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input service distributor

ashish gupta ( student) (1922 Points)

23 November 2009

I want to know what is the meaning of inut service distributor in service tax as m not able to understand it. If anyone could explain in simple words

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BeyondConsultants (CA/CS/LLB(DU)) (184 Points)
Replied 10 December 2009

As a percondition for availing CENVAT Credit, service invoice should be issued on the address of that location from where taxable goods and services are provided by that company.

But in few cases services are procured by Head office for PAN India operations like STAT Auditor, Management Consultants, Advertisements etc.However, manufacturing or services are rendered from different locations say head office is in GGN but manufacturing is in Noida or Punjab.

In such a situation Head office will register itself as Input Service Distributor and distribute credit amoung locations (by mean of invoices) so that credit can be utilised otherwise it will lapse.