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How to Distribute RCM Credit through ISD

Akshay Kishor Dalwale (Audit Assistant) (39 Points)

12 May 2020

A Multi Location Private Limited Company having Registered/Corporate office in Maharashtra. All location of the Company has receiving Technical Support Services from Parent Company situated in Abroad. Parent Company has raising Invoice for Such services to the Registered Office only. Since it is Import of Services RCM is applicable How to Distribute the RCM Credit to other locations through ISD ?

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6 Replies

Mohit Jagnani (Professional - CA firm) (524 Points)
Replied 12 May 2020

Hi,

by raising a invoice for RCM from normal location to ISD location

thanks
Mohit
8335093446

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Akshay Kishor Dalwale (Audit Assistant) (39 Points)
Replied 12 May 2020

It means again we have to make payment ?

Mohit Jagnani (Professional - CA firm) (524 Points)
Replied 12 May 2020

No not paying again, can explain over call

Akshay Kishor Dalwale (Audit Assistant) (39 Points)
Replied 12 May 2020

Sir, Parent Company has issued to Head office on which head has paid RCM & availed the credit for the same. (only making of Payment it doesn't means that the Credit is availed we have to availed the same through 3B) Now the same credit I want to distribute to other locations in Turnover ratio.. you said that I can distribute the same by raising Invoice i.e Normal Supply / we can say Cross Charge

only by Raising of Invoice how I can distribute the Credit ? a

CA Haritha Komma (Chartered Accountant) (1147 Points)
Replied 12 May 2020

Yaa. You are correct..

ISD can distribute the ITC only to the extent of GST on invoices which are raised by vendors on ISD GSTIN.

In the current scenario, RCM is paid with regular GSTIN and ITC can also be availed by regular GSTIN itself and not ISD GSTIN.

Hence, as ITC availed is not in ISD GSTIN, distribution to its branches also is not possible.

Any of the following options can be availed:

1. Raise a GST invoice from regular GSTIN to ISD GSTIN and then distribute to branches through ISD

2. Can cross charge directly to branches with regular GSTIN

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Kriti Chhabra (Senior Associate) (22 Points)
Replied 12 May 2020

Considering that the services are availed by all the offices, the company can follow ISD distribution route.

In this case, the company can raise a GST invoice on the ISD GSTIN from its normal registration for transferring the credit to ISD registration. Thereafter, the ISD registration can distribute the said credit to other registrations.

Further, reference can also be made to Rule 54(1A) for understanding the particulars to be mentioned on such invoice.