The Hon’ble Finance Minister introduced Finance Bill, 2024 in Lok Sabha on 01.02.2024.
The Finance Bill proposes key amendment in the Central Goods and Services Tax Act, 2017, by way of making ISD Registration mandatory for registered person having GST Registrations in more than one State.
Pls. find below short description of the amendment proposed. The same shall become enforceable (with changes) as and when the provision is notified by notification in Official Gazette.
- A registered person having GST registration in more than one State or Union Territory shall be required to register as Input Service Distributor.
- As illustration, an entity, ABC having PAN AAACA0000A has registrations in 2 States.
- ABC receives invoices from various suppliers on which tax is paid to the suppliers. ABC is also required to pay tax under RCM in respect to few suppliers.
- Under the proposed law, ABC is required to obtain ISD Registration in respect to ANY of its office.
- Once ISD Registration is obtained, ABC shall distribute Input Tax Credit in respect of invoices pertaining to offices in respective State of Registration.
- Under the proposed law, ITC of tax paid under RCM by ABC in the State where ISD Registration is obtained, shall also be distributed.
- ISD shall be eligible to distribute the credit of central tax or integrated tax charged.
- Such distribution of CGST/ IGST shall be undertaken by way of issue of document containing the amount of ITC.
Above are proposed amendments, and shall come into force as and when Notification is published in Official Gazette.
