Filing of Form GST ITC-03: All you need to know

Ruchi Gandhi

06 Jun, 2024

Form GST ITC-03 is a form which is submitted by registered taxpayers in special circumstances where the input tax credit availed has to be reversed. Where a taxpayer opts for composition scheme or where his supplies become exempt, he has to file a declaration to intimate ITC reversal/payment of tax on inputs held in stock. In this article, we shall discuss the provisions concerning Form GST ITC-03 and the collateral information which is required to be furnished therein.

What is Form GST ITC-03 for?

Form GST ITC-03 is a form which is to be furnished to pay an amount through the common portal, either by way of debit in the electronic credit ledger or through electronic cash ledger. Such amount is equivalent to the credit availed by the taxpayer in respect of:

• Inputs held in stock, and
• Inputs contained in semi-finished goods or finished goods held in stock, and
• Capital goods held in stock

Here, the taxpayer refers to one who opts for composition scheme, i.e., seeks to shift from normal tax regime to the composition scheme or where goods or services or both become wholly exempted.

Reversal of ITC:

Who is required to file ITC-03?

Form GST ITC-03 is to be furnished by a registered taxpayer who has availed input tax credit (ITC), and

• Who opts for a composition scheme, or
• Where goods or services or both supplied/rendered by him become wholly exempted from tax

What things are to be declared in ITC-03?

Form GST ITC-03 entails details of the stock, as on the date immediately preceding the date on which the composition right is exercised or, as the case may be, the date of such exemption, in respect of the inputs kept in stock, the inputs found in semi-finished or finished goods held in stock and the capital goods, on which the input tax credit has been availed and the same must be reversed or paid if used, in compliance with section 18(4) of the CGST Act, 2017.

Since a taxpayer shifting from normal tax regime to composition tax scheme would breach the ‘GST and input tax’ chain, he cannot avail any ITC. However, if he has already claimed an ITC on goods lying in his stock as on the date immediately preceding the FY from which composition scheme is applicable, he needs to reverse such ITC and intimate via Form ITC-03. Similarly, where goods or services supplied by the taxpayer become wholly exempt, then in that case also, the input credit claimed earlier needs to be reversed.

Are there any pre-conditions for the filing of Form GST ITC-03?

The following prerequisites must be met before the filing of Form GST ITC-03:

• In the form GST CMP-02, the taxpayer has filed an intimation to opt for a composition scheme, or
• The Government has issued notifications relating to the exemption of goods or services, or both supplied by taxpayers and which have become completely exempt, and
• ITC has been used/availed by the taxpayers for inputs held in stock and inputs contained in semi-finished goods or finished goods held in stock and on capital goods held in stock.

By when does one need to file GST ITC-03 if he has opted to pay tax under composition?

As per GST law, in the event that an intimation has been filed in Form GST CMP-02 on or before March 31, 2018, the taxpayer shall furnish GST ITC-03 within 180 (one hundred and eighty) days from the day on which the tax under composition begins to be paid.

However, in the event that an intimation in Form GST CMP-02 is filed after March 31, 2018, the taxpayer shall furnish GST ITC-03 within 60 (sixty) days of the beginning of the financial year for which the option of paying the compositional tax is exercised.

As part of a Covid-19 relaxation in due dates notified by CBIC, it has been provided that if a taxpayer opts for the composition scheme for the financial year 2020-21, he can now file for reversal of input tax credit, by the filing of Form GST ITC-03 till 31^st July 2020, instead of the earlier date of 30^th May 2020.

Furthermore, if a taxpayer submits form GST ITC-03 because of the exemption of products or services, he should file the form as and when the notifications of such exemption are issued.

Here, it is of significance to note that a registered person can only file ‘Form GST ITC-03’ once in a financial year to apply for the composition scheme. Conversely, it can be filed several times for reversal/payment of tax in case of exemption of supplies, as and when notices are given by government exempting such supplies.

Does a taxpayer need to file GST ITC-03 only for the GSTIN for which he has filed an intimation to opt for paying tax under Section 10?

Any intimation filed to pay tax under Section 10 (composition scheme) with respect to any place of business in any State or territory of the Union shall be deemed to constitute an intimation with respect to all other places of business reported on the same Permanent Account Number. Hence, it can be inferred to mean that form GST ITC-03 needs to be filed for all GSTINs on the same PAN.

From where can Form GST ITC-03 be accessed?

Login with valid credentials to the GST Portal and click the Services > Returns > ITC FORMS > ITC03 command to file GST ITC-03. The form can be filed in both online and offline mode.

What details are to be given in Form GST ITC-03?

The information concerning the quantity and value of all stock of inputs held in stock, inputs contained in semi-finished or finished goods held in stock, and capital goods has to be provided separately where invoices (of such purchases) are available and where invoices are not available with the taxpayer.

In addition, the following details are required to be given:

• GSTIN, Legal name and Trade name
• Details of an application filed to opt for composition scheme
• Date from which exemption is effective
• Details of ITC claimed on inputs held in stock (where the invoice is available)
• Details of ITC claimed on inputs contained in semi-finished and finished goods held in stock (where the invoice is available)
• Details of ITC claimed on capital goods held in stock (where the invoice is available)
• Details of ITC claimed on inputs held in stock and as contained in semi-finished /finished goods held in stock (where the invoice is not available)
• Details of ITC claimed on capital goods held in stock (where the invoice is not available)
• The total liability of ITC payable (to be reversed) and being paid off after setting off with the balance available in the respective Electronic Cash Ledger or Electronic Credit Ledger
• The balance of credit lying in the Electronic Credit Ledger will lapse on the filing of this form, after ITC reversal/payment of tax, in case of the option being exercised for composition scheme.

What value should be adopted for filling input details where invoices are not available?

It is provided under the CGST Act that where there are no invoices available to calculate the value of ITC availed, the registered individual shall estimate the sum based on the prevailing market price of the products on the effective date of the occurrence of any of the events which required the filing of Form GST ITC-03. Such details furnished shall be duly certified by a practicing-chartered accountant or cost accountant. A certificate to this effect needs to be uploaded with the Form GST ITC-03 before filing the form.

Takeaway

Also, read: Changes in Utilization of Input Tax Credit under the GST Act