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CA Final · Indirect Tax Laws · Input Tax Credit

Yamuna Retail Ltd, an ISD, is distributing credit in April 2026. One recipient, a newly registered branch, had no turnover in its State in the preceding financial year. Under the Explanation to Rule 39, which period is the 'relevant period' for the distribution?

The relevant period is the last quarter for which turnover details of all recipients are available before the month of distribution. This applies because at least one recipient had no turnover in the preceding financial year, which otherwise would be the relevant period.

  1. AThe preceding financial year for all recipients regardless
  2. BThe last quarter for which details of turnover of all the recipients are available, previous to the month of distributionCorrect
  3. CThe month in which the invoice from the supplier was issued
  4. DThe current financial year up to the date of distribution

Explanation

The Explanation to Rule 39 says that if some or all recipients do not have turnover in their States in the preceding financial year, the relevant period is the last quarter for which turnover details of all recipients are available, previous to the month of distribution. The preceding financial year applies only where the recipients have turnover in that year.

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