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Example

Suppose a company has 2 branches at Mumbai and Bangalore

Mumbai Branch receives bill as follows

A Ltd

Bill to X Ltd, Mumbai

A LTD

Consultancy Charges for Bangalore Branch

10000

CGST 6%

600

SGST 6%

600

TOTAL

11200

Hence, it is an expense of Bangalore Branch but it is received by Mumbai Branch

Mumbai Branch now wants to charge Amount from Bangalore Branch Can it do so?

-a-

Yes, it has to issue Invoice or Debit Note) (to Bangalore Branch

-ea-

Can it charge GST on its Invoice?

-a-

If Mumbai Branch is registered as Input Service Distributor, it can charge GST

If it is not registered as Input Service Distributor it cannot charge GST

-ea-

Example Input Service Distributor in GST ii.png

 

Example Input Service Distributor in GST i.png

Make Bill assuming Mumbai Branch is not Registered as Input Service Distributor

-a-

DEBIT NOTE

   Mumbai  Branch

Bill to Bangalore Branch

 

Particulars

 Amt

Charges for Consultancy Paid on Behalf of Bangalore Branch

11200

(inclusive of taxes)

 

In this case, Bangalore Branch will not be able to take input of expense

-ea-

Make Bill assuming Mumbai Branch is Registered as Input Service Distributor

-a-

TAX INVOICE

Mumbai  Branch

Bill to Bangalore Branch

 

Particulars

 Amt

Charges for Consultancy Paid on Behalf of Bangalore Branch

10000

ADD CGST 9%

600

ADD SGST 9%

600

 

11200

In this case, Bangalore Branch will be able to take the input of expense.It will show it as ISD Credit

Noida Branch will be able to show it as Input Tax Credit.

-ea-

Make Input Tax Credit ledger in books of ISD

-a-

PARTICULARS

CGST

SGST

IGST

TOTAL

Opening Balance

0

0

0

0

Add Credit Taken for Distribution

600

600

0

1200

Less Credit Distributed

600

600

0

1200

Closing Balance

0

0

0

0

-ea-

 

 

  1. GST - Goods and Services Tax, India
  2. GST Computation & Accounting
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About the Author

CA Maninder Singh's photo - Expert in Practical Accounts, Taxation and Efiling
CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 7 years. He provides courses for Practical Accounts, Taxation and Efiling at teachoo.com .
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