Everything About Four Types of ITC Forms Under GST

Author: John Den Mark

The input tax credit is a tax eligible to be given back to the taxpayer as it is an input tax while purchasing goods for the course or furtherance of business. There are different types of input tax credit forms and basically, 4 of them are discussed.

Through this article, we will give you a brief knowledge about the four types of ITC Forms which are present in the GST Portal so that you can understand it more deeply.

How many types of ITC forms are present?

Given below are four types of ITC Forms-

  • ITC 01 - ITC for new GST Registration
  • ITC 02 - Transfer of ITC in case of sale/merger etc
  • ITC 03 - Reversal of ITC
  • ITC 04 - ITC on goods sent to Job Worker
    • ITC 01 - ITC for new GST Registration: Given below are the cases in which the declaration in ITC-01 must be mandatorily filed-
  • If an application for the registration of GST is done within a month (30 days) of becoming liable for payment of GST. [Section 18(1)(a)]
  • If the person chooses voluntary registration. [Section 18(1)(b)]
  • If the person leaves the composition scheme but still is considered as registered like the regular taxpayer. [Section 18(1)(c)]
  • If the exempt supply of the goods or services becomes a taxable supply. [Section 18(1)(d)]

    • Note: ITC (Input Tax Credit) is allowed concerning the inputs of stock, inputs present in semi-finished or finished goods, and cut-off date of capital goods.

    Given below are the points that must be kept in mind during filing the ITC-01 form:

  • Know which ITC (Input Tax Credit) can be claimed. For instance, the ITC for services cannot be claimed in the ITC-01 Form. In relation to capital goods, ITC can be claimed only if the composition dealer exits from the composition scheme and where the exempted supply turns out to be a taxable supply.
  • The details of the invoice of ITC must be available which has been made on the purchase till the cut-off date.
  • ITC-01 Form must be filed within a month (30 days) after the registration/ migration date to a regular scheme.
  • The input invoices can be claimed until one year while the capital goods invoices can be claimed until five years.
  • The taxpayer claims the ITC above INR 2 lakhs then he must upload the Chartered Accountant (CA) certificate or Cost Accountant certificate.
    • ITC 02 - Transfer of ITC in case of sale/merger etc: The taxpayer has the rights to apply for the transfer of the matched ITC (Input Tax Credit) which is present in the Electronic Credit Ledger to another organization for the business transfer in form of sale of business/merger/ demerger by filing the ITC declaration in GST ITC-02 form.

    Given below are the conditions for filing the ITC-02 Form:

  • If the registered taxpayer experiences the sale, de-merger, merger, lease, amalgamation, or transfer, then the taxpayer has to mandatorily file the ITC declaration for its transfer in the GST ITC-02 Form.
  • The taxpayer or the transferor must mandatorily match the ITC of the Electronic Credit Ledger from the date of merger/ acquisition/amalgamation/lease/ transfer.
  • Both the transferee and the transferor must register in the GST reign.
    • The transferor must file all the previous returns mandatorily.
  • All the pending transactions which are for the merging entity must be either accepted or rejected or modified and id other liabilities arises from the returns that have been filed by the transferor must be mandatorily paid.
  • The business transfer must be with the selected provision transfer of liabilities, which will be in relation to the demands of the tax, or cases of litigation or recovery. It should be given along with the certificate that has been issued by a CA (chartered accountant) or a cost accountant.

    • The transferring matched unutilized ITC by filing the GST ITC-02 form process is categorized in two steps-

  • The entity which acquired i.e. the transferor files declaration in FORM GST ITC-02 on GST portal, defining the accessible balanced ITC in all primary head.
  • The transferee either accepts or rejects it in the GST portal.

    • ITC 03 - Reversal of ITC:

    The ITC-03 can only be filed in two situations-

  • If the registered taxpayer chooses the Composition Scheme
  • If the taxable supply turns to be the exempt supply.

    • Given below are the condition to file the ITC 03 form:

  • The taxpayer must avail the ITC (Input Tax Credit) before to reverse it with ITC-03 Form.
  • The taxpayer should inform the department about choosing the composition scheme in CMP-02 at the starting of the year.
  • The taxpayer must have a DSC (Digital Signature Certificate) or an EVC (Electronic Verification Code).
  • If the details of the invoice are not present then a certificate from a CA is needed to certify the value of goods.

    • If a taxpayer chooses the composition scheme and files the ITC-03 Form then he must file this form every FY (Fiscal Year). This happens because if the taxpayer chooses the composition scheme at the starting of the FY (Financial Year) then he does not have any rights to back off till next FY.

    The ITC-03 Form must be filed within 2 months (60 days) from the beginning of the FY (financial year). If the taxpayer files the CMP-02 before 31st March 2018, then ITC-03 form can be filed until 180 days after the beginning of the FY. if the taxpayer files the ITC-03 form taking into consideration the services or products for becoming the exempt he must file the form when the notification is received.

    ITC 04 - ITC on goods sent to Job Worker:

    The GST ITC-04 Form must be submitted every 3 months i.e. quarterly. Given below details of challans must be includes-

  • Goods dispatched to a job worker or
  • Received from a job worker
  • Sent from one job worker to another
    • The quarterly form must be filed till the 25th day of the month after the quarter. For instance, for the October-December quarter, the last date is 25th January.

    The manufacturer has the rights to take the credit of the payment of tax on the purchase of goods that are sent on job work:

  • From the place of business of the principal
  • Directly from suppliers place of supply of such goods
    • Given below is the time period of the goods that must be received by the manufacturer-
  • Capital Goods within 3 years
  • Input Goods within 1 year

    • If no goods are received within the mentioned time period then such goods will be considered as the supply from the mentioned date and the payment of the tax will be done.