In
this article, Author have tried to simplified the process of filing the form
ITC-02A, from one GSTN No. to another GSTN No. of a "Registered Person" having same PAN.
Need of
introducing this new Form ITC-02A by GST department.
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 head office (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 unutilized ITC to the newly established branch.
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.
Before
going into this deeper, first we will analyse the section 25(2) of CGST act where
the abstract of the section is as follows:
“A
person seeking registration under this Act shall be granted a single
registration in a State or Union territory:
Provided
that a person having multiple places of business in a State or Union territory
may be granted a separate registration for each such place of business, subject
to such conditions as may be prescribed.”
The important part of
this proviso, where it says, if a person wants to take separate registration
within same state for different business verticals, he can take.
For Example, let's say
Mr. A is having registration
in Delhi state and at same time he is planning to set up another business where
the risks and rewards from the new business was entirely different from the
earlier one. He can take separate registration in Delhi itself as it is
permitted by proviso to section 25(2).
Following points should be kept in mind while
transferring the matched ITC available:
· Amount
of matched ITC available: The amounts in this column are auto-populated.
Having unutilized balance in Electronic Credit Ledger
may not be enough. The same should also be matched, i.e. the respective
supplier should have also uploaded the invoice details in GSTR-2A against which
ITC is claimed.
The ITC rules allows the claim of provisional ITC up to
10% of the eligible ITC in GSTR-2A. Such ITC can’t be transferred.
· Calculation
of matched ITC transferred: As per Proviso the Rule 41A, ITC shall be
transferred to the newly registered entities in the ratio of assets held
by them at the time of registration.
It is to be noted that, value of
assets means, Value of entire assets of the business (whether or not input
tax credit has been availed thereon)
For better understanding purpose an example as follows:
ITC available in business 1 is Rs.
5,00,000/-
Assets X value is Rs. 10,00,000/- (ITC
was not availed and ITC portion was capitalized and added to asset value),
Assets Y value is Rs. 15,00,000/- on
which ITC has been taken. (Assets Y was transferred to new business 2)
Now ITC can be transferred to
business 2 be
= 5,00,000 X 15,00,000/25,00,000 = Rs.
3,00,000/-
Note: ITC can be
transferred or received separate each major head wise and not on cumulative
basis. It means Proportionate of IGST/SGST/CGST of each head to be calculated
separately.
How to file
Form ITC-02A on the GST portal ?
The transferor must follow the below
steps.
Step 1: Log
in to the GST Portal with valid login 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:
Click on ‘Transfer ITC’ on the ‘GST ITC-02A’ tile, as given below:
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.
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.
Step 1 –
Login to GST Portal using transferee login credentials.
Step 2 –
Select the “ITC Form” in the Return Option of the Services Tab.
Step 3 –
Select the ITC-02A form and then click on the ‘Take Action’ Tab.
Step 4 –
Verify the details provided and select accept- Once you select accept a
confirmation message of acceptance will reflect. Thereafter Select the check
box for declaration and select authorised signatory- Select “File ITC with EVC”
or “File ITC with DSC” (whichever option is preferable).
Step 5 –
Verify in the Credit Ledger whether the ITC has been credited to the transferee
and the same has been debited from the transferor.
How this benefitted to registered
person
Earlier scenario, where
ITC-02A was not enabled, credit availed by the transferee (Prior Scenario of
ITC-02A):
1.
Transferor used to book sales entry to Transferee, where
it unnecessarily increases Turnover without actual sales made (because both
Transferee and Transferor units are of single person) – Now this type of
Transactions will be ended.
2.
The cost of booking sales transaction is also high – how
??
We will understand this by our earlier
example to transfer the credit of 3,00,000/- and entity was dealing in GST
rated goods of 5% then transferor needs to book sale of 3,00,000/5% = 60,00,000/-
which drastically increases turnover
in the books and leads to unnecessary complications like GST Departmental
Audit and compliance with GSTR 9C and some other sections of the GST
act where the turnover limits are the criteria for enabling such provisions.
Author’s Comment: GST
ITC-02A Form will enable seamless flow of credit within the same organisation.
****
DISCLAIMER : THE ENTIRE CONTENT OF THIS DOCUMENT HAVE BEEN PREPARED ON THE BASIS OF RELEVANT PROVISIONS AND AS PER THE INFORMATION EXISTING AT THE TIME OF PREPARATION. THOUGH UTMOST EFFORTS HAS MADE TO PROVIDE AUTHENTIC INFORMATION, IT IS SUGGESTED TO HAVE BETTER UNDERSTANDING. KINDLY CROSS CHECK THE RELEVANT SECTIONS AND RELATED RULES TO IT. THE OBSERVATION OF THE AUTHOR ARE THE PERSONAL VIEW AND AUTHOR DO NOT TAKE RESPONSIBILITY OF THE SAME. IN NO EVENT I SHALL BE LIABLE FOR ANY DIRECT AND INDIRECT RESULT FROM THIS ARTICLE. THIS IS ONLY A KNOWLEDGE SHARING INITIATIVE.
THE AUTHOR - CA ASHU BANSAL (ASSOCIATE PARTNER AT AMKV & ASSOCIATES)
CAN BE REACHED AT | CAASHUBANSAL5@GMAIL.COM | M: 9034674871 |
