TMI BlogInput Service Distributor in GSTX X X X Extracts X X X X X X X X Extracts X X X X ..... ervices only and not goods (inputs or capital goods). Companies may have their head office at one place and units at other places which may be registered separately. The Head Office would be procuring certain services which would be for common utilization of all units across the country. The bills for such expenses would be raised on the Head Office. But the Head Office itself would not be providing any output supply so as to utilize the credit which gets accumulated on account of such input services. Since the common expenditure is meant for the business of all units, it is but natural that the credit of input services in respect of such common invoices should be apportioned between all the consuming units. ISD mechanism enables such pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted shall be equal to the aggregate of the amount of input tax credit of central tax and State tax or Union territory tax that qualifies for distribution to such recipient. The input tax credit on account of integrated tax shall be distributed as integrated tax. Let s take an example to understand this concept. The Corporate office of ABC Ltd., is at Bangalore, with its business locations of selling and servicing of goods at Bangalore, Chennai, Mumbai and Kolkata. Software license and maintenance is used at all the locations, but invoice for these services (indicating CGST and SGST) are received at Corporate Office. Since the software is used at all the four locations, the input tax credit of entire services cannot be claimed at Bangalor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i which are operational in the current year. M/s XYZ Ltd furnishes the following information for the month of July, 2017 asks for permission to distribute the below input tax credit to various units. i. CGST paid on services used only for Mumbai Unit: Rs.300000/- ii. IGST, CGST SGST paid on services used for all units: Rs.1200000/- Total Turnover of the units for the Financial Year 2015-16 are as follows: - Unit Turnover (Rs.) Total Turnover of three units = ₹ 10, 00, 00,000 Turnover of Mumbai unit =Rs. 5, 00, 00,000 (50%) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued. The details in the returns will be made available to the respective recipients in their GSTR 2A. The recipients may include these in its GSTR-2 and take credit. An ISD shall not be required to file Annual return. An ISD cannot accept any invoices on which tax is to be discharged under reverse charge mechanism. This is because the ISD mechanism is only to facilitate distribution of credit of taxes paid. The ISD itself cannot discharge any tax liability (as person liable to pay tax) and remit tax to government account. If ISD wants to take reverse charge supplies, then in that case ISD has to separately register as Normal taxpayer. Conclusion: Thus the concept of ISD is a facility made available to business having a large share o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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