Distribution of Credit by Input Service Distributor (ISD) In GST – Section 20
- Blog|GST & Customs|
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- 2 Min Read
- By Taxmann
- Last Updated on 30 December, 2020
a) Central Tax:
b) Integrate Tax:
Distribution of ISD under GST:
As per sub-rule (1) of Rule 39, there will be two situations:
A. ISD & recipient of credit is in same state:
When the ISD and the recipient of credit are in the same state then the Input tax credit shall be distributed as Central tax and State tax or Union territory tax respectively.
B. ISD and Recipient of credit are in different state:
CGST (Same state)
SGST (Same state)
IGST (Separate state)
As per clauses (d) and (e) of sub-section (2) of Section 20 of CGST Act, ITC is required to be distributed to one of the recipients ‘R1’, whether registered or not, from amongst the total of all the recipients to whom input tax credit is attributable, including the recipient(s) who are engaged in making exempt supply, or are otherwise not registered for any reason, shall be the amount, “C1”, to be calculated by applying the following formula:
C1 = (t1/T) * C
“C” is the amount of credit to be distributed,
“t1” is the turnover, as referred to in section 20, of person R1 during the relevant period, and
“T” is the aggregate of the turnover, during the relevant period, of all recipients to whom the input service is attributable.
Conditions for Distribution:
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