ITC-03: GST Input Tax Credit – 3

Form ITC-03 is to be filed by a specified class of GST-registered taxpayers when the Input Tax Credit that has already been availed has to be reversed. In this article, we will help you understand:

What Is Form ITC-03?

The ITC-03 is a form that allows a taxpayer to reverse the Input Tax Credit already availed. This form is generally used by:

1. Taxpayers registered under the composition scheme. Example: When a composition dealer claims ITC which he/she is not entitled to, such ITC will have to be reversed.
2. Dealers whose goods and services become exempt. Example: In case certain taxable goods become exempt because of notification or rule, the ITC availed on such goods will have to be reversed.

The ITC-03 form is filed by the taxpayers to pay an amount equal to the ITC availed through the electronic cash or credit ledger. These payments can be made on account of -

• Inputs held in stocks,
• Inputs available in semi-finished goods or finished goods held in stock and
• Capital goods or plant and machinery held in stock.

Prerequisites To File Form ITR-03

• • The taxpayer should have availed the ITC earlier to file for a reversal in Form ITC-03.
  • The taxpayer should have opted for the Composition Scheme by filing CMP-02 and intimated the department about the selection at the beginning of the financial year.
  • The taxpayer should authenticate the Form ITC-03 with a digital signature or an Electronic Verification Code (EVC). The EVC will be sent to the registered mobile number or email ID of the taxpayer when requested.
  • An invoice validating the value of goods/services should be available with the taxpayer. In case if the invoice is not available, the taxpayer needs to have a certificate from a Chartered Accountant certifying the value of goods/services.

• The details in Form ITC-03 can be filled online through the GST portal or the offline utility(excel workbook) available on the portal.

When Should The Form ITC-03 Be Filed?

• If the taxpayer has opted for a composition scheme and is filing ITC-03 then, he/she needs to file this form only once, within 60 days from the commencement of the financial year. This is because taxpayers can opt for the composition scheme only once at the beginning of the financial year.
• If a taxpayer is filing the ITC-03 on account of goods/services becoming exempt, this form has to be filed as and when the relevant notifications are issued.

Important: The time limit to file form ITC-03 after filing form CMP-02 for FY 2020-21 was 30 June 2020. However, it was extended till 31 July 2020 for taxpayers freshly opting for the composition scheme.

What Are The Steps To File Form ITC-03?

As mentioned above, Form ITC-03 can be prepared directly on the GST portal or can be prepared offline using the utility. If the form is prepared offline, it will have to be uploaded on the GST portal to complete the filing process.

Offline Utility

In case users are using the Offline utility, they will have to:

• Step 1: Download the offline utility from here.
• Step 2:  Enter the asked information.
• Step 3: Log in to the GST portal and
• Step 4: Click on ‘Prepare Offline’ under ‘GST ITC-03’ and upload the prepared Form ITC-03.
• Step 5: Verify details using DSC or EVC.

Online Filing

• Step 1: Log in to GST Portal using the relevant credentials.

• Step 2: Click on the ‘Services’ tab and then select ‘Returns’. Here, click on ‘ ITC Forms’.

• Step 3: Select ‘Prepare Online’ under ‘GST ITC-03’.
• Step 4: Update details.

Under GST ITC-03, there are two options - 4(a) and 4(b):

• 4(a) - This option applies to the taxpayers opting for the composition scheme.
• 4(b) - This option is applicable for all taxpayers whose goods and services have become exempt.

For Composition dealers, the basic details of the taxpayer are auto-populated. For others, the date from which the exemption is effective has to be entered along with the other basic details. The other details required are (for both 4a and 4b) :

1. Details of Goods with invoices
2. Details of Goods without invoices
3. Amount of ITC paid and payable
4. Debit entries in cash ledger/credit ledger for payment of tax.

• Step 5:  Upload certificate. In case the invoice is not available (for Step 4), a certificate from a Chartered Accountant (CA) or Cost Accountant certifying the value of the goods/service needs to be uploaded. This is mandatory. Along with the certificate, the name of the person certifying, the name of the firm, membership number and certificate date need to be mentioned.
• Step 6: Make payment (If applicable). The taxpayer will have to make a payment equivalent of the ITC that is to be reversed. If the electronic cash ledger has a balance, the amount payable will get deducted from the balance. However, if there is no balance in the ledger, a cash payment will have to be made by generating a challan. This amount can be paid online or over the counter.
• Step 7:  Verify the ITC-03 with DSC or EVC.
• Step 8: Download the form for future reference.

What Happens If Form ITC 03 Is Not Filed?

If the taxpayer does not comply with the provisions of the act, he/she may be issued a show-cause notice by the GST department. This may lead to the withdrawal or cancellation of the composition scheme for the taxpayer.

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