Category: Input Service Distributor

1. Yes. In terms of Section 21 of the Act, the recovery provisions can be initiated if the Input Service Distributor distributes credit in contravention of the law resulting in excess distribution of credit to one/ more recipients of credit.
2. Such credit can be recovered from the recipients along with applicable interest.and the provisions of section 73 or section 74, as the case may be, shall, mutatis mutandis, apply for determination of amount to be recovered.

(ICAI FAQ PUBLICATION 06-09-2017 -: Recovery of Credit distributed in excess : FAQ NO. 40)

 

In terms of Section 20(2) of CGST Act, an Input Service Distributor can distribute the credit subject to the following conditions:
 The credit should be distributed to recipient against a document containing such details as given in Rule 54(1) of the CGST Rules, 2017;
 The amount of credit distributed shall not exceed the amount of credit available for distribution;
 The credit of tax paid on input service attributable to a recipient of credit shall be distributed only to that recipient;
 If credit is attributable to more than one recipient, then it shall be distributed
among such recipient(s) to whom the input service is attributable on pro rata
basis of the turnover in a State of such recipient during the relevant period, to the aggregate of the turnover of all such recipients to whom such input service Is attributable.
 If credit is attributable to all recipients, the above method of allocation on pro rata may be applied with reference to all recipients.

(ICAI FAQ PUBLICATION 06-09-2017 -: Distribution of credit by the Input service distributor : FAQ NO. 39)

 

No. Section 20(1) does not permit distribution of CGST as SGST and vice versa. This flows from the fundamentals of the GST law wherein the credit of CGST cannot be utilized against SGST and vice versa.

(ICAI FAQ PUBLICATION 06-09-2017 -: Distribution of credit by the Input service distributor : FAQ NO. 38)

 

The Input Service Distributor is permitted to distribute the credit as follows:
 Central tax as central tax or integrated tax; and

 Integrated tax as integrated tax or central tax, and

 State tax as State tax or integrated tax [Rule 39(1)(f)]

(ICAI FAQ PUBLICATION 06-09-2017 -: Distribution of credit by the Input service distributor : FAQ NO. 37)

 

It is mandatory that the Input Service Distributor and the recipient of credit are persons having the same PAN, whether or not they are located in the same State.

(ICAI FAQ PUBLICATION 06-09-2017 -: Distribution of credit by the Input service distributor : FAQ NO.36)