Input Tax Credit (ITC) can be taken on all input services and capital goods (on the ED portion). However, if your company renders both taxable and non-taxable services then ITC will be restricted to 20% on the tax payable on the output service. For example, if your company is a software development service co., then this resctriction will apply since there are two services (one software development, which is exempt and another AMC, which is taxable).

Amul

ITC rules for Input Service Distributor

One of the fundamental features of GST is the seamless flow of input credit across the chain (from the manufacture of goods till it is consumed) and across the country. In this article, we will understand the ITC rules for input service distributors.

Who is an Input Service Distributor?

The concept of ISD under GST is a legacy carried over from the service tax regime.  It is an office meant to receive tax invoices towards receipt of input services and further distribute the credit of CGST, SGST/UTGST or IGST to supplier units  (having the same PAN) proportionately. The CGST Rules, 2017 prescribes the procedural conditions to be complied with by ISD,  the Manner and Quantum of Input tax credit ( ITC ) to be distributed by Input Service Distributor  to the eligible recipients, the invoice to be issued, return to be filed by ISD and how to deal with ITC on the credit and debit notes issued to the ISD.......

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