Itc on computer

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This query is : Resolved

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This discussion explains how to handle Input Tax Credit (ITC) for a computer purchased at the Head Office (HO) that will be used by multiple branches. The HO claims the initial ITC. When branches utilize the computer's services, the HO must issue cross-charges (invoices for IT services) to the branches, including GST. This allows the branches to then claim their portion of the ITC. The physical computer doesn't need to be transferred; the service usage is what matters for cross-charging and ITC claims.

Rajkumar Gutti

Rajkumar Gutti (Querist)

20 December 2025 We have purchased computer at head office.
How ITC on computer transfer to distinct branches via cross charges. Pleas elaborate by accounting entry.

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)

22 December 2025 Accounting Entries (HO)

At purchase (HO):

Computer (Fixed Asset)........Dr
Input GST....................Dr
To Vendor / Bank

Monthly cross-charge (example):

Branch Receivable.............Dr
To Cross-Charge Income (IT Services)
To Output IGST / CGST / SGST

Depreciation (HO):

Depreciation Expense.........Dr
To Accumulated Depreciation

🧾 Accounting Entries (Branch)

On receipt of cross-charge invoice:

IT / Admin Expense............Dr
Input IGST / CGST / SGST......Dr
To HO Payable

(Branch can fully avail ITC if used for taxable supplies.)

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)

22 December 2025 ITC on a computer purchased at HO is first availed by the HO. If branches use the computer, HO must cross-charge IT infrastructure services to branches with GST, enabling branches to claim ITC. Physical transfer is optional; periodic cross-charge with proper valuation and invoices is the best-practice approach.

Rajkumar Gutti

Rajkumar Gutti (Querist)

22 December 2025 Sir, H. O. Purchased computer for use of all branches.
Physical computer use in H. O. Office, not branches.
Only this computer usage service will flow to all branches.
Then can we only credit for Computer services in the books of H. O. Account, is it right, because physical computer movement is not possible, computer is permanently installed at H. O..
Second if computer services is considered, how valuation is taken. Pl suggest.

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