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?
View answer
Yes, it has to issue Invoice or Debit Note) (to Bangalore Branch
Can it charge GST on its Invoice?
View answer
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
Make Bill assuming Mumbai Branch is not Registered as Input Service Distributor
View answer
|
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
Make Bill assuming Mumbai Branch is Registered as Input Service Distributor
View answer
|
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.
Make Input Tax Credit ledger in books of ISD
View answer
|
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 |