Rule 8:

The amendment updates the Input Service Distributor (ISD) provisions under Rule 39 of the CGST Rules, 2017 to ensure a streamlined and accurate distribution of Input Tax Credit (ITC) among recipients. The changes focus on timely distribution, accurate allocation, and proper documentation of ITC transactions.

Key Changes:

1. Monthly Distribution & Compliance: ITC must be distributed in the same month it is available. ISD must furnish ITC details in FORM GSTR-6.
2. Credit Limits & Allocation: ISDs cannot distribute more ITC than available. ITC specific to one recipient must be allocated only to that recipient. ITC common to multiple recipients must be distributed proportionally based on their turnover in the relevant period.
3. Formula-Based Allocation: ITC for each recipient (R1) is determined using:

C1=(t₁/T)×C

Where:

1. • • C = Total credit to be distributed
     • t₁ = Turnover of recipient R1 in the relevant period
     • T = Total turnover of all eligible recipients
2. Handling of Ineligible Credit: ITC ineligible under Section 17(5) must be distributed separately.
3. Distribution of Different Tax Types:
   • IGST: Always distributed as IGST.
   • CGST & SGST/UTGST:
     • Same State/UT recipient: Distributed as CGST & SGST/UTGST.
     • Different State/UT recipient: Converted to IGST.
4. Invoice & Documentation Requirements:
   • ISDs must issue an ISD invoice for ITC distribution.
   • Credit notes must be issued for any reduction in distributed credit.
   • Debit notes must be distributed as per standard ITC allocation rules.
5. New Provisions for Common Input Services:
   • A registered person with the same PAN and State Code as ISD can first transfer ITC on common input services to the ISD via an invoice.
   • ISD will then distribute this ITC as per the revised rules.
6. Clarification of Relevant Period for Turnover: If recipients had turnover in the previous financial year, that period is used. If no turnover exists in the previous year, the last available quarter is used.
7. Definition of ‘Recipient of Credit’: Only suppliers with the same PAN as the ISD are eligible.
8. Updated Turnover Definition: Excludes certain tax levies under the Constitution’s Seventh Schedule, such as duties and taxes under Entry 84 & 92A (Union List) and Entry 51 & 54 (State List).

Rule 37:

Form GSTR-7 is used by tax deductors to report Tax Deducted at Source (TDS) under GST. This amendment modifies Table 3 and Table 4, along with instructions, to ensure clarity, accuracy, and compliance in TDS reporting.

Key Changes:

1. Revision of Table 3