We have an ISD registration. now a new state is added under the same PAN. Please let me know how to distribute credit to the new registration. Distribution is based on previous year turnover for all other states.
09 July 2024
When you have a new state added under the same PAN and you want to distribute input tax credit (ITC) to the new registration under ISD (Input Service Distributor), you can follow these steps:
1. **Understand ISD Principles**: Input Service Distribution (ISD) allows you to distribute the ITC on services received by the head office or the registered office to its branches or units that are registered under GST within the same state or in different states.
2. **Maintain Proper Records**: Ensure that you maintain clear records of ITC received on services for each state separately. This helps in accurate distribution based on previous year turnover.
3. **Determine Distribution Basis**: According to GST rules, ITC distribution can be based on turnover or any other reasonable basis. Since you mention using turnover from the previous year for other states, you would typically use a similar method for the new state.
4. **Calculate Proportionate ITC**: Calculate the proportionate ITC for the new state based on the turnover ratio of the new state to the turnover of all states where you have ISD registrations.
5. **Issue ISD Invoice**: Prepare an ISD invoice for distributing the ITC to the new state. The ISD invoice should clearly mention the GSTIN of the recipient in the new state, the amount of ITC being distributed, and other required details as per GST rules.
**File GST Returns**: Ensure that you correctly reflect the distributed ITC in your GST returns for both the head office and the new state registration.
**Compliance Check**: Regularly review your ITC distribution process to ensure compliance with GST laws and regulations. Keep documentation and records up to date to facilitate any audits or inspections.
If you have specific turnover data or need to apply a different basis for distribution to the new state, it's advisable to consult with a GST expert or a chartered accountant who can tailor the distribution method to fit your specific business circumstances and comply with GST regulations effectively.
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