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Section 18(3) — transfer of unutilised ITC on SALE / MERGER / AMALGAMATION / LEASE / TRANSFER of business:
AITC lapses
BUnutilised ITC can be transferred to the buyer/successor, subject to specific liabilities being transferred and prescribed conditions (Form ITC-02)
CITC is partly refunded
DITC continues with the seller
Answer & Solution
Correct answer: B. Unutilised ITC can be transferred to the buyer/successor, subject to specific liabilities being transferred and prescribed conditions (Form ITC-02)
1. Sec 18(3) — registered person who undergoes a sale/merger/demerger/lease etc. may transfer unutilised ITC to the new entity provided specific liabilities are also transferred.
2. Rule 41 — Form GST ITC-02 must be filed electronically, and the transferee must accept the ITC. CA certificate may be required.
3. The acquirer / successor then has the ITC in their electronic credit ledger.
_Source: ICAI BoS CA Final Paper 8, Ch 6 "Input Tax Credit", §Sec 18(3) + Rule 41_
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