ITC-02A is a declaration for transfer of unutilized ITC from the existing entity of a registered taxpayer to a newly registered entity (different place of business) in the same state or union territory.
In a usual scenario, every business under GST is bound to take one registration (GSTIN) in every state of operation. However, as per section 25(2) of CGST act, if in case a person has multiple places of business in a State /UT, he may take separate registration for each place of business.
Now, imagine you start a new operation in the same state/UT and transfer some of your assets to the newly registered business. So, when you transfer the assets, the ITC for this transaction will be held in existing business. So, you may have unutilized ITC in existing entity from your newly registered entity. ITC 02A helps you in transferring this unutilized ITC to the newly registered business which can then be utilized to settle the output tax liability of new entity.
For distribution of ITC by ISD read here.
1. What is ITC-02A?
A registered person, who has obtained separate registration for multiple places of businesses in a State/UT may transfer unutilized matched Input Tax Credit lying in Electronic Credit Ledger of an existing entity (transferor) to newly registered entity (transferee), by filing Form GST ITC-02A on GST Portal, within 30 days from obtaining such registration and newly registered entity can accept or reject the same.
2. Rule 41A for Form ITC-02A
Rule 41A of CGST Rules was inserted vide notification no 03/2019 –CT dated 29 January 2019.
The rule suggests how a taxpayer can transfer credit (funds) lying in the ECL of his existing business to a new registration for different/multiple places of business in the same state or UT.
- If a registered taxpayer on obtaining a separate registration for multiple places of business wants to transfer the credit (partly or fully) to the newly registered entity, he can furnish it within 30 days of obtaining such separate registration only if the ITC that needs to be transferred is in the ratio of the value of assets held by the business at the time of the registration.
- The transferee has to accept the details submitted by the transferor in order to avail the credit in the ECL (Electronic Cash Ledger).
3. Enablement of ITC-02A
Despite the introduction of Rule 41A in January 2019, the form was not enabled on GSTIN until now. On May 26, 2020, GST portal enabled the functionality of ITC-02A.
Earlier when ITC-02A form was not enabled the transferor used to book sales entry to transferee. This unnecessarily used to increase the turnover of the transferor without actual sales being made. This in turn hampered many GST rule applicability that had turnover as the underlying principal.
4. How to file the form GST ITC-02A?
Steps for the transferor:
Log in to the official GST Portal.
Go to ‘Services’ then click on ‘Returns’
Select ‘ITC Forms, then you will be able to locate ‘Form ITC-02A’Select option “Transfer ITC”
Note: The PAN number of Transferor and Transferee has to be the same.
Click on ‘Transfer ITC’ on the ‘GST ITC-02A’tab.
The next page is – ‘Declaration of transfer of ITC in case of obtaining separate registration within a State or Union Territory’
Fill in the details in the given fields. Here is a sample ITC 02Aform for your reference
After you fill the entire form, you can view the filled form by clicking on the ‘Preview Draft GST ITC-02A (PDF)’
Select the declaration checkbox and then select the authorised signatory from the ‘drop-down’ list. Further, you need to click on the ‘File ITC with EVC’ or the ‘File ITC with DSC’ button according to your selected preference.
You can file Form ITC-02A with the help of EVC or DSC.
- If ‘File ITC with DSC’ button is selected, you need to choose the digital signature and click on the ‘Sign’ button.
- If ‘File ITC with EVC’ is selected, then you need to enter the OTP sent on your registered email address and/or mobile number.
You will receive a message confirming a successful submission along with ARN. The ECL (Electronic Cash Ledger) will be debited. You can also download the filed form in PDF format.
Steps for the transferee:
Once the transferor, transfers the ITC, as a transferee, you will get a notification via email regarding the ITC transfer. You have to either ‘Accept’ or ‘Reject’ it after choosing the applicable ARN and carry on the further process. For that, have to choose the ‘Take Action’ button after logging in to the portal.
Log-in to the official GST Portal
Go to ’Services’ then click on‘Refund’
Select ‘ITC-02A’ and click‘Take Action’.
Step 2: Check the list of all ARNs which are pending for action. Then, accept or reject the appropriate ARN hyperlink to take action.
Step 3: The details of ITC which is to be transferred by the transferor entity gets displayed. Click either ACCEPT or REJECT it.
- It is not possible for you to modify the amount as a transferee entity.
- On acceptance by the transferee entity, ITC will be transferred to the transferee entity.
- On rejection by the transferee entity, ITC will not be transferred to the transferee entity and the amount mentioned in ‘Form GST ITC-02A’ will be re-credited in the Electronic Credit Ledger of transferor entity.
In case of acceptance: A confirmation message is displayed stating your successful acceptance and declaration of transfer of ITC in Form GST ITC-02A.
In case of rejection: A confirmation message is displayed stating successful rejection and the declaration of transfer of ITC in Form GST ITC-02A.
Select the checkbox for declaration
Select the authorized signatory.
Click FILE ITC WITH DSC or FILE ITC WITH EVC button.
- To FILE ITC WITH DSC: You need to click the PROCEED button and then select the certificate and click on the SIGN button.
- To FILE ITC WITH EVC: You have to enter the OTP sent on email and mobile number of the Authorized Signatory registered at the GST Portal and click on the VERIFY button.
- Click on PROCEED.
Step 6: The success message with ARN is displayed. The status is changed to filed.
After Form GST ITC-02A is successfully filed the transferee will get an e-mail and SMS notification for action taken i.e. acceptance/ rejection in the form.
On acceptance, the Electronic Credit Ledger of transferee will be updated accordingly.
On rejection, ITC will not be transferred to the transferee and the amount mentioned in ‘Form GST ITC-02A’ will be re-credited in the Electronic Credit Ledger of the transferor.
Next, you have to click on DOWNLOAD button to download Form GST ITC-02A.
Here’s form GST ITC-02A is displayed in PDF format.
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