Clarification regarding taxability of services provided by an office of an organisation in one State to the office of that organisation in another State, both being distinct persons

Delhi GST Act 2017 Clarifies ITC Distribution for Inter-State Services Within Same Organization; Employee Salary Costs Excluded if Full ITC Unavailable.

The circular addresses the taxability of services between offices of the same organization located in different states under the Delhi Goods and Services Tax Act, 2017. It clarifies that the Head Office (HO) can distribute Input Tax Credit (ITC) for common input services to branch offices (BOs) either through the Input Service Distributor (ISD) mechanism or by issuing tax invoices directly. For internally generated services, if full ITC is available to BOs, the value declared in invoices is deemed the open market value, regardless of whether all cost components are included. Employee salary costs are not mandatory in the taxable value computation if full ITC is unavailable.