THE CENTRAL GOODS AND SERVICES TAX ACT,
2017
INPUT TAX CREDIT
Section 20:
Manner
of distribution of credit by Input Service Distributor. (Relevant Rule 39,
Rule 54)
(Relevant
Updates)
2[(1) Any office of the supplier of goods or services
or both which receives tax invoices towards the receipt of input services,
including invoices in respect of services liable to tax under sub-section (3) or
sub-section (4) of section 9, 3[of this Act
or under sub-section (3) or sub-section (4) of
section 5 of the Integrated Goods
and Services Tax Act, 2017] for or on behalf of distinct persons referred to
in section 25, shall be required to be registered as Input Service Distributor
under clause (viii) of section 24 and shall distribute the input tax credit in
respect of such invoices.
(2) The Input Service Distributor
shall distribute the credit of central tax or
integrated tax
charged on invoices received by him, including the credit of
central or integrated tax in respect of services subject to levy of tax under
sub-section (3) or sub-section (4) of section 9
3[of this Act
or under sub-section (3) or sub-section (4) of
section 5 of the Integrated Goods
and Services Tax Act, 2017] paid by a distinct person
registered in the same State as the said Input Service Distributor, in such
manner, within such time and subject to such restrictions and conditions
as may
be prescribed.
(3) The credit of central tax shall be distributed as central tax
or integrated
tax and integrated tax as integrated tax or central tax, by way of issue of a
document containing the amount of input tax credit, in such manner
as may be prescribed.]
[helldodold[(1) The Input Service Distributor shall distribute the credit of
central tax as
central tax or integrated tax and integrated tax as integrated
tax or central tax, by way of issue of a
document
containing the amount of
input tax credit
being distributed in such manner
as may be prescribed.
(2) The
Input Service Distributor
may distribute the credit subject to the following conditions, namely:––
a)
the
credit can be distributed to the recipients of credit against a document
containing such details as may be prescribed;
b)
the
amount of the credit distributed shall not exceed the amount of credit
available for distribution;
c)
the
credit of tax paid on
input services
attributable to a
recipient
of credit
shall be distributed only to that recipient;
d)
the
credit of tax paid on input services attributable to more than one
recipient of
credit shall be distributed amongst such recipients to whom the input service
is attributable and such distribution shall be pro rata on the basis of the
turnover in a
State
or turnover in a
Union territory
of such recipient, during
the relevant period, to the aggregate of the turnover of all such recipients to
whom such input service is attributable and which are operational in the
current year, during the said relevant period;
e)
the
credit of tax paid on input services attributable to all recipients of credit
shall be distributed amongst such recipients and such distribution shall be pro
rata on the basis of the turnover in a State or turnover in a Union territory
of such recipient, during the relevant period, to the aggregate of the turnover
of all recipients and which are operational in the current year, during the
said relevant period.
Explanation.––For the purposes of
this section,––
(a) the “relevant period” shall be––
(i)
if
the recipients of credit have turnover in their States or Union territories in the
financial year preceding the year during which credit is to be distributed, the
said financial year; or
(ii)
if
some or all recipients of the credit do not have any turnover in their States
or Union territories in the financial year preceding the year during which the
credit is to be distributed, the last
quarter
for which details of such
turnover of all the recipients are available, previous to the month during
which credit is to be distributed;
(b) the
expression “recipient of credit” means the supplier of goods or
services
or
both having the same Permanent Account Number as that of the Input Service
Distributor;
(c) the term ‘turnover’, in relation to any
registered person
engaged in the
supply of taxable goods as well as
goods
not taxable under this Act, means the
value of turnover, reduced by the amount of any duty or tax levied
1[under
entries 84
and 92A]
[helldod
old[under
entry
84]helldod]
of List I of the Seventh Schedule to the Constitution and
entry 51 and
54 of
List II of the said
Schedule
.]helldod]
1. Substituted Vide:-
Section 10 of CGST Amendment Act 2018 vide
Notification
No. 02/2019 - Central Tax (w.e.f. 01.02.2019)
2.
Substituted Vide:-
Section
12 of
Finance Act 2024 vide
Notification No. 16/2024 - Central Tax (w.e.f. 01.04.2025)
3.
Inserted Vide:- Section 125 of
Finance Act 2025 (w.e.f. 01.04.2025)