For Input Service Distributors Registration - Reg.

[RAM SHARMA]

Dear Experts,

We have 3 units registered with seperate excise and service tax registration no. We have centralised bank of all the three units and want to take service tax credit on such bank charges. By doing this we have to take Input Distributors Registration. At this stage, what precaution and procedure to be taken for apply input distributors Registration. Please advice.

[Ganeshan Kalyani]

Pls. Go through the link.

http://INPUT SERVICE DISTRIBUTOR MEANING & SCOPE

[RAM SHARMA]

Dear Sir,

Unable to Go through this link. Please summarise your views.

Thanks & Regards

[DR.MARIAPPAN GOVINDARAJAN]

Whether you are having a head office for these three units? If so head office is to take registration as Input Service Tax Distributor and then credit may be distributed to these three units.

[YAGAY andSUN]

Rule 7	:	Manner of distribution of credit by input service distributor
Rule 7A	:	Distribution of credit on inputs by the office or any other premises of output service provider
Rule 7B	:	Distribution of credit on inputs by warehouse of manufacturer

[Ganeshan Kalyani]

The registration type should be selected and centralised, the address of the head office and the units address to be incorporated in the registration application. The application should be filed online first followed by submission of hard copy to the jurisdiction service tax department.

Regarding distribution of credit, the credit to be distributed in units turnover ratio. If the bank charges is incurred specific to one unit then the credit should be distributed to that unit only. Only common credits to be distributed in turnover ratio.

Thanks.

[YAGAY andSUN]

It is a settled law that for distribution of CENVAT credit the registration with the revenue authority is not mandatory.

[KASTURI SETHI]

Better option is to obtain registration as ISD. Why to invite trouble unnecessarily ? Govt. has framed rules for following and honouring the same. There is some purposes behind making any rule.

[RAM SHARMA]

Dear Sir,

Whether we have to close all existing registration for taken new ISD and follow new rule for service tax return filling. Please advice.

Thanks

[Ganeshan Kalyani]

The registration existing for the unit shall continue. You will have to get it for HO. From HO you would be able to issue ISD invoice. Thanks.

[KASTURI SETHI]

Rightly advised by Sh.Ganeshan Kalyani, Sir.

[RAM SHARMA]

Dear Experts,

If today onward, we go to ISD Registration then we can avail service tax credit preceding one year. Please advice.

Thanks

[Ganeshan Kalyani]

Sir, credit of invoice dated back to one year is not allowed. Credit is allowed to be taken within one year of the date of invoice. Thanks.

[YAGAY andSUN]

Distribution of Credit beyond the limit of One Year won't be possible, if this is the scenario, better to book in either in expense account or capitalize it but do not show in current assets account.

[Ganeshan Kalyani]

Accounting aspect has also become essential in view of Detailed manual scrutiny initiated by the department. Hence matching the cenvat register / service tax return with books of accounts become necessary. Thanks.

AI Summary

Input Service Distributor registration enables central distribution of service tax credit, subject to the one year invoice limit. Registration as an Input Service Distributor allows a head office to centrally receive and distribute service tax credit to constituent units; applications must be filed online with hard copy submission while unit registrations continue. Distribution must allocate common credits by units' turnover ratio and assign unit-specific credits to the relevant unit. Credit can be availed only within the statutory temporal limit from the invoice date; credits beyond that period should be expensed or capitalised. Maintain reconciliation between cenvat/service tax records and books of account due to departmental scrutiny.