CENVAT Credit Rules 2004: Guidelines for Distribution by Input Service Distributors, Including Pro Rata Allocation Based on Turnover

The CENVAT Credit Rules, 2004, outline the distribution of CENVAT credit by an input service distributor (ISD). The ISD must distribute the credit for service tax paid on input services to its manufacturing units or units providing output services, adhering to specific conditions. These include ensuring the credit does not exceed the service tax paid, distributing credit attributable to specific units only to those units, and distributing credit for services used by multiple units pro rata based on turnover. Outsourced manufacturing units must maintain separate accounts for input service credit and use it solely for duty payment on goods manufactured for the ISD. Credit available as of March 31, 2016, cannot be transferred to outsourced units and must be distributed among other units.

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