TaxTMI 
TaxTMI 
We have two manufacturing units in different states. One unit houses HO also. Accounts are centralised at HO and service tax credit of common bills like professional charges, rent, etc., is taken at HO and used in respect of Unit which houses HO. Is it mandatory to seek service tax registration as Input Service Distributor for HO and distribute the credit between two units proportionately? I feel, it is only optional as the relevant Rule uses the word 'may' and service tax guide /FAQ of CBEC uses the word at the convenience of the business entity. The experts can kindly comment on this.
Input Service Distributor
23 Aug 2012 
1 Reply 
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Input Service Distributor optional registration allows centralised Cenvat credit distribution to units based on attribution or turnover.
Registration as an Input Service Distributor is a non mandatory facility allowing a head office that centrally receives taxable services to transfer Cenvat credit to manufacturing units. Under Rule 7 and Rule 7A of the CENVAT Credit Rules (as amended), distribution is to the unit that pays central excise on final goods when services are fully attributable, or otherwise apportioned based on turnover, and credits cannot be distributed to units manufacturing exempted goods. (AI Summary)
Registration as an Input Service Distributor is a non mandatory facility allowing a head office that centrally receives taxable services to transfer Cenvat credit to manufacturing units. Under Rule 7 and Rule 7A of the CENVAT Credit Rules (as amended), distribution is to the unit that pays central excise on final goods when services are fully attributable, or otherwise apportioned based on turnover, and credits cannot be distributed to units manufacturing exempted goods. (AI Summary)