Under the complex GST framework in India, businesses operating through multiple branches or units often struggle to allocate input tax credit (ITC) effectively. The Input Service Distributor (ISD) system is designed to resolve this issue by enabling the fair and organized distribution of ITC among various locations within the organization. This approach supports regulatory compliance and maximizes the efficient use of tax credits.
New Stuff :- Reimagining Healthcare Accounting: A Strategic Approach with Sage Intacct
An Input Service Distributor (ISD) refers to a GST-registered taxpayer who receives invoices for input services and subsequently allocates the eligible Input Tax Credit (ITC) to its various units or branches. These recipient branches must be registered under the same PAN and may be situated in different states, each with a unique GSTIN.
Key Highlights of ISD:
- Centralized Invoicing: All service invoices are billed to the ISD unit, even though the benefits of those services are distributed across multiple branches.
- ITC Allocation: Input Tax Credit is distributed to the relevant branches based on their annual turnover.
- Distinct Registration: The ISD is required to obtain a dedicated GST registration, separate from the standard taxpayer registration.
- Services Only Scope: This mechanism is applicable solely to input services and does not cover goods or capital goods.
To accommodate this functionality in our Sage Intacct ERP, we have integrated the ISD feature within our GST Add-on. This enhancement allows users to seamlessly distribute ITC to different branches in accordance with ISD registration and corresponding GST numbers. A dedicated distribution screen has been introduced to help users view the total taxes paid and allocate them based on turnover or specified percentages. The following screen illustrates how this tax distribution is managed.
Additionally, upon clicking the Post button, an ISD Invoice will be automatically generated. At the same time, a General Ledger Journal Entry (GL-GJ) will be created to allocate the taxes to the appropriate accounts, as configured in the Setup screens.
Thus, the Input Service Distributor (ISD) system is an effective solution for businesses with operations in multiple locations. It enables the efficient allocation of input tax credits and supports streamlined GST compliance. Nevertheless, to maximize advantages and avoid penalties, it is crucial to implement the mechanism correctly, maintain thorough documentation, and have a solid grasp of the applicable regulations.
About Us
Greytrix – a globally recognized and one of the oldest Sage Development Partner is a one-stop solution provider for Sage ERP and Sage CRM organizational needs. Being acknowledged and rewarded for multi-man years of experience and expertise, we bring complete end-to-end assistance for your technical consultations, product customizations, data migration, system integrations, third party add-on development and implementation competence.
Greytrix has a wide product range for Sage Intacct- a Cloud ERP. This includes migrations from QuickBooks | Sage 50 | Sage 100 | Sage 300 to Sage Intacct. Our unique GUMU™ integrations include Sage Intacct for Sage CRM | Salesforce | FTP/SFTP | Rev.io | Checkbook | Dynamics 365 CRM | Magento | Rent Manager | Treez | Avalara Avatax | Blackline SFTP. We also offer best-in-class Sage Intacct Development Services, Consulting services, integrated apps like POS | WMS | Payroll | Shipping System | Business Intelligence | eCommerce for Sage Intacct to Sage business partners, resellers, and Sage PSG worldwide. Greytrix constantly develops apps, products, and add-ons to enhance user experience. Sage Intacct add-ons include AR Lockbox File Processing.
Greytrix GUMU™ integration for Sage CRM – Sage Intacct, Sales Commission App for Sage Intacct, and Checkbook.io ACH/Digital Check Payments for Sage powered by GUMU™ are listed on Sage Intacct Marketplace.
The GUMU™ Cloud framework by Greytrix forms the backbone of cloud integrations that are managed in real-time for the processing and execution of application programs at the click of a button.
For more information on Sage Business Cloud Services, please contact us at sagecloud@greytrix.com. We will like to hear from you.
