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input service distributor

ravi. (article trainee) (424 Points)

23 December 2009

Can anyone give me the example of input service distributor in case of manufactured goods with full detail and registration of it??

Whether Input service distributor and manufacturer are different ?

if yes, then pls give example ?

thanking you frnds...

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6 Replies

Ajay Raghatate (Sr Executive (Excise & Accounts)) (736 Points)
Replied 23 December 2009

Yes, Input Service Distributor & Manufacturer are different.

When, Company has more than one manufacturer unit, and service tax credit received on service charges paid to others, dificult to allocation of this service tax credit ( like financial services ), Company may be taken Input Service Distributor registration, first availed service tax credit in ISD then distribute service tax credit, on which unit are related to that service charges.

Thanks

Ajay Raghatate

9890799561

1 Like

sristi srivastava (COST ACCOUNTANT) (113 Points)
Replied 23 December 2009

INPUT SERVICE DISTRIBUTOR as per Rule 2(m) of the Cenvat credit rules 2004 means

An Office of manufacturer or Producer of Final Products.

Which Receives Invoices issued under Rule 4A of the Service Tax Rules, 1994 towards purchases of

Input services and Issues Invoice bill or challan for the purposes of distributing the credit of service tax paid on the said services to such manufacturer or producer.

MANUFACTURE as per Sec 2(f) of Central Excise Act 1994 INCLUDES any process:

(1) Which is incidental or ancillary to the completion of their manufactured product;

(2) Which is specified in relation o any goods in the section /Chapter Notes to CETA,1985

As amounting to manufacture; or

(3) Which, in relation to goods specified in the THIRD SCHEDULE to CEA, 1944,involves

Packing or repacking of such goods in a unit container or

Labeling or relabeling of container including declaration or alteration of retail sale price on it or

Adoption of any other treatment on Goods.

Madhukar N Hiregange (Chartered Accountant) (38934 Points)
Replied 23 December 2009

Illustration:

A lts is a manufacturer of Shamoos. They have 2 factories one in Bangalore and the other in Hyderabad. They aslo have a Cororpate office at bangalore + central warehouse in Mumbai + depots in all metors + major towns their own outlets. All the places would have incurred ST on rent, insurance, telephone, AMCs etc.

Any one of the units / office or depots could be designated as the ISD. In this example we assume Corproate office at Bangalore is chosen as the ISD.

All invoices from the various locations would be funnelled to the Corporate office where the eleigible credits wouldbe availed. After that the credits could be transferred to one or both of the manufacturing units by way of a sattement- ISD invoice.

3 Like

Ashish M (Chartered Accountant) (2731 Points)
Replied 23 December 2009

Originally posted by : Madhukar N Hiregange
	Illustration: A lts is a manufacturer of Shamoos. They have 2 factories one in Bangalore and the other in Hyderabad. They aslo have a Cororpate office at bangalore + central warehouse in Mumbai + depots in all metors + major towns their own outlets. All the places would have incurred ST on rent, insurance, telephone, AMCs etc. Any one of the units / office or depots could be designated as the ISD. In this example we assume Corproate office at Bangalore is chosen as the ISD. All invoices from the various locations would be funnelled to the Corporate office where the eleigible credits wouldbe availed. After that the credits could be transferred to one or both of the manufacturing units by way of a sattement- ISD invoice.

tHIS IS REALLY NICELY EXPLAINED.!!!

1 Like

ravi. (article trainee) (424 Points)
Replied 24 December 2009

relating to above example-

Q.. In case of factory, whether factory pays the duty or the head-office ?
Q. And whether the input service can be distributed to the factory ?
( as duty is paid when goods are removed.)
Q. I m not understanding the flow of Transition of goods. so sir, if
u can tell me or give me an article showing flow of transition along
with dates and examples would be very helpful..

Lokesh Agarwal (Student) (22 Points)
Replied 22 June 2017

Hello,

Can anyone tell me the accounting entries in case of Input Service Distribution in the books of both parties who are distributing it and the who are receving it.

Thanks in advance