How to File ITC-02 on the GST Portal?

How to File ITC-02 on the GST Portal?

How to File ITC-02 on the GST Portal?

ITC-02 is a form used to transfer the Input Tax Credit (ITC) balance in the electronic credit ledger of a GSTIN to another GSTIN due to mergers and acquisitions.

What is ITC-02 and Who Must File It?

In the case of a business transfer through sale, merger, or demerger, a registered taxpayer can transfer the unutilized input tax credit from their electronic credit ledger to another business by filing a declaration in Form GST ITC-02. The transferor must file the form, and the transferee must take action. There is no specified time limit under the Act or Rules. The treatment of GST in such cases can be understood from our article titled "GST on the Transfer of Business."

Why You Need to File ITC-02

Since the implementation of GST, there have been multiple amalgamations, mergers, and demergers. In such cases, the transferor of the business will have unutilized ITC in their electronic credit ledger. They can transfer this ITC to the new business only by filing GST ITC-02. By filing this form, the unutilized credit of the transferor will be transferred to the electronic credit ledger of the transferee, thereby unblocking the working capital with 100% input tax credit claims.

Format and Contents of ITC-02

The form ITC-02 follows the following format:

ITC-02

The contents of Form GST ITC-02 are as follows:

1. Basic details: Provide the GSTIN, trade name, and legal name of the transferor and transferee.

2. ITC transfer details: Provide the details of the total available ITC and the amount of ITC to be transferred under each major head.

3. CA/Cost Accountant details: Provide the details of the certifying CA or Cost Accountant.

How to File ITC-02 on the GST Portal?

Before filing Form GST ITC-02, there are certain prerequisites:

1. The transferor and transferee of business must have valid GST registration.

2. The transferor must have ITC available in the electronic credit ledger.

3. The transferor must have filed all applicable GST returns of the past periods.

4. All pending transactions related to the merger must be accepted, rejected, or modified. Additionally, all liabilities related to past returns of the transferor must be paid off.

5. The transfer of business must be done with an accurate provision for the transfer of liabilities, certified by a Chartered Accountant or Cost Accountant, regarding stayed demand of tax, litigation, recovery, etc.

The process of transferring unutilized ITC is divided into two parts:

1. The transferor files GST ITC-02 stating the unutilized ITC.

2. The transferee accepts or rejects the transfer on the GST portal.

The transferor should follow these steps:

Step 1: Log in to the GST Portal.

Step 2: Navigate to Services > Returns > ITC Forms to open ITC-02.

ITC-02

Click on the "Prepare Online" button on the ITC-02 tile.

ITC-02

Step 3: Enter details of the transferee. Update the GSTIN of the transferee and enter the amount to be transferred under each major head. The Form GST ITC-02 will open, and the amount of unutilized ITC will be auto-populated from the electronic credit ledger. The transferor can choose to transfer the entire amount or partial ITC, as applicable.

ITC-02

Step 4: Provide the details of the certifying Chartered Accountant or Cost Accountant, including the name of the certifying firm, name of the certifying Chartered Accountant or Cost Accountant, membership number of the certifying firm, date of issue of the certificate, and attach a copy of the certificate. Click "Save."

ITC-02

A message will pop up, confirming that the details have been saved successfully.

ITC-02

Step 5: Proceed to file using either EVC or DSC. Check the declaration checkbox, select the authorized signatory from the drop-down list, and file the form using the DSC or EVC option.

ITC-02

Click "Proceed" on the warning message, enter the OTP, and click "Verify." A confirmation message will pop up.

ITC-02

What to Do After Filing Form ITC-02?

After filing Form GST ITC-02 by the transferor, the transferee can accept or reject the transfer by following these steps:

Step 1: Log in to the GST portal and navigate to Services > User Services > ITC-02 Pending for Action.

ITC-02

Step 2: Click on the ARN to view the details filed.

ITC-02

Step 3: The transferee can accept or reject the transfer.

ITC-02

If the transferee clicks "Accept," a confirmation message will pop up. The transferee can then proceed to file with DSC or EVC.

ITC-02

Upon successful transfer, a confirmation message will pop up. The transferee can go to the ITC-02 Pending for Action screen to confirm that the status has changed to "Accepted."

