Rental Charges of Directors accommodation to be considered as ISD

[Venkata K]

Dear Expert 

One of our client registered dealer in Haryana and Karnataka  and having its ISD registration in Karnataka. Directors accommodation has been provided by company by making payment of rental charges to Unregistered Dealer of Haryana. we are GST under RCM for the rental charges in Haryana Registration. From 01-04-2025 the ISD is made mandatory for the single PAN and 3 registration in different states. In view of this compulsion whether my client should treat this rental charges paid towards Directors accommodation as common credit and shall transfer the same to ISD for further distribution? 

[Sadanand Bulbule]

In terms of Section 20 of the CGST Act read with Rule 39, GST paid under RCM  on directors accommdation in Haryana GSTIN is common input service. Since 01/04/2025, such ITC must be availed in Haryana and mandatorily distributed to other registrations via ISD [e.g. Karnataka] under the amended provisions under a single PAN.

[Shilpi Jain]

Yes this has to be distrubuted through ISD. Pay RCM in regular registration of Haryana and move the credit to ISD for further distribution,

Though, claiming credit could attract objection from department.

Also, whether rental agreemetn is between director and LL or company and LL?

[Shilpi Jain]

If rental agreemetn is between LL and director then the answer to this query could be different,

AI Summary

ISD distribution of common input tax credit: RCM-paid rental charges should be pooled and allocated across registrations.
Rental charges paid by a company under the reverse charge mechanism to an unregistered landlord for a director's accommodation qualify as a common input service and, under the single PAN ISD mandate, the GST paid should be availed in the registration where received, moved into the ISD account, and distributed to other registrations. Treatment may change if the rental contract is between the landlord and the director personally, and departmental objections are possible when claiming the credit.