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

Under the Central Goods and Services Tax Act, 2017 as it applies from 1 April 2025, an office of a supplier that receives tax invoices for input services on behalf of distinct persons is required to do which of the following?

The office must register as an Input Service Distributor and distribute the input tax credit on those invoices. Section 20(1) makes this compulsory where the office receives input service invoices for or on behalf of distinct persons. It cannot stay unregistered or retain the credit for itself.

  1. ARegister as an Input Service Distributor and distribute the input tax credit on such invoicesCorrect
  2. BRemain unregistered because it makes no outward supply
  3. CPass the invoices to each distinct person without any distribution document
  4. DClaim all the credit in its own return and keep it

Explanation

Section 20(1) requires any office that receives tax invoices for input services for or on behalf of distinct persons to register as an Input Service Distributor under clause (viii) of section 24. It must then distribute the credit on those invoices. The other options ignore this mandatory registration and distribution duty.

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