ITC eligibility on hotel expenses incurred for inter branch travel (payment from a different branch)

[Abhijeet Mane]

ABC has one branch in Delhi and another branch in Noida. Both branches have separate GST registrations (different GSTINs) and separate bank accounts, but they operate under the same PAN.

An employee of the Delhi branch travels to Noida for official work and stays at a hotel in Noida. The hotel invoice is issued with the GSTIN of the Noida branch. However, the payment for the hotel stay is made from the Delhi branch's bank account.

Can Noida GST Registration avail ITC of hotel invoice. Give some reference if avbl

[Raam Srinivasan Swaminathan Kalpathi]

Dear Querist

There is not much clarity from the department on these issues. As per the extant provisions, the hotel considering the POP of services will only issue an invoice charging CGST and SGST. The employee had visited the Noida branch for purposes of the business of the Delhi branch. ITC, in my opinion, CANNOT be availed by the Noida branch. Please hold on for the opinion of the other learned panelists and then take a decision.

[YAGAY andSUN]

ITC is admissible to the Noida GST registration, notwithstanding that payment is made by the Delhi branch, subject to statutory conditions.

Under Sections 16(2) and 25(4) of the Central Goods and Services Tax Act, 2017, separately registered units are treated as distinct persons, and ITC is available where:

(i) a valid tax invoice is held,

(ii) goods/services are received,

(iii) tax is paid to the Government, and

(iv) returns are duly filed. The law does not mandate that consideration must flow from the same GSTIN's bank account.

In the present case, the invoice is issued in the name of the Noida registration, the hotel service is consumed for official business of that unit, and GST has been charged. Accordingly, the substantive conditions of Section 16 are satisfied, and ITC is legally available to the Noida GSTIN.

The fact that payment is discharged by the Delhi branch does not vitiate ITC eligibility; however, it gives rise to inter-branch implications, as both registrations qualify as distinct persons. Such payment may require appropriate treatment either as a cross-charge or as an expense incurred on behalf of another unit, depending on the factual matrix and internal arrangements.

This position is supported by Section 16 (eligibility and conditions for ITC), Section 25(4) (distinct persons), and Schedule I (supplies between distinct persons without consideration) of the Act. The governing principle is that ITC entitlement is determined by possession of invoice and receipt of service, not by the source of payment.

From a compliance perspective, the expense should be recorded in the books of the Noida registration, and the corresponding payment by Delhi should be reflected through proper inter-branch accounting entries and, where applicable, cross-charge documentation. The invoice must bear the Noida GSTIN and relate to bona fide business use.

Our final view

ITC is admissible to the Noida GSTIN; payment by the Delhi branch does not invalidate the claim, subject to proper inter-branch treatment and documentation.

[Pinnacle Tax Advisor]

You can avail ITC on the Noida GSTIN for the invoice raised by the hotel. There is no requirement to maintain a separate bank account for each branch. Having a bank account in a Delhi branch does not mean it is restricted to the Delhi unit alone. The same account can be used for payments of expenses incurred by any branch.

Since the invoice has been raised on the Noida branch and payment has been made by your company, the Noida branch is the actual recipient of the service. Accordingly, ITC is eligible in the Noida branch, provided all other conditions specified under Section 16 of the CGST Act are satisfied.

However, if the service was specifically utilized by the Delhi branch, then inter-unit billing from Noida to Delhi would be required.

[Shilpi Jain]

Take an ISD registration and take the invoice in ISD and distribute it to Delhi,

AI Summary

Input tax credit on inter-branch hotel expenses depends on invoice, service receipt, and distinct person treatment, not payment source. Input tax credit on hotel expenses for inter-branch travel is considered in the context of separate GST registrations. ITC eligibility depends on the statutory conditions under Section 16 of the CGST Act, including a valid tax invoice, receipt of service, tax payment, and filing of returns, rather than on whether payment is made from the same branch account. Separate registrations are treated as distinct persons under Section 25(4), so payment by another branch does not by itself invalidate the claim, though inter-branch accounting or cross-charge treatment may be required.