How to File ITC-02 on the GST Portal?

ITC-02 is a form used to transfer the Input Tax Credit (ITC) balance in the electronic credit ledger of a GSTIN to another GSTIN due to mergers and acquisitions.

What is ITC-02 and Who Must File It?

In the case of a business transfer through sale, merger, or demerger, a registered taxpayer can transfer the unutilized input tax credit from their electronic credit ledger to another business by filing a declaration in Form GST ITC-02. The transferor must file the form, and the transferee must take action. There is no specified time limit under the Act or Rules. The treatment of GST in such cases can be understood from our article titled "GST on the Transfer of Business."

Why You Need to File ITC-02

Since the implementation of GST, there have been multiple amalgamations, mergers, and demergers. In such cases, the transferor of the business will have unutilized ITC in their electronic credit ledger. They can transfer this ITC to the new business only by filing GST ITC-02. By filing this form, the unutilized credit of the transferor will be transferred to the electronic credit ledger of the transferee, thereby unblocking the working capital with 100% input tax credit claims.

Format and Contents of ITC-02

The form ITC-02 follows the following format:

ITC-02

The contents of Form GST ITC-02 are as follows:

1. Basic details: Provide the GSTIN, trade name, and legal name of the transferor and transferee.

2. ITC transfer details: Provide the details of the total available ITC and the amount of ITC to be transferred under each major head.

3. CA/Cost Accountant details: Provide the details of the certifying CA or Cost Accountant.

How to File ITC-02 on the GST Portal?

Before filing Form GST ITC-02, there are certain prerequisites:

1. The transferor and transferee of business must have valid GST registration.

2. The transferor must have ITC available in the electronic credit ledger.

3. The transferor must have filed all applicable GST returns of the past periods.

4. All pending transactions related to the merger must be accepted, rejected, or modified. Additionally, all liabilities related to past returns of the transferor must be paid off.

5. The transfer of business must be done with an accurate provision for the transfer of liabilities, certified by a Chartered Accountant or Cost Accountant, regarding stayed demand of tax, litigation, recovery, etc.

The process of transferring unutilized ITC is divided into two parts:

1. The transferor files GST ITC-02 stating the unutilized ITC.

2. The transferee accepts or rejects the transfer on the GST portal.

The transferor should follow these steps:

Step 1: Log in to the GST Portal.

Step 2: Navigate to Services > Returns > ITC Forms to open ITC-02.

ITC-02

Click on the "Prepare Online" button on the ITC-02 tile.

ITC-02

Step 3: Enter details of the transferee. Update the GSTIN of the transferee and enter the amount to be transferred under each major head. The Form GST ITC-02 will open, and the amount of unutilized ITC will be auto-populated from the electronic credit ledger. The transferor can choose to transfer the entire amount or partial ITC, as applicable.

ITC-02

Step 4: Provide the details of the certifying Chartered Accountant or Cost Accountant, including the name of the certifying firm, name of the certifying Chartered Accountant or Cost Accountant, membership number of the certifying firm, date of issue of the certificate, and attach a copy of the certificate. Click "Save."

ITC-02

A message will pop up, confirming that the details have been saved successfully.

ITC-02

Step 5: Proceed to file using either EVC or DSC. Check the declaration checkbox, select the authorized signatory from the drop-down list, and file the form using the DSC or EVC option.

ITC-02

Click "Proceed" on the warning message, enter the OTP, and click "Verify." A confirmation message will pop up.

ITC-02

What to Do After Filing Form ITC-02?

After filing Form GST ITC-02 by the transferor, the transferee can accept or reject the transfer by following these steps:

Step 1: Log in to the GST portal and navigate to Services > User Services > ITC-02 Pending for Action.

ITC-02

Step 2: Click on the ARN to view the details filed.

ITC-02

Step 3: The transferee can accept or reject the transfer.

ITC-02

If the transferee clicks "Accept," a confirmation message will pop up. The transferee can then proceed to file with DSC or EVC.

ITC-02

Upon successful transfer, a confirmation message will pop up. The transferee can go to the ITC-02 Pending for Action screen to confirm that the status has changed to "Accepted."

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