Input Service Distributor-ISD

[K.lakshmipati rao]

Input Service Distributor [Section 2(61) of CGST Act,2017]- ISD.

Companies having Registered Office/Corporate Head office/Director’s office- [Office] premises shall get registered as ISD in general, as per the provisions of Section 24(viii) of CGST Act,2017.

Common Services [other than Goods]:- ISD- which receives Tax Invoices towards the receipt of input services, shall be distributed by ISD to respective branches or Units as per the provisions Section 20 (2) & (3) read with Rule 39.

Query-1: Whereas, If an office of ISD which receives Tax Invoices, (exclusively for its operations as ISD) towards the receipt of input on Goods, like Capital Goods [Computers/Printers/Office Equipment etc.,] and other materials like Stationery/Printing Material items etc., what could be the accounting treatment in the Company books of Accounts, with reference to GST element in the Tax Invoices meant for supply of Goods [being used by ISD].

• Does GST element should be added to the cost of Goods [Capital Goods and/or Other Goods/items] while accounting in the Company books of Accounts, since ineligible.

AI Summary

ISD input tax credit on goods not distributable; GST on goods must be capitalized or expensed unless registered as taxpayer.
An ISD may distribute ITC only on input services; GST charged on goods procured and used by the ISD is not distributable via the ISD mechanism. Where ITC on such goods is not available, the GST element must be treated as a non creditable cost: capitalised into the cost of capital goods or expensed for consumables. To lawfully claim ITC on goods used exclusively by the ISD the entity must obtain a separate regular registration and have taxable activity in that state; absent that, capitalisation or expensing is the compliant accounting treatment.