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ITC 03 is a form that is filed under special circumstances. Form GST ITC – 03 is to be filled up by those taxpayers who opt for the composition scheme or where goods or services or both supplied by taxpayer becomes wholly exempt. This form is to pay an amount, by way of debit in the electronic credit ledger or electronic cash ledger, equivalent to credit availed in respect of Inputs and Capital goods.

Who should file Form GST ITC-03:

ITC 03 form is filed by a taxpayer who has to pay an amount equal to the ITC through electronic credit or electronic cash ledger. Payments may be on the account of ITC on :

  • Input held in stock
  • Input contained in semi-finished goods or finished goods held in stock
  • Capital goods held in stock

When Form GST ITC-03 needs to be filed?

It should be filed under two situations :

  • Situation 1: When a registered dealer opts for the Composition scheme, then ITC is not available to them. Therefore, they have to reverse ITC in ITC 03.
  • Situation 2: When taxable goods become exempt. ITC has to be reversed in Form GST ITC-03.

What are the prerequisites to file Form GST ITC-03?

1. Input tax credit should have been availed by the taxpayer earlier to reverse it using Form GST ITC-03.

2. The taxpayer should intimate the department regarding opting for the composition scheme in CMP-02 at the beginning of the year.

3. The taxpayer must possess a digital signature certificate (DSC) or an electronic verification code (EVC).

4. In cases where invoice details are not available, a certificate from a Chartered Accountant is required certifying the value of goods.

Frequency to file Form GST ITC-03:

1. If ITC 03 is on account of availing the composition scheme, then a registered person can file ITC 03 only once in a financial year while opting for the composition scheme. The form is to be filed within 60 days from the commencement of the financial year.

2. In the case of exempt supplies, ITC 03 can be filed multiple times, as and when notifications exempting such supplies are issued by the Government.

How to reverse GST?

Registered taxpayers can utilize their balances in the electronic credit ledger and the electronic cash ledger. If the balance is short, then it should be paid through generating challan.

Modes of signing Form GST ITC-03

ITC 03 can be signed by Digital Signature or by EVC.

What happens after Form GST ITC 03 is filed?

1. After filing ITC 03, an ARN will be generated on the GST portal, and the same will be communicated to the taxpayer by SMS on their registered mobile number and via email on their registered email id respectively.

2. The balance of credit lying in Electronic Credit Ledger will lapse on filing this form, after ITC reversal /payment of tax, in case of Opt-in for composition scheme.

What are the consequences of not filing Form GST ITC-03?

 If the registered taxpayer does not comply with the provisions of the Act and has opted for the composition scheme, then the officer may issue a show cause notice, which may lead to the denial of the composition scheme to the registered taxpayer.

Conclusion: Navigating the complexities of GST compliance entails a thorough understanding of forms like GST ITC 03. By adhering to filing requirements, utilizing appropriate modes of signing, and comprehending the consequences of non-compliance, taxpayers can ensure seamless adherence to regulatory frameworks and mitigate potential risks. Stay informed, stay compliant!

Author Bio

CA Hiral Pala, Practicing Chartered Accountant. Contact No : (91) 8104067285 / (91) 8286750579 Email ID : Area of practice : Income tax, TDS, PT, GST, Audit, Company/LLP Incorporation or closure, Business consultancy, Startups, MSME etc. Having vast experience of 12 years in View Full Profile

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June 2024