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CMA Final · Indirect Tax Laws and Practice · Input Tax Credit

Under the ISD distribution procedure in the CGST Rules, 2017 (as amended w.e.f. 1 April 2025), which statement about distribution of input tax credit of integrated tax is correct?

Integrated tax credit received by an Input Service Distributor is distributed to every recipient as integrated tax credit, irrespective of the recipient's location. The split into central and State tax, or conversion to integrated tax, applies only to central tax and State or Union territory tax credit.

  1. AIt is distributed as input tax credit of integrated tax to every recipientCorrect
  2. BIt is distributed as central tax to recipients in the ISD's State and as integrated tax to others
  3. CIt is distributed only to recipients located in the same State as the ISD
  4. DIt is distributed as State tax to every recipient registered under the same PAN

Explanation

Clause (i) of the distribution rule states that credit of integrated tax is distributed as integrated tax credit to every recipient. Option B describes the treatment of central and State tax credit, not integrated tax, so it is wrong.

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