GST CROSS CHARGE/INPUT TRANSFER QUERY

[Sarath S]

A company engaged in IT/software export services has its Head Office (HO) in Hyderabad and a Branch Office (BO) in Bangalore. Over the years, the BO has accumulated unutilized ITC of ₹50 lakhs (FY 2018-19 to FY 2024-25) due to a lack of taxable outward supplies. However HO is engaged in zero-rated exports and claiming ITC refunds.

Considering the GST framework:

1. Can the BO transfer its accumulated ITC to the HO through cross charge? If so, how can it be structured legally?
2. Given the amendments effective from 01.04.2025 mandating ITC distribution only through the ISD mechanism, will the BO lose the accumulated ITC post-31.03.2025?
3. What is the best strategy to ensure that the company does not forfeit the accumulated ITC while remaining GST-compliant?

AI Summary

Navigating GST Complexities: IT Firm Strategizes Rs.50 Lakh Input Tax Credit Transfer Between Branches to Prevent Forfeiture An IT/software export company with offices in Hyderabad and Bangalore has accumulated Rs.50 lakhs of unutilized Input Tax Credit (ITC) in its Bangalore branch. The company seeks guidance on transferring this ITC to the head office before upcoming GST amendments, exploring legal mechanisms like cross-charging services or ISD registration to prevent ITC forfeiture while maintaining GST compliance. Respondents suggest raising service invoices between branches and seeking professional consultation for precise structuring.