GST Input Tax Credit – 3 – Steps to file ITC – 03 on GST Portal

ITC 03 is a form that is filed in special circumstances when input tax credit that has been availed has to be reversed. Are you a person who opted for Composition scheme this year or has any of the item on which ITC was availed become exempt even before you could utilise? Use ITC-03 to reverse the ITC.

What is GST ITC 03 and who should file it?

ITC 03 form is filed by a taxpayer who has to pay an amount equal to the ITC through electronic credit or cash ledger. Payments may be on the account of ITC on:

• Input held in stock
• Input contained in semi-finished goods or finished goods held in stock
• Capital goods held in stock

It should be filed under two situations:

What are the prerequisites to file ITC 03?

To file ITC 03, the following conditions have to be satisfied:

• Input tax credit should have been availed by the taxpayer earlier in order to reverse it using ITC 03
• The taxpayer should intimate the department regarding opting for composition scheme in CMP-02 at the beginning of the year.
• The taxpayer must possess a digital signature certificate (DSC) or an electronic verification code (EVC)
• In case invoice details are not available, a certificate from a Chartered Accountant is required certifying the value of goods
• The offline utility can be downloaded from the portal and data entry can be made offline. Offline utility (excel sheets) works best in windows 7 with internet explorer 10. Detailed system requirements are available on the website.

What are the steps to file ITC 03 on the portal?

Step 1: Login to GST portal using login credentials.

Step 2:Select ITC-03 Form and relevant mode of filing
Select -Services tab——> Returns——->ITC Forms from drop down options as below: 

Under ITC-03 capsule, you have either of two modes to file the form. Select either ‘Prepare online’ or ‘Prepare offline’ option.

1. Offline mode: download offline utility on Homepage, fill data, login and upload file after clicking ‘Prepare Offline’.
2. Online mode: Enter data online and file as discussed in the below steps

Step 3: Select either 4(a) or 4(b) as the case may be:
4(a) option applicable for taxpayers opting for composition scheme
4(b) option applicable for taxpayers whose goods or services become exempt
After proceeding with the above selection, the entry screen for ITC 03 opens. Let us now see simultaneously the steps after selecting option 4(a) or option 4(b) above.

Step 4: Enter details of Goods with or without Invoice under two separate tabs:
After selecting 4(a) or 4(b) respectively, make necessary selection
The following webpage is displayed by selecting 4(a)

The following webpage is displayed on selecting 4(b)

Basic taxpayer’s details are auto populated. If application has been applied for opting into the composition scheme and is pending, ARN number with date of opting into scheme appears. The ITC 03 form has 4 options as seen above. These options are common for both the selections i.e. 4(a) and 4(b).

The options are as follows:

• Goods details with invoices
• Goods details without invoices
• Amount of ITC payable and paid
• Debit entries in cash/ credit ledger for tax payment

We can observe from the above, that the date from which exemption is effective has to be filled along with the other basic details and mentioned above.

Note that the other options are common between both the selections and has been discussed in the following paragraphs.

Comparison of selecting goods details with invoices and goods detail without invoice option under common both 4(a) and 4(b):

Goods details with  invoice	Goods details without invoice
A selection has to be made between GST or CX/VAT	A selection has to be made between GST or CX/VAT
After entering the details, the invoice can be saved and can be edited later as well	After entering the details, the invoice can be saved and can be edited later as well
This step can be used when the number of invoices is less than 500. When the invoices are more than 500, they have to be uploaded separately	This step can be used when the number of invoices is less than 500. When the invoices are more than 500, they have to be uploaded separately
–	CA certificate required

In case of 4(a) only:

Goods details with  invoice	Goods details without invoice
Under this (GST or CX/VAT), the taxpayer has to give details of date from when taxpayer has opted for composition scheme and the ARN, the supplier’s details for which input tax credit has to be reversed (name,registration number), the invoice details (number and date)and details of the goods (quantity, HSN, taxable amount, tax paid etc.)	Under this (GST or CX/VAT), the taxpayer has to give details of date from when taxpayer has opted for composition scheme and the ARN, the supplier’s details for which input tax credit has to be reversed (name,registration number) and details of the goods (quantity, HSN, market value of similar goods etc.)

In case of 4(b) only:

Goods details with  invoice	Goods details without invoice
Under this (GST or CX/VAT), the taxpayer has to give details of date from when exemption became effective, the supplier’s details for which input tax credit has to be reversed (name,registration number), the invoice details (number and date)and details of the goods (quantity, HSN, taxable value, tax etc.)	Under this (GST or CX/VAT), the taxpayer has to give details of date from when exemption became effective, the supplier’s details for which input tax credit has to be reversed (name,registration number) and details of the goods (quantity, HSN, market value of similar goods etc.)

Step 5: Upload CA/CMA certificate online with name of the person certifying, firm, membership number, certificate date.
When some details are added or when invoices are not available with the taxpayer (in this case value of goods will be based on market value of similar goods) a certificate from a Chartered Accountant or Cost Accountant (CA) is mandatory.

Step 6: On main page, select the Tab-Amount of ITC payable or paid option wherein the taxpayer’s electronic ledgers will be shown as follows:

The input tax credit availed (liability in our case) can be paid off using the availability of credit and cash in the ledger shown above. The column ‘paid through ITC’ is auto-populated by the system but it can be edited. As and when this column changes, the cash column also changes. If the cash is available in the electronic cash ledger, it will get deducted. If not, cash payment has to be made by generating a challan as discussed in the next step.

Step 7: Make payment of ITC to be reversed, if necessary.
A challan gets generated with auto-populated details of the amount to be  paid. This amount can be paid online by NEFT/RTGS or over the counter.The form can be previewed before making the payments for the same. After this, changes cannot be made.  Click on ‘Make payment’ option and pay the amount liable. Click on ‘View debit entries in cash/ credit ledger for tax payment to view the updated balance in the ledgers.

Step 8: Verify the ITC-03 with DSC or EVC.
After making the payment, a digital signature can be attached and the form can be filed. The form can be signed either by using a DSC or EVC. The filed form can be downloaded for future reference.  

When should a form ITC 03 be filed?

If a taxpayer is filing ITC 03 on account of opting for composition scheme, he should file this form once in a financial year. This is because once he opts for composition scheme in the beginning of the financial year, it cannot be changed till the next financial year.

This form has to be filed within 60 days from the commencement of the financial year. If CMP 02 has been filed before March 31 2018, then ITC 03 has to be filed within 180 days of commencement of the scheme If a taxpayer is filing ITC 03 on account of products or services becoming exempt, he should file the form as and when the notifications are issued.

What are consequences of not filing ITC-03?

In case a composition dealer does not comply with the provisions of the Act, the officer may issue a show cause notice which may lead to denial of the composition scheme to the taxpayer.