How To File ITC-02 on The GST Portal?

What is ITC-02?

Form ITC-02 is used under the GST regime to transfer unutilized Input Tax Credit (ITC) from one GST registration to another within the same PAN, usually in case of:

• Business transfer, such as sale, merger, demerger, or amalgamation.
• Change in constitution of a business.

Purpose:

• To ensure smooth transfer of ITC without loss to the taxpayer.
• To maintain continuity of credit when one GSTIN ceases operations and another begins.

The transferor must file ITC-02 on the GST portal, and the transferee must accept the ITC for the transfer to be valid.

Who Needs to File ITC-02?

GST taxpayers who have received goods or services and wish to claim ITC must file the ITC-02 form. Additionally, GST taxpayers who have  claimed ITC  on goods or services in their GSTR-2A (GST Return 2A) and wish to reverse that claim must also file the ITC-02 form.

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How to File ITC-02?

Form GST ITC-02 submission requires the following prerequisites:

1. Both the transferor and the transferee of the business must be legally registered for GST.
2. ITC should be accessible to the transferor in the electronic credit ledger.
3. The transferor is responsible for submitting all necessary  GST returns  from earlier years.
4. The merger’s pending transactions should all be approved, rejected, or amended. Additionally, all debts owed by the transferor for earlier returns must be settled.
5. When selling a business, it is important to accurately plan for transferring liabilities due to stayed tax demands, litigation, recovery, etc. A cost accountant or a chartered accountant should certify the same.

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There are two steps in the process of transferring unused ITC:

1. The transferor submits GST ITC-02 with the ITC that was not used.
2. On the GST portal, the transferee either accepts or rejects the same.

The transferor must take the steps listed below to file ITC-02:

1. Log in to the GST portal using your login credentials.
2. Go to the “Services” menu and select “Returns”, and then choose “ITC-02.”
3. Fill in the relevant information in the form, including details of the goods or services received, the GST paid on them, and the GST payable on your outputs.
4. Update the following information for the cost accountant or chartered accountant certification:
5. 1. The certifying company’s name
   2. Name of the Cost Accountant or Chartered Accountant who is certifying
   3. The number assigned to members of the certifying body
   4. Date the certificate was issued
   5. Click “Save” after adding a copy of the certificate.
5. Upload any supporting documents, if required.
6. Proceed to file using either EVC or DSC. Select the authorised signatory from the drop-down list and check the declaration checkbox. Use the DSC or EVC option to submit the form, as shown below:
7. Preview and verify the form before submitting it.
8. Once you have submitted the form, you will receive an acknowledgement number. Keep this number safe for future reference.

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Format and Contents of ITC-02

The ITC-02 form consists of the following key sections:

• GSTIN of the transferor – Pre-filled based on the logged-in user.
• GSTIN of the transferee – To whom the ITC is to be transferred (must be under the same PAN).
• Reason for transfer – Dropdown with options like amalgamation, demerger, sale of business, etc.
• Date of the event – The date on which the transfer took effect.
• Details of ITC to be transferred:
• • CGST, SGST/UTGST, IGST, and Cess balances separately.
• CA/Cost Accountant certificate:
• • File upload for a digital certificate validating that liabilities are accounted for and the transfer is legitimate.
• Declaration and Verification:
• • Signature using DSC or EVC before submission.

How to File ITC-02 on the GST Portal?

Here’s a step-by-step guide to file ITC-02:

• Login to the GST Portal: Visit www.gst.gov.in and log in with your transferor GSTIN credentials.
• Navigate to the Form: Go to Services → Returns → ITC Forms → ITC-02.
• Enter Transferee GSTIN: Provide the GSTIN of the entity receiving the ITC.
• Select Reason and Date: Choose the reason (e.g., demerger) and enter the effective date of transfer.
• Enter ITC Details: Fill in the available ITC balances you wish to transfer (segregated by tax head).
• Upload CA Certificate: Attach the digitally signed certificate from a Chartered Accountant or Cost Accountant.
• Submit the Form: Verify and submit using DSC or EVC.
• Transferee Action: The transferee must log in and accept the transferred ITC under ‘Services → Returns → ITC-02 (Accept/Reject)’.

Once accepted, the ITC reflects in the electronic credit ledger of the transferee.