Tuesday 24 June 2014

Blog 5 : Input Service Distributor :


Where the service provider is providing the output service from the multiple locations can receive input services invoices at one location and distribute the credit on input services to various locations of the service provider subject to the following conditions.

·         Credit distributed shall not exceed the amount of service tax paid on input service
·         Credit shall not be distributed on input service which is used exclusively in providing the exempted service
·         Where an input service which is used exclusively in one unit entire credit on such input service shall be distributed to that unit only.
·         Where an input service is used for more than one location credit on such input shall be distributed to all such units on the basis of turnover of each unit to the total turnover of all the units.

This facility could be used where the manufacturer or service provider has a system of receiving the bills for input services at the Head Office or at branch offices but the credits are to be distributed to the registered service units providing taxable services or the factories engaged in manufacturing. Where the assessee has independent registration for the various service units/factories, this scheme would be particularly useful. The scheme requires the Head Office/branch office seeking to distribute the cenvat credits to the individual units, to register under service tax as an ISD (Input Service Distributor).

Once registered, the Head Office/branch office would issue an invoice, bill or a challan to each of the recipient to whom the credit is sought to be distributed. The invoice, bill or challan is to be serially numbered and shall contain –

·         Details as to name, address and registration number of the provider of input services.
·         Details of the document/bill given by such input service provider.
·         Name and address of the input service distributor.
·         Name and address of the recipient of the distributed credit.
·         The amount of the credit that is sought to be distributed.

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