Zenith Chemical & Allied Ltd. is a diversified Indian conglomerate dealing in specialty chemicals, industrial reagents and allied services. Over…

CA Final · Indirect Tax Laws · RTP · January 2026
Zenith Chemical & Allied Ltd. is a diversified Indian conglomerate dealing in specialty chemicals, industrial reagents and allied services. Over the years, it has established production, trading and services units across multiple States. It has obtained separate Input Service Distributor (ISD) registration in the State of Kerala. The ISD receives invoices for services used across the group and distributes the Input Tax Credit (ITC) pertaining to these invoices to the various units. Following details are furnished for a particular month, and you are required to distribute the ITC to other units that are carrying manufacturing, trading and supplying services to the customers. SI. No. Particulars Amount in lakh (₹) (1) Turnover in the relevant month of each of the units: Mumbai (Maharashtra) 12.00 Bangalore (Karnataka) 60.00 Hyderabad (Andhra Pradesh) 36.00 Trivandrum (Kerala) 72.00 (2) Total ITC of input services available during the month with the ISD (includes CGST/ SGST & IGST) on account of supplies received during the month 48.00 (3) Out of the above, ITC of input services exclusive to Bangalore unit, available as IGST credit 12.00 (4) Out of the above, ITC of input services exclusive to Trivandrum and Hyderabad units (CGST and SGST of 3.00 lakh each) 6.00 (5) Rest of the credit of input services available is allocable as common credit to all the units and is received from local suppliers in Kerala 50.00 (6) Basic value of a debit note received for input services during the month, in respect of a previous supply, with tax levied @ 12% IGST (7) Total value in the credit note received for input services, during the month, applicable exclusively to Trivandrum (Kerala) unit, taxed at the rate of 9% CGST and 9% SGST, which is charged and indicated separately 118.00 (inclusive of GST) Notes: 1. All the above amounts are exclusive of GST unless otherwise specified. 2. Also make your comments regarding the amount of ITC in credit notes, if exceeds the ITC from invoices and debit notes in a particular month for all or any of the units.

Suggested Answer and Working Notes:

Computation of the amount of credit distributed by the ISD to various units of Zenith Chemical & Allied Ltd. Particulars Mumbai Unit Bangalore Unit Hyderabad Unit Trivandrum Unit CGST (₹) SGST (₹) IGST (₹) CGST (₹) SGST (₹) IGST (₹) CGST (₹) SGST (₹) IGST (₹) CGST (₹) SGST (₹) IGST (₹) ITC exclusive to Bangalore unit available as IGST [ITC of IGST is distributed as IGST only.] 12 ITC exclusive to Trivandrum and Hyderabad units [ITC of CGST and SGST is distributed as CGST and SGST to unit located in Kerala (Trivandrum unit) and as IGST to unit located in a different State (Hyderabad unit) in the ratio of 2:1.] 6 2 2 Common credit for all units [Balance credit of CGST and SGST (since supplies are received locally) of 15lakh each (48 lakh - 12 lakh - 6 lakh) to be distributed among all four units in proportion