Whether GST Cross-Charge is Required on Recovery of Common Development Cost from Group Entities?

[Kumar Gaurav]

XYZ Ltd. (Head Office) is incurring development cost for creation of a common digital portal, which will subsequently be allocated among interested other GSTIN of the same entity on a cost-to-cost basis.

Whether such recovery/allocation of Cost from HO to other GSTIN would require issuance of a cross-charge invoice under GST, or can it be treated as a mere cost allocation/reimbursement without GST implications?

AI Summary

GST cross-charge for common portal costs may apply between distinct registrations unless input tax credit is distributed through ISD.
Common digital portal development costs allocated by a head office to other GST registrations may be treated as a supply between distinct persons, requiring a cross-charge tax invoice and valuation under the applicable rule rather than treatment as mere reimbursement or cost sharing. Input tax credit on common costs may be distributed through an Input Service Distributor registration among relevant GST registrations; the discussion states that this mechanism is mandatory from 1 April 2025.