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????*Desk of CA. Praveen Sharma*

*Series- 473*????

Union Budget 2024: Changes in ISD Definition and Concepts

1- Registration as ISD and Distribution of ITC is proposed to become mandatory for any person who receives invoices for or on behalf of other branches having separate GSTIN.

2- It is imperative that all multi location entities should evaluate whether any branch is receiving invoice on behalf of another and determine their requirements to distribute ITC as ISD.

3- Multi-location entities should commence their preparation for compliance with these provisions to avoid any sudden knee jerk changes in their procedure. This may involve the following steps:

a. Register as ISD in the relevant state (if not registered)

b. Expense-wise evaluation of ITC distributable to other branches

c. Identify the vendors from whom distributable ITC is received

d. Provide GSTIN of ISD to such vendor

e. Ensure that vendor provides invoice in the name of ISD only

f. Accounting and transfer of such ITC to be recognized in ISD Books

g. ISD Invoice to be issued and reported in GSTR-6

h. Recipient branch to recognize ITC in their books and GSTR-3B

i. Reconciliation between ISD distribution and ITC receipt

4- ITC in respect of reverse charge is also to be distributed as common credit if the same is attributable to any other GSTIN. Such distribution would be only for RCM paid by another distinct person / branch registered in the same state as that of ISD.

5- The manner of distribution would now be provided by means of rules to be prescribed. Currently, the ITC is distributed to that branch to which the expense is solely attributable and if attributable to multiple branches, based on turnover. It remains to be seen if this mechanism is continued.

6- ISD invoice containing relevant particulars would be used for distribution of ITC to other branches. CGST can be distributed as CGST or IGST and IGST as IGST or CGST.

Read more:

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CA. Praveen Sharma