Input Service Distribution (ISD)

[Ganeshan Kalyani]

I would like bring some points in front to get clarified as regards Input Service Distribution is concerned. There are various services availed at Head Office. Some are specific to a particular unit, whereas some services are common for some units. Also there are services which are availed for Head Office. Most of us have a doubt in our mind as regard which service tax credits should be considered to distribute to units where excise duty is payable. As I understand the service which is specific to a particular unit should be distributed 100% to that unit only. Whereas services which are common in nature say for eg. legal consultancy for legal, service tax or excise matter in department or Tribunals, where the consultants are providing service for different locations and raises one common bill in the Head office address. The service tax should be distributed in the turnover ration of those units for which the service is availed. Thirdly while distributing the service tax on service which is specific to Head office eg. audit fees, security service etc. whether such service tax credits can also be distributed to units where excise duty is payable and in which ratio.

kindly through some lights in ISD method.

regards,

ganeshan

[Mahir S]

Sir,

Vide recent Circular No. 178/4/2014 – ST dated 11.07.2014, clarification for distribution of common input service credit under rule 7(d) of the Cenvat Credit Rules, 2004 has been provided.

[Ganeshan Kalyani]

Dear Naveed S,

I already went through the mentioned circular. But i would like to discuss in depth about the type of service of which cenvat credit can be distributed under Input Service Distribution.

regards,

ganeshan

[YAGAY andSUN]

Dear Ganeshan,

Distribution of Service Tax through ISD is allowed on all Input Service as described/mentioned in the Rule 2(l), read with Rule 7 or Rule 7(A) including sub rules, and also read with Circular No. 178/4/2014 – ST dated 11.07.2014, clarification for distribution of common input service credit under rule 7(d) of the Cenvat Credit Rules, 2004 as amended from time to time.

Further, In case you need in-depth analysis or discussion on this matter, then, you may either write to us for seeking an written opinion on payment of fees or you may discuss it with TRU.

Regards,

YAGAY and SUN

(Management and Indirect Tax Consultants)

Mobile:- 9818131923

E-Mail:- [email protected]

AI Summary

Input service distribution: allocation of input tax credit to units, with common services apportioned by turnover among beneficiaries. Input service distribution concerns allocation of input service tax credit from a head office to excise-liable units under the Cenvat Credit regime. Specific services are allocated wholly to the benefiting unit; common services are apportioned among units in proportion to their turnovers. Questions arise about distribution of credits for services consumed at the head office, and guidance relies on the statutory distribution provisions and a circular clarifying apportionment of common input services. Detailed factual application requires formal opinion or technical clarification.