Shashikant Varshney
(Chartered Accountant)
(763 Points)
Replied 07 December 2017
Please call GST helpline and quote you GST No.
ankit
(account)
(49 Points)
Replied 07 December 2017
Shashikant Varshney
(Chartered Accountant)
(763 Points)
Replied 07 December 2017
It is turnover as per CGST Act.
Let’s take an example to understand this concept. The Corporate office of ABC Ltd., is at Bangalore, with its business locations of selling and servicing of goods at Bangalore, Chennai, Mumbai and Kolkata. Software license and maintenance is used at all the locations, but invoice for these services (indicating CGST and SGST) are received at Corporate Office. Since the software is used at all the four locations, the input tax credit of entire services cannot be claimed at Bangalore. The same has to be distributed to all the four locations. For that reason, the Bangalore Corporate office has to act as ISD to distribute the credit.
If the corporate office of ABC Ltd, an ISD situated in Bangalore receives invoices indicating Rs. 4 lakhs of Central tax, Rs.4 lakhs of State tax and Rs. 7 lakhs of integrated tax, it can distribute central tax, State tax as well as integrated tax of Rs. 15 lakhs as credit of integrated tax amongst its locations at Bangalore, Chennai, Mumbai and Kolkata through an ISD invoice containing the amount of credit distributed. So in what ratio will the credit be distributed by the ISD? The credit has to be distributed only to the unit to which the supply is directly attributable to. If input services are attributable to more than one recipient of credit, the distribution shall be in the pro-rata basis of turnover in the State/Union Territory. For example, if an ISD has 4 units across the country. However, if a particular input service pertains exclusively to only one unit and the bill is raised in the name of ISD, the ISD can distribute the credit only to that unit and not to other units. If the input services are common for all units, then it will be distributed according to the ratio of turnover of all the units. The following illustration will clarify the issue M/s XYZ Ltd, having its head Office at Mumbai, is registered as ISD. It has three units in different states namely ‘Mumbai’, ‘Jabalpur’ and ‘Delhi’ which are operational in the current year. M/s XYZ Ltd furnishes the following information for the month of July, 2017 & asks for permission to distribute the below input tax credit to various units.
(i) CGST paid on services used only for Mumbai Unit: Rs.300000/-
(ii) IGST, CGST & SGST paid on services used for all units: Rs.1200000/-
Total Turnover of the units for the Financial Year 2015-16 are as follows: -
Unit Turnover (Rs.) Total Turnover of three units = Rs. 10,00,00,000
Turnover of Mumbai unit = Rs. 5,00,00,000 (50%)
Turnover of Jabalpur unit = Rs. 3,00,00,000 (30%)
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