When GST was first implemented, there was a rule that a taxpayer cannot obtain more than one GST registration within the same state/Union Territory (UT) unless he/she has a separate line of business. Later the rule was modified so that one can obtain more than one registration within the same state/UT without any restrictions.
This rule was changed for the convenience of the taxpayers and to conduct the branch-wise business with ease. Therefore, few taxpayers obtained a separate GST registration for their branches within the state/UT as an additional place of business.
It is certain that before a branch is set up within the same state/UT, the inputs, input services or capital goods required for the new department are bought by the principal place of business (say, head office).
In such cases, the principal place of business would have already claimed Input Tax Credit (ITC) on such inputs, input services or capital goods. Those ITC claims are related to the branch since it is the final consumer for those inputs, input services or capital goods.
Now the problem raises on how to claim that unutilised ITC related to the additional place of business, i.e. new GSTIN which was already claimed under the principal place of business, i.e. existing GSTIN. Thus, the form GST ITC-02A comes into the picture to transfer such unutilised ITC to the newly established branch.
A taxpayer can transfer unutilised ITC to the additional place of business which was obtained within the same state/UT using the form GST ITC-02A. The rule 41A of the CGST Rules, 2017 deals with the transfer of ITC on getting a separate registration for multiple places of business within a state/UT. The principal place business is called as ‘Transferor’, and the new additional place of business is called as ‘Transferee’.
Also Read: Can You Still Claim Pre-GST Transitional Tax Credit?
The transferor can transfer any unutilised balance of ITC to a transferee in the ratio of the value of assets within 30 days from obtaining the new registration. The total cost of assets is to be considered irrespective of whether or not ITC has been availed thereon. The transferor should file GST ITC-02A for transfer of ITC.
GST ITC-02A contains details of both the transferor and transferee such as GSTIN, legal name and trade name. It also includes a table showing the details of ITC to be transferred, tax/cess, amount of matched ITC available, and matched ITC to be transferred. Matched ITC means the ITC for which supplier had uploaded the invoice details in GSTR-2A. Hence, 10% of provisional ITC should not be included while calculating matched ITC.
The following procedure to be followed while filing GST ITC-02A:
- The transferor has to file GST ITC-02A by navigating to Services > Returns > ITC Forms > Transfer ITC after logging into the GST portal.
- An e-mail and SMS notification will be sent to the transferee to accept or reject the transferred ITC.
- The Electronic Credit Ledger (ECL) of the transferor will get updated with the transferred ITC.
- Now the transferee can take action by navigating to Services > Returns > ITC Forms > Take action.
- The transferee cannot modify the ITC amount, and he/she can accept or reject the transferred ITC.
- An e-mail and SMS notification will be sent to the transferor once the transferee completes taking action.
- Once the transferee accepts, the transferee ECL will be updated accordingly.
- If the transferee rejected it, the amount mentioned in GST ITC-02A would be re-credited in the ECL of transferor entity.
For any clarifications/feedback on the topic, please contact the writer at dvsr.anjaneyulu@cleartax.in
DVSR Anjaneyulu known as AJ, is a Chartered Accountant by profession. Loves to listening to music & spending time with family and friends.
