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“ Input Service Distributor ”

 

Definition

 

  • ISD u/r 2(m) of CCR,2004 means
  • An office of the manufacturer or producer of final products or
  • Provider of output service,
  • Which receives invoices issued under rule 4A of the Service Tax Rules, 1994 towards purchases of input services and
  • Issues invoice, bill or, as the case may be, challan
  • For the purposes of distributing the credit of service tax paid on the said services
  • To such manufacturer or producer or provider, as the case may be

 

Prerequisite

 

  • Only an “Input Service” can be distributed

 

  • “Input Service” under Cenvat Credit Rules inter alia  means any service “used for providing output service”

 

  • Credit distributed by ISD cannot exceed amount of tax paid thereon

 

 

Distribution

 

  • No credit of service tax of service used for manufacturing exempted goods or providing exempted service.

 

  • Distribution to new units [with no turnover]

 

a) in proportion to turnover, when available

b) exclusive credit for new unit can be distributed later also

 

  • Service used only in a particular unit :- Credit of service tax to be distributed to that unit only.

 

  • Service used in more than one unit :- Credit to be distributed in proportion to turnover

 

Turnover

 

  • Turnover means  Dutiable, exempted and exported goods cleared + Value of services incl. exported service (+) inputs removed as such  (-) duty component

 

  • Turnover for previous month / quarter to be used for ( Rule 5 of CCR, 2004)

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