Apportionment credit

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This query is : Resolved

Quick Summary

When common expenses like security or housekeeping are incurred, the invoice should be raised to the head office (HO) if it's an ISD-registered person. The HO can then distribute the relevant input tax credit (ITC) to distinct persons. Importantly, only the ITC is distributed, not the actual service charges or costs, which are handled separately through internal accounting.

Rajkumar Gutti

Rajkumar Gutti (Querist)

24 March 2025 If a common expenditure incurred like as security, house keeping, advertising.

Then is invoice demanded from out side vendor on Ho i. e ISD registered person. Is it correct, or any other else.

At the time of distributing input credit on service, is only input credit distribute or input credit plus service component charges both distribution to concern distinct person.

Please guide

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

13 April 2025 Yes, it is correct that the invoice for common expenditures is typically demanded from an outside vendor by the head office (HO), which is the ISD-registered person. This is because the ISD mechanism allows the head office to receive invoices for services used across multiple branches and distribute the Input Tax Credit (ITC) accordingly.
The ISD distributes only the ITC related to the input services. The actual service charges or costs are not part of the ITC distribution. Instead, these costs are typically allocated based on the business's internal accounting policies or agreements between branches.

Dhirajlal Rambhia

Dhirajlal Rambhia

(Expert)

30 September 2025 Good luck....

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