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CS Professional · Goods and Services Tax (GST) and Corporate Tax Planning · Input Tax Credit and Computation of GST Liability

Mehta Pharma Ltd's head office in Mumbai receives an invoice for consultancy services used for its branches in Pune and Chennai, which are distinct persons. Which statement follows from section 20 of the CGST Act, 2017 (post 1 April 2025)?

The Mumbai office must register as an Input Service Distributor and distribute the credit by issuing a document containing the credit amount. It receives an input service invoice on behalf of distinct persons, which triggers section 20(1), and section 20(3) prescribes the distribution document.

  1. AThe Mumbai office must register as ISD and distribute the credit by issuing a document containing the amount of creditCorrect
  2. BThe branches may each claim the credit directly on the Mumbai invoice without any distribution
  3. CThe office need not register because the service is consultancy
  4. DCredit can be distributed only through an invoice raised by the vendor

Explanation

The Mumbai office receives an input service invoice for or on behalf of distinct persons, so section 20(1) requires ISD registration. Section 20(3) requires distribution by a document containing the credit amount. Direct claim by branches or a vendor invoice is not what the text provides.

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