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

Rajasthan GST Clarifies Tax Rules for Services Between Distinct Offices, Input Tax Credit, and ISD Mechanism Explained.

The circular clarifies the taxability of services between distinct offices of an organization across different states under the Rajasthan Goods and Services Tax Act, 2017. It addresses whether a Head Office (HO) can avail input-tax credit (ITC) for services procured from third parties and the method of distributing ITC to Branch Offices (BOs). The HO can use the Input Service Distributor (ISD) mechanism or issue tax invoices directly to BOs. For internally generated services, the value declared on invoices is deemed the open market value if full ITC is available to BOs, irrespective of whether employee costs are included. If full ITC is unavailable, employee costs are not mandatory in computing taxable value.