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Distributed Dilemma - Input Service Credit & Distribution


ISD - How to avoid undue lapsing of credit

(1) With reference to Part III of the above Table, it is opined that Credit cannot be distributed to units exclusively engaged in manufacture of exempted goods or in providing exempted service, in view of Rule 7(b). Therefore credit of Rs.1,800 and Rs.3,600, as shown in the Table, would be lapsed at the end on ISD.

(2) As shown in Part III of the above Table, exempted units C and D are not getting any part of common services, even though credit of Rs.1,800 and Rs.3,600 has to be lapsed as per the present Rule 7(d) read with Circular dated 11.07.2014. As a result, Units A and B are getting less credit than what they should receive logically. To avoid this situation, the assessee should consider to enter into separate contracts for Units A and B with the service provider and receive separate bills in the name & address of Units A and B. Under this situation the question of distribution of such credit would not arise; and Units A and B can take full credit directly on the basis of invoice of service provider, if admissible otherwise.

These are personal views.

Shvetal Parikh 22/12/2015

 

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