Rule 39. Procedure for distribution of input tax
credit by Input Service Distributor.-
(1) An Input Service Distributor shall distribute
input tax credit in the manner and subject to the following conditions,
namely,-
(a) the input tax credit available for distribution in
a month shall be distributed in the same month and the details thereof shall be
furnished in FORM GSTR-6 in accordance with the provisions of Chapter VIII of
these rules;
(b) the Input Service Distributor shall, in accordance
with the provisions of clause (d), separately distribute the amount of
ineligible input tax credit (ineligible under the provisions of sub-section (5)
of section 17 or otherwise) and the amount of eligible input tax credit;
(c) the input tax credit on account of central tax,
State tax, Union territory tax and integrated tax shall be distributed
separately in accordance with the provisions of clause (d );
(d) the input tax credit that is required to be
distributed in accordance with the provisions of clause (d) and (e) of
sub-section (2) of section 20 to one of the recipients "R1", whether
registered or not, from amongst the total of all the recipients to whom input
tax credit is attributable, including the recipient(s) who are engaged in
making exempt supply, or are otherwise not registered for any reason, shall be
the amount, "C1", to be calculated by applying the following formula -
C 1 = (t 1 / T) x C
where,
"C" is the amount of credit to be
distributed,
"t1 " is the turnover, as referred to in
section 20, of person R1 during the relevant period, and
"T" is the aggregate of the turnover, during
the relevant period, of all recipients to whom the input service is
attributable in accordance with the provisions of section 20;
(e) the input tax credit on account of integrated tax
shall be distributed as input tax credit of integrated tax to every recipient;
(f) the input tax credit on account of central tax and
State tax or Union territory tax shall-
(i) in respect of a recipient located in the same
State or Union territory in which the Input Service Distributor is located, be
distributed as input tax credit of central tax and State tax or Union territory
tax respectively;
(ii) in respect of a recipient located in a State or
Union territory other than that of the Input Service Distributor, be
distributed as integrated tax and the amount to be so distributed shall be
equal to the aggregate of the amount of input tax credit of central tax and
State tax or Union territory tax that qualifies for distribution to such
recipient in accordance with clause (d );
(g) the Input Service Distributor shall issue an Input
Service Distributor invoice, as prescribed in sub-rule (1) of rule 54, clearly
indicating in such invoice that it is issued only for distribution of input tax
credit;
(h) the Input Service Distributor shall issue an Input
Service Distributor credit note, as prescribed in sub-rule (1) of rule 54, for
reduction of credit in case the input tax credit already distributed gets
reduced for any reason;
(i) any additional amount of input tax credit on
account of issuance of a debit note to an Input Service Distributor by the
supplier shall be distributed in the manner and subject to the conditions
specified in clauses (a) to (f) and the amount attributable to any recipient
shall be calculated in the manner provided in clause (d) and such credit shall
be distributed in the month in which the debit note is included in the return
in FORM GSTR- 6;
(j) any input tax credit required to be reduced on
account of issuance of a credit note to the Input Service Distributor by the
supplier shall be apportioned to each recipient in the same ratio in which the
input tax credit contained in the original invoice was distributed in terms of
clause (d), and the amount so apportioned shall be-
(i) reduced from the amount to be distributed in the
month in which the credit note is included in the return in FORM GSTR-6; or
(ii) added to the output tax liability of the
recipient where the amount so apportioned is in the negative by virtue of the
amount of credit under distribution being less than the amount to be adjusted.
(2) If the amount of input tax credit distributed by
an Input Service Distributor is reduced later on for any other reason for any
of the recipients, including that it was distributed to a wrong recipient by
the Input Service Distributor, the process specified in clause (j) of sub-rule
(1) shall apply, mutatis mutandis, for reduction of credit.
(3) Subject to sub-rule (2), the Input Service
Distributor shall, on the basis of the Input Service Distributor credit note
specified in clause (h) of sub-rule (1), issue an Input Service Distributor
invoice to the recipient entitled to such credit and include the Input Service
Distributor credit note and the Input Service Distributor invoice in the return
in FORM GSTR-6 for the month in which such credit note and invoice was issued.
