Input Service Distributor in GST

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..... 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 proportionate di .....

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..... 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 Bangalore. The same has to b .....

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..... 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%) Turnover of Jabalpur unit = ₹ 3, 00, 00,000 (30%) Turnover of Delhi unit = ₹ 2, 00, 00,000 (20%) Computation of Input Tax Credit Distributed to various units is as follows:   Credit distributed to all un .....

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