GST Input Credit Tutorial 17 – ISD Conditions

GST Input Credit Tutorial 17 – ISD Conditions Understanding the manner and conditions for distribution of credit by the Input service distributor.
this is the last lecture in our module

of input ax credit we are going to deal

with a manner and condition of

distribution by the input service

distributor there are three broad

conditions attached one in relating to

documents the input service distributor

should issue prescribed documents to

each recipient the government will

prescribe these documents and he just

has to to show these documents to each

recipient giving all the details of the

tax transfer the second is amount of

credit and a very simple reason the

credit distributed should not exceed

credit available logical isn’t it the

third one is where it gets a little

tricky it is related to the service it

is related attribution of the input

service if the input service is

attributable to specific recipient then

the credit of that input service should

be distributed to those recipients only

so we’ll check the third situation out

and we will the first two are very

self-explanatory there could be three

situations where the input service is

attributable to only one recipient where

the input service is attributable to

more than one recipient and where it is

attributable to all recipients under the

same plan the first situation where it’s

attributable to only one it’s very easy

all of the credit which is related with

this input service will have to be

transferred will have to be distributed

with that recipient only the second

situation there it is attributable to

more than one recipient and what will

you do in such a situation the input

credit on such input service will have

to be distributed only these recipients

to whom such service is attributable on

road at our basis what is this basis as

a formula it’s nothing but so

we’re in a state of each individual

recipient / aggregate turnover of all of

these specific recipients put together

during the relevant period this is the

proportion in which the credit has to be

distributed to all these recipients we

already know what turnover in a state is

we’ve seen it while we discuss

composition scheme we’d seen that

turnover in a state is all the supplies

of goods and/or services of a person

with them or from a state and it

excludes taxes and the value of inward

supplies we also know what aggregate

turnover is it is all supplies of goods

and services of a person having the same

pan and excludes taxes and values of

inward supply what is unknown here in

our formula is that relevant period it

gets a little tricky pay attention there

are two situations where the turnover in

a state is available and where the

turnover in state is not available the

first situation is where all the

recipients have turnover in a state in

the financial year just before the year

during mr. credit is to be distributed

so suppose the credit has to be

distributed in – you have five

recipients you have turnover in a state

for all of these five situations in the

year – then the relevant period

would be – at financial year the

second situation is where turnover in a

state is not available for all of these

recipients it may be a live ailable for

one but not all in such a situation the

relevant period would be the last

quarter for which turnover in a state is

available for all of the recipients this

quarter should be before the month

during which the credit is to be

distributed so two situations turnover

in a state is available then you choose

the financial year preceding the urine

which credit is to be distributed

yawn over an estate is not available

then you choose the last quarter where

all of these are available the quarter

should be before the month during which

credit is distributed whichever third

quarter is where all turnover in estates

are available so that was the relevant

period coming to the third one you could

already guess what this would be

it is attributable to all recipients you

could call this as common input service

for all recipients within the same plan

in such a situation same basis all the

credit should be distributed to all the

recipients on pro rata basis the pro

rata remains the same turnover in a

state divided by aggregate turnover of

all these recipients during the relevant

period so this is how input service

distribution would work attributable to

only one recipient dispute the entire

credit to that recipient more than one

or all distribute on pro rata basis and

that’s all that we had to deal with in

input tax credit we’ve covered all the

relevant concepts included in the

provisions of input tax credit