Can I distribute Input Tax Credit to my branches?

Yes, if you are an Input Service Distributor (ISD)

Input Service Distributor

  • Who: Supplier of Goods/Services, who receives tax invoice for the services used by it’s different branches with same PAN.
  • Why ISD: To Distribute Input tax credit to the ultimate users of service.
  • How to take registration: Form REG-01.
  • Manner of Distribution : By issuing of tax invoice to different branches from the head office or principal office.
  • Basis for Distribution : Distribute of ITC in the proportion of TURNOVER (Distribute only to those branches which has used the common service)
  • Example : M/s XYZ Ltd  head Office at Goa, is registered as ISD. It has 3 units in different states namely ‘Goa’, ‘Punjab’ and ‘Kerala’ which are operational in the current year. M/s XYZ Ltd furnishes the following information for the month of July, 2017.
    • CGST paid on services used only for Goa Unit: Rs.3,00,000/-
    • IGST, CGST & SGST paid on services used for all units: Rs.12,00,000/-
Turnover in previous Year
Units Turnover (Rs)
Goa Unit 5,00,000 (50%)
Punjab Unit 3,00,000 (30%)
Kerala Unit 2,00,000 (20%)
Total 10,00,000 (100%)

Computation of Input Tax Credit Distributed to various units is as follows:

Credit distribution
Particulars Total Credit Available Goa Unit Punjab Unit Kerala Unit
CGST paid on services used only for Goa Unit. 3,00,000 3,00,000
IGST, CGST & SGST paid on services used in all units Distribution on pro rata basis to all the units which are operational in the current year 12,00,000 6,00,000(50%*12Lakh) 3,60,000(30%*12Lakh) 2,40,000(20%*12Lakh)
Total 15,00,000 9,00,000 3,60,000 2,40,000
  • Can I distribute all ITC : ITC on common services can only be distributed. (ITC on raw material and capital goods are ineligible for distribution)
  • Can RCM credit be distributed: No
  • Returns to be filed: Only GSTR 6 by 13th of the succeeding month.
  • Conclusions :BHead office can distribute the input tax credit available on purchase of Common services or goods (which are used by different branches) by just obtaining a ISD Registration and issuing tax invoice to the branches in this connection.

Disclaimer:"The information contained herein is only for informational purpose and should not be considered for any particular instance or individual or entity. We have obtained information from publicly available sources, there can be no guarantee that such information is accurate as of the date it is received or it will continue to be accurate in future. No one should act on such information without obtaining professional advice after thorough examination of particular situation."

Prepared By

Veeresh Krishna Alawandi

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Contact :

Ankit C Shetty