ITC TRANSFER MECHANISM

Dear Dharmindra .

ITC can be transferred under following conditions:

1. As per Section 18(3) of CGST r/w rule 41 of CGST , registered person shall, in the event of sale, merger, de-merger, amalgamation, transfer or change in the ownership of business for any reason, furnish the details of sale, merger, de￾merger, amalgamation, lease or transfer of business, in FORM GST ITC-02, electronically on the common portal along with a request for transfer of unutilized input tax credit lying in his electronic credit ledger to the transferee
Example :
A company XYZ is registered in two States of M.P. and U.P.
Its total value of assets is worth Rs. 100 crore, while its assets in State of
M.P. and U.P are Rs 60 crore and Rs 40 crore respectively. It demerges a
part of its business to company ABC. As a part of such demerger, assets of XYZ amounting to Rs 30 Crore are transferred to company ABC in
State of M.P, while assets amounting to Rs 10 crore only are transferred to
ABC in State of U.P. (Total assets amounting to Rs 40 crore at all-India
level are transferred from XYZ to ABC). The unutilized ITC of XYZ in
State of M.P. shall be transferred to ABC on the basis of ratio of value of
assets in State of M.P., i.e. 30/60 = 0.5 and not on the basis of all-India
ratio of value of assets, i.e. 40/100=0.4. Similarly, unutilized ITC of XYZ
in State of U.P. will be transferred to ABC in ratio of value of assets in
State of U.P.,i.e. 10/40 = 0.25.

2. As per Rule 41A , A registered person who has obtained separate Registration for multiple places of business (With in State) & who wants to transfer wholly or partly, Unutilised ITC lying in Credit Ledger to any or all of Newly registered place business, shall furnish within 30 days from obtaining such separate Registration by filing ITC 02A on common portal.

Hence only in above conditions the ITC in credit ledger can be transferred.

Thank you very much Sir for very useful suggestions

You are always welcome