Head office to Branch
This query is : Resolved
14 July 2025
We have multiple branches in india. Our H. O is in Gujrat. From Gujrat H. O. Transported Goods to other distict branches in multiple states.
But transporter raise his invoice on H. O. i. o. On Gujrat. So whole RCM input consume by Gujrat.
My question is - is it input distribution mandatory via isd in above case. If yes, what provision by Law
But transporter raise his invoice on H. O. i. o. On Gujrat. So whole RCM input consume by Gujrat.
My question is - is it input distribution mandatory via isd in above case. If yes, what provision by Law
12 August 2025
GST Law Position:
Input Service Distributor (ISD) concept:
An ISD is a business that receives invoices for input services and distributes the input tax credit to its units (branches) based on the invoice.
ISD mechanism is primarily for distribution of ITC on input services.
Is transporter invoice an input service?
Yes, transporter charges are classified as input services (transportation services).
When is ISD mandatory?
If the transport service invoice is raised to the HO, and the HO wants to distribute the ITC of that input service to its branches for utilization, the HO must be registered as ISD.
This is necessary because each branch is registered under a different GSTIN (different states).
Without ISD registration, the HO cannot distribute ITC to branches.
Relevant Law:
Section 2(61) of CGST Act defines ISD.
Section 20 of CGST Act governs ISD functionality.
Rule 39(5) of CGST Rules, 2017 mandates ITC distribution via ISD to branches in different states when input services are billed to HO.
If no ISD:
Entire ITC remains with HO.
Branches cannot claim ITC on the transporter services utilized by them, causing ITC blockage.
Input Service Distributor (ISD) concept:
An ISD is a business that receives invoices for input services and distributes the input tax credit to its units (branches) based on the invoice.
ISD mechanism is primarily for distribution of ITC on input services.
Is transporter invoice an input service?
Yes, transporter charges are classified as input services (transportation services).
When is ISD mandatory?
If the transport service invoice is raised to the HO, and the HO wants to distribute the ITC of that input service to its branches for utilization, the HO must be registered as ISD.
This is necessary because each branch is registered under a different GSTIN (different states).
Without ISD registration, the HO cannot distribute ITC to branches.
Relevant Law:
Section 2(61) of CGST Act defines ISD.
Section 20 of CGST Act governs ISD functionality.
Rule 39(5) of CGST Rules, 2017 mandates ITC distribution via ISD to branches in different states when input services are billed to HO.
If no ISD:
Entire ITC remains with HO.
Branches cannot claim ITC on the transporter services utilized by them, causing ITC blockage.
20 August 2025
Sir you mentioned HO wants to distribute ITC - means it is not mandatory to distribute itc. Is it as per wish of HO.
ABCD are distinct person. A- Is in Gujrat, B- in rajastan, C- in Karnatak, D- in Madhya Pradesh registered person.
Our Main raw material supplier is in Gujrat. Gujrat supplier send the goods to above 4 persons independently through road transport. But transporter billed in the name of on our Gujrat person. Hence RCM paid by Gujrat & ultimately input taken by Gujrat unit.
In above case is input distribution mandatory to distinct person via isd. Is Gujrat unit should take registration for isd.
Second scenario-
Gujrat unit send goods to other state distinct person as well as other customer in various state through road transport. In this case is isd applicable. Wants to take isd registration for gujrat.
Pl. You are requested to guide
ABCD are distinct person. A- Is in Gujrat, B- in rajastan, C- in Karnatak, D- in Madhya Pradesh registered person.
Our Main raw material supplier is in Gujrat. Gujrat supplier send the goods to above 4 persons independently through road transport. But transporter billed in the name of on our Gujrat person. Hence RCM paid by Gujrat & ultimately input taken by Gujrat unit.
In above case is input distribution mandatory to distinct person via isd. Is Gujrat unit should take registration for isd.
Second scenario-
Gujrat unit send goods to other state distinct person as well as other customer in various state through road transport. In this case is isd applicable. Wants to take isd registration for gujrat.
Pl. You are requested to guide
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