Distribution of Credit

SECTION : Input Service Distributor

  • Lesson Objectives

    On completion of this lesson, you will be able to understand:

    ·       Distribution of Input Tax Credit

    ·       Units located in different states

    ·       Units located in same state

    ·        Distribution based on Turnover

    ·        Distribution of CGST and SGST Credits


    Please go through the Second Video of Chapter 11.

    In this chapter you can learn about distribution of credit among units in different states or same state.


    Distribution of common credit among the units of an ISD

    The common credit used by all the units can be distributed by ISD on pro rata basis i.e. based on the turnover of each unit to the aggregate turnover of all the units to which credit is distributed.


    Distribution by ISD to units located in different States.

    An ISD can distribute CGST credit, IGST credit and SGST Credit as IGST for the units located in different States. Common Credits are transferred on pro-rata basis i.e. based on Turnover.



    When the ISD is in one State say at Delhi and the Recipients of credits (Suppliers or Locations) are in different States say in Chennai, Tamil Nadu and Bangalore, Karnataka. The turnovers for the relevant period is Chennai unit = Rs.10 Crores and Bangalore unit = Rs.30 Crores.




    Distribution by ISD to units located in Same State.

    An ISD can distribute the input tax credit for the units located in same State.

    This can be done as…


    CGST can be allocated as CGST Credit.

    SGST can be allocated as SGST Credit.

    IGST credit can be distributed as CGST Credit / SGST Credit.


    Input Service Distributor (ISD) is located at Bangalore.

    Unit is located at Mysore. Both are in Karnataka State.

    Credits Available:- CGST – 6,000/- IGST – 10,000/- SGST – 4,000/-



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