declaration for transferred ITC.**Select the declaration checkbox, choose an authorized signatory from the dropdown, and click either 'File ITC with EVC' or 'File ITC with DSC.'If 'File ITC with DSC' is selected, choose the digital signature and click 'Sign.'If 'File ITC with EVC' is selected, enter the OTP sent to the registered email and mobile number. A warning message will appear; click 'Proceed.'A success message with the ARN will be displayed, and the form can be downloaded. The transferor will be notified of the response via email and SMS.

**If Accepted:**The transferee's Electronic Credit Ledger will be credited with the transferred amount.

**If Rejected:**The ITC amount will not be transferred to the transferee and will be re-credited to the transferor's Electronic Credit Ledger.