Chapter - V of CGST Rules, 2017
INPUT TAX CREDIT
RULE 39. Procedure for distribution of input tax credit by Input Service Distributor (corresponding section 20)
(1) An Input Service Distributor shall distribute input tax credit in the manner
and subject to the following conditions, namely,-
(a) the input tax credit available for distribution in a month shall be
distributed in the same month and the details thereof shall be furnished in
FORM
GSTR-6 in accordance with the provisions of Chapter VIII of these rules;
(b) the Input Service Distributor shall, in accordance with the provisions of
clause (d), separately distribute the amount of ineligible input tax credit
(ineligible under the provisions of sub-section (5) of
section 17 or otherwise)
and the amount of eligible input tax credit;
(c) the input tax credit on account of central tax, State tax, Union territory
tax and integrated tax shall be distributed separately in accordance with the
provisions of clause (d);
(d) the input tax credit that is required to be distributed in accordance with
the provisions of clause (d) and (e) of sub-section (2) of
section 20 to one of
the recipients 'R1', whether registered or not, from amongst the total of
all the recipients to whom input tax credit is attributable, including the recipient(s) who are engaged in making exempt supply, or are otherwise not
registered for any reason, shall be the amount,'C1', to be calculated by
applying the following formula -
C1
= (t1'T) ' Cx
where,
'C' is the amount of credit to be distributed,
't1' is the turnover, as referred to in
section 20, of person R1 during the
relevant period, and
'T' is the aggregate of the turnover, during the relevant period, of all recipients to whom the input service is attributable in accordance with the provisions of section 20;
(e) the input tax credit on account
of integrated tax shall be distributed as input tax credit of integrated tax to
every recipient;
(f) the input tax credit on account of central tax and State tax or Union
territory tax shall-
(i) in respect of a recipient located in the same State or Union territory
in which the Input Service Distributor is located, be distributed as input tax
credit of central tax and State tax or Union territory tax respectively;
(ii) in respect of a recipient located in a State or Union territory other
than that of the Input Service Distributor, be distributed as integrated tax and
the amount to be so distributed shall be equal to the aggregate of the
amount of input tax credit of central tax and State tax or Union territory tax
that qualifies for distribution to such recipient in accordance with clause (d);
(g) the Input Service Distributor shall issue an Input Service Distributor
invoice, as prescribed in sub-rule (1) of rule 54, clearly indicating in such
invoice that it is issued only for distribution of input tax credit;
(h) the Input Service Distributor shall issue an Input Service Distributor
credit note, as prescribed in sub-rule (1) of rule 54, for reduction of credit
in case the input tax credit already distributed gets reduced for any reason;
(i) any additional amount of input tax credit on account of issuance of a debit
note to an Input Service Distributor by the supplier shall be distributed in the
manner and subject to the conditions specified in clauses (a) to (f) and the
amount attributable to any recipient shall be calculated in the manner provided
in clause (d) and such credit shall be distributed in the month in which the
debit note is included in the return in FORM
GSTR-6;
(j) any input tax credit required to be reduced on account of issuance of a
credit note to the Input Service Distributor by the supplier shall be
apportioned to each recipient in the same ratio in which the input tax credit
contained in the original invoice was distributed in terms of clause (d), and
the amount so apportioned shall be-
(i) reduced from the amount to be distributed in the month in which the credit
note is included in the return in FORM
GSTR-6; or
(ii) added to the output tax liability of the recipient where the amount so
apportioned is in the negative by virtue of the amount of credit under
distribution being less than the amount to be adjusted.
(2) If the amount of input tax credit distributed by an Input Service Distributor is reduced later on for any other reason for any of the recipients, including that it was distributed to a wrong recipient by the Input Service Distributor, the process specified in clause (j) of subrule (1) shall apply, mutatis mutandis, for reduction of credit.
(3) Subject to sub-rule (2), the
Input Service Distributor shall, on the basis of the Input Service Distributor
credit note specified in clause (h) of sub-rule (1), issue an Input Service
Distributor invoice to the recipient entitled to such credit and include the
Input Service Distributor credit note and the Input Service Distributor invoice
in the return in FORM
GSTR-6 for the month in which such credit note and invoice
was issued.