Common Services received at Head Office

[Kaustubh Karandikar]

XYZ having manufacturing unit cum Head Office in Maharashtra and other units outside Maharashtra. Certain common services are received at Maharashtra on which 100% credit is taken at Maharashtra. In this situation, they can raise monthly invoice in the name of other units under the category of ‘Business Support Service’ based on the value mentioned in the invoices of the service provider for common services received at Maharashtra and by adding certain percentage of mark - up on it. Once this figure is arrived at, the same needs to be apportioned in the name of each unit based on cost centre wise expenses maintained by company on monthly basis. Will this be allowed or Maharashtra should necessarily obtain ISD Registration and then distribute the credit to other units?

AI Summary

Manufacturing Company Debates ISD Registration vs. Cross-Charging for Input Tax Credit Distribution Under GST Law A manufacturing company with its head office in Maharashtra and units outside the state receives common services at the head office and takes full credit there. The discussion revolves around whether Maharashtra should obtain an Input Service Distributor (ISD) registration to distribute the credit to other units or if it can raise monthly invoices to other units for these services. Participants suggest that ISD registration is the proper procedure for distributing input tax credit according to GST law. However, cross-charging is considered an alternative, albeit with potential litigation risks. The consensus leans towards obtaining ISD registration for compliance.