Let us accept the fact most of us are confused between concept of Cross Charge and concept of Distribution of Input Tax Credit related to services among distinct persons (Input Service Distributor Concept) in GST. Let me tell you, both concepts have own legal backing as per GST provisions. I have prepared this presentation in most simplified manner which will remove all your doubts and clarify the concept. I am sure after reading this, you will not make a mistake.

1. July 12, 2019
CONECPT OF CROSS-CHARGE & INPUT SERVICE
DISTRIBUTOR IN GST
PRADEEP GOYAL, FELLOW MEMBER OF ICAI [MAIL: PRADEEP@PGAA.IN, MOBILE: +91-
9811777103] [FOR EDUCATION & INFORMATION PURPOSE ONLY]
1
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RENUNCIATION
“Though all the information assimilated
in this document is taken from authentic
sources, I don’t make any warranties
about the completeness, reliability and
accuracy of the information contained in
this document. Any action you take
upon the information in this document,
is strictly at your own risk and I will not
be liable for any losses or damages in
connection with the use of this
document”- Pradeep Goyal
[Fellow member of The Institute of Chartered
Accountants of India | Associate member of
Professional Accounting Body of Certified
Practising Accountants (CPA), Australia
================================

2. July 12, 2019
CONECPT OF CROSS-CHARGE & INPUT SERVICE
DISTRIBUTOR IN GST
PRADEEP GOYAL, FELLOW MEMBER OF ICAI [MAIL: PRADEEP@PGAA.IN, MOBILE: +91-
9811777103] [FOR EDUCATION & INFORMATION PURPOSE ONLY]
2
WHEN CONSIDERATION INVOLVED
It is a supply as per clause (a) of sub-section (1) of Section (7) of CGST Act, 2017 as the word “By
a person” is used in this provision but “Supply to whom” is not mentioned which means supply
to anyone is a supply under this section. In conclusion, supplies between distinct persons are
supplies and Tax will be charged on the value in terms of valuation rule 28 of CGST (Rules), 2017.
WHEN CONSIDERATION NOT INVOLVED
Supply of goods or services or both between related persons or between distinct persons as
specified in section 25, when made in the course or furtherance of business is a deemed supply
as per entry 2 of Schedule-I of CGST Act, 2017. Tax will be charged on the value in terms of
valuation rule 28 of CGST (Rules), 2017.
ABC Limited-
Head Office
ABC Limited-
Branch/Project Office
ABC Limited-
Branch/Project Office
Supplies
between
Distinct
Persons
CONCEPT OF CROSS CHARGE
Applicable for Goods or
Services or Both

3. July 12, 2019
CONECPT OF CROSS-CHARGE & INPUT SERVICE
DISTRIBUTOR IN GST
PRADEEP GOYAL, FELLOW MEMBER OF ICAI [MAIL: PRADEEP@PGAA.IN, MOBILE: +91-
9811777103] [FOR EDUCATION & INFORMATION PURPOSE ONLY]
3
ABC Limited-
Branch/Project
Office
CONCEPT OF INPUT SERVICE DISTRIBUTOR
Applicable for Services only
ABC Limited-
Head Office
ABC Limited-
Branch/Project Office
Internal Auditor-Mr. A
CarriedoutInternal
Auditofthisoffice
Description of activity in above presentation
ABC Limited appointed Mr. A as an internal auditor for its head office as well as
branches/project offices/sites throughout India. Mr. A carried out audit & raised
Tax Invoice of Rs. 11.80 Lacs (10 Lacs+ 1.8 Lacs GST) on Head Office mentioning
HO’s GST Number. As per clause (d) of sub-section (2) of Section 20 of CGST Act,
2017, HO will take ITC of full amount of Rs. 1.8 Lacs, transfer this full ITC to its
ISD registration and from ISD number, can distribute ITC to all branches/offices
(where internal audit carried out) in proportion as given under Rule 39 of CGST
Rules, 2017.
ITC of
Rs. 1.8
Lac on
full
invoice
ISD- Registered
as Separate
Office of ABC Ltd
Distribute
PROPORTIONATE ITC
Distribute
PROPORTIONATE ITC

4. July 12, 2019
CONECPT OF CROSS-CHARGE & INPUT SERVICE
DISTRIBUTOR IN GST
PRADEEP GOYAL, FELLOW MEMBER OF ICAI [MAIL: PRADEEP@PGAA.IN, MOBILE: +91-
9811777103] [FOR EDUCATION & INFORMATION PURPOSE ONLY]
4
 Don’t get confused between Cross
Charge & ISD as both have altogether
different concept & legal backing in GST
laws.
 Cross Charge applicable for Goods or
Services or Both while ISD (as name
suggest) only in relation of distribution of
ITC-Services.
 When you distribute ITC as per ISD
concept, always remain supporting
documents/process-trails or
transactions’ logs to substantiate your
claim of receipt of services by respective
branches/offices to whom ITC distributed
by ISD office of a person.
 ISD is a separate office for which separate
registration is compulsory.
_____________________________________
Relevant Provisions of GST Laws
 Clause (a) of sub-section (1) of Section (7), section 25(4), Section 2(61) & Section 20 of CGST Act,
2017.
 Entry 2 of Schedule-I of CGST Act, 2017.
 Explanation-1 with section 8 of IGST Act, 2017
 Rule 28 & 39 of CGST Rules, 2017
 For definition of relevant terms, section 2 of CGST Act, 2017 be referred.

5. July 12, 2019
CONECPT OF CROSS-CHARGE & INPUT SERVICE
DISTRIBUTOR IN GST
PRADEEP GOYAL, FELLOW MEMBER OF ICAI [MAIL: PRADEEP@PGAA.IN, MOBILE: +91-
9811777103] [FOR EDUCATION & INFORMATION PURPOSE ONLY]
5
जल ही जीवन है , इसे बबबाद नब करे
LET US SUPPORT
“JAL SHAKTI ABHIYAN”
MINISTRY OF JAL SHAKTI, DEPARTMENT OF WATER RESOURCES, RIVER
DEVELOPMENT & GANGA REJUVENATION, GOVERNMENT OF INDIA.
SAVE WATER || SAVE UNIVERSE

6. July 12, 2019
CONECPT OF CROSS-CHARGE & INPUT SERVICE
DISTRIBUTOR IN GST
PRADEEP GOYAL, FELLOW MEMBER OF ICAI [MAIL: PRADEEP@PGAA.IN, MOBILE: +91-
9811777103] [FOR EDUCATION & INFORMATION PURPOSE ONLY]
6