To Whom the Invoice Should be Raise

[Disha]

Q1.   I Have to Raise Professional Invoice to the Firm for my Services which I have rendered but Firm has its 

a) Head office in Maharashtra from where Books of Accounts is maintained, Audit is conducted and all the administrative work & decision are taken. No Sales and Purchase Transaction in Maharashtra GSTIN.

b) Firm have ISD No. in Maharashtra state.

c) The firm have Factory in the state Gujarat from where all the Sales & Purchase Transactions are done.

Kindly advice whether Invoice for CA Monthly Retainership Consultancy & Tax Audit should be raised to:

1) Head office (Maharashtra) and charge CGST and SGST,

(2) Factory (Gujarat) and charge IGST,

(3) ISD and charge CGST and SGST.

Please quote the Section for our better understanding. 

Q2. How to distribute ITC of ISD in case of one operational Branch?

[Sadanand Bulbule]

For your CA Retainership and Tax Audit services: you have to raise the invoice to the Head Office (HO) in Maharashtra and charge CGST and SGST. This is because the HO is the Location of the Recipient (a registered person) where administrative and decision-making services are consumed, making it the Place of Supply under Section 12(2)(a) of the IGST Act.

For the distribution of Input Tax Credit (ITC) of the Input Service Distributor (ISD), if the Gujarat Factory is your only operational branch with turnover, you have to distribute 100% of the ISD credit to that Gujarat GSTIN, as required by Rule 39 of the CGST Rules, since it is the sole recipient with taxable turnover.

[Shilpi Jain]

The invoicing should be done as per the request given by the client.

However, if yours is a common service for the client then you should advice the client to take it into the ISD registration so that the creidt can be appropriately distributed

[Shilpi Jain]

ISD credit is to be distributed basis turnover of the previous FY. In that case if only one branch has turonver then only to that branch the ITC will go.

[Ryan Vaz]

Q1. To whom should the Professional Invoice be raised?

Applicable Law:

• Sec 20, CGST Act / Rule 39: Input Service Distributor (ISD) mechanism.

• Sec 12(2), IGST Act: Place of supply is the location of the registered recipient.

Short Practical Answer:

Option 3: ISD (Maharashtra) is the correct compliance method.

Reasoning:

• Nature of Service: Audit and Retainership are "Common Input Services" contracted at the Head Office (HO) but used for the business as a whole (including the factory).

• Why not HO (Regular)? If billed to HO Regular GSTIN, the credit sits in Maharashtra. Since HO has no output liability, the credit accumulates. Transferring this later via "Cross Charge" is legally weaker for third-party services than ISD.

• Why not Factory (Gujarat)? Incorrect Place of Supply. You are not providing services at the factory location, nor are the books maintained there.

Recommended Action:

Raise the invoice to ISD Maharashtra.

• If you are in MH: Charge CGST + SGST.

• If you are outside MH: Charge IGST.

  The ISD will then distribute this credit to the Gujarat factory.

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Q2. How to distribute ITC of ISD (One Operational Branch)?

Applicable Law:

Rule 39(1)(d) of CGST Rules: ITC is distributed pro-rata based on the turnover of the recipients to whom the input service is attributable.

Short Practical Answer:

If the Gujarat Factory is the only unit with turnover, 100% of the ITC is distributed to Gujarat.

Computation:

• Total Credit (C): ?18,000 (Example)

• Turnover of Gujarat (t1): ?10 Crores

• Turnover of HO: Nil (Admin only)

• Aggregate Turnover (T): ?10 Crores

Filing Process:

1. HO files GSTR-6.

2. HO issues an ISD Invoice to Gujarat.

3. Tax Head: Since ISD (MH) Factory (GJ) is interstate, distribute as IGST.

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Caveats & Human Review

• Mandatory ISD: Recent amendments (effective April 1, 2025) make ISD mandatory for common credits. Avoid cross-charge for this.

• Exclusive Services: If a fee is strictly for Gujarat (e.g., Gujarat VAT assessment), bill Gujarat directly or distribute 100% to Gujarat via ISD specifically as "attributable to distinct person."

Action Plan

• Obtain the ISD GSTIN of the Maharashtra HO.

• Raise your invoice to the ISD GSTIN.

• Advise client to file GSTR-6 to pass the credit to Gujarat as IGST.

[Padmanathan KV]

Advice your client to take your invoice in ISD Registration and then distribute it.

AI Summary

Professional invoice allocation: raise to ISD/HO in Maharashtra; ISD distributes ITC 100% to lone Gujarat factory. Invoice professional CA retainership and tax audit services to the ISD or Head Office GSTIN in Maharashtra where administrative control is exercised; charge CGST and SGST if intra state, or IGST if the supplier is outside Maharashtra. ISD credit must be distributed to recipients based on taxable turnover; if the Gujarat factory is the sole operational recipient, 100% of the distributable ITC is allocated to that Gujarat GSTIN, and the ISD must file the prescribed return and issue the ISD invoice treating the transfer as interstate (IGST) where applicable.