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Under the GST law, different business establishments within the same state can either be declared as an ‘additional place of business’ by amending the registration of the principal place of business or obtain separate GST registration.
In case a new registration is taken, the establishment would have a separate GSTIN and a different record of the electronic ledgers/registers under the GST law.
Let us look at how this new establishment can avail ITC initially with the following topics:
The principal place of business (transferor) can transfer any unutilised balance of input tax credit to a new branch (transferee) in the ratio of the value of assets within a period of 30 days from obtaining the new registration. The value of assets is to be considered irrespective of whether or not ITC has been availed thereon. The transfer of ITC is to be done by the filing of Form GST ITC-02A by the transferor.
The method of ITC transfer is similar to the distribution of ITC by ISD, but within the same state/Union Territory and based on asset distribution.
It is possible that before a branch is set up within the same state, the capital goods, inputs or input services meant for that new branch are purchased by the head office (principal place of business). In such a case, the principal place of business would have already claimed ITC on such capital goods, inputs or input services.
Such ITC claims ideally belong to the branch since it ultimately consumes or uses the capital goods, input services or inputs. Thus, the Form GST ITC-02A is used to transfer such unutilised ITC to the newly established branch.
ITC-02A contains details of both the transferor and transferee such as GSTIN, legal name and trade name.
It also contains a table showing the details of ITC to be transferred, as given below:
Having unutilised balance in the Electronic Credit is not merely enough. The same should also be matched, i.e., the respective supplier should also upload the invoice details in GSTR-2A against which ITC is claimed.
The ITC rules allow the claim of provisional ITC up to 10% of the eligible ITC in GSTR-2A. Such ITC cannot be transferred.
The transferor of ITC must follow the below steps.
Step 1: Log in to the GST portal with valid credentials and navigate to the ITC-02A page.
From the homepage, go to Services > Returns > ITC Forms
Click on ‘Transfer ITC’ on the ‘GST ITC-02A’ tile, as given below:
The page on ‘Declaration of transfer of ITC in case of obtaining separate registration within a State or Union Territory’ is displayed.
Step 2: Enter the necessary details of ITC to be transferred.
Enter the GSTIN of the transferee. It will auto-populate the ‘Transferee Legal Name’ and ‘Transferee Trade Name’. Enter the amounts in the ‘Amount of matched ITC to be transferred’ column and click on ‘Save’.
A confirmation message saying ‘Details saved successfully’ will be displayed.
Step 3: Preview form ITC-02A before filing.
Click on the ‘Preview Draft GST ITC-02A (PDF)’ button to view the filled-up draft form.
The summary page will be displayed as shown below.
Step 4: File Form ITC-02A either using EVC or DSC.
Choose the declaration checkbox. Select the authorised signatory from the drop-down list and click on the ‘File ITC with EVC’ or the ‘File ITC with DSC’ button, whichever applicable.
If ‘File ITC with DSC’ button is selected, choose the digital signature and click on the ‘Sign’ button.
If ‘File ITC with EVC’ is selected, enter the OTP sent on the registered email address and mobile number.
A warning message will be displayed. Click on ‘Proceed’.
A message confirming successful submission appears along with the ARN. The filed form can also be downloaded in PDF format.
The Electronic Credit Ledger will be debited with the amount of transfer.
Upon the successful filing of ITC-02A, an email and SMS notification will also be automatically sent to the transferee (branch). The branch can either accept or reject the transfer following the below steps.
Step 1: Log in to the GST portal with valid credentials.
From the homepage, Go to Services > Returns > ITC Forms
Step 2: Take action by either accepting or rejecting the ITC transferred to you after due verification.
Click on the ‘Take Action’ button under the ‘GST ITC-02A’ tile.
Choose the applicable ARN, that is pending for action. There is a complete list of ARNs displayed with status as ‘Accepted’, ‘Rejected’ or ‘Pending for Action’.
The following details must be verified by the transferee GSTIN:
The transferee should verify the details provided and click on the ‘Accept’ button if they are in order. If they are not, click on the ‘Reject’ button.
If accepted, the confirmation message will be ‘You have successfully accepted declaration of transfer of ITC in GST ITC-02A. Kindly proceed for filing.’
If rejected, the confirmation message will be ‘You have rejected the declaration of transfer of ITC in GST ITC-02A. Kindly proceed for filing.’
Step 3: Submit the declaration for ITC transferred through ITC-02A
Select the declaration checkbox. Select the authorised signatory from the drop-down list and click on the ‘File ITC with EVC’ or the ‘File ITC with DSC’ button, whichever is applicable.
If the ‘File ITC with DSC’ button is selected, choose the digital signature and click on the ‘Sign’ button.
If ‘File ITC with EVC’ is selected, enter the OTP sent on the registered email address and mobile number. A warning message will be displayed. Click on ‘Proceed’.
The success message along with the ARN will be displayed. The filed form can also be downloaded in PDF format. The transferor will be notified of the response by email and SMS.
The Electronic Credit Ledger of the transferee will be credited as shown below:
The amount of ITC will not be transferred to the transferee and the same will be re-credited to the Electronic Credit Ledger of the transferor as follows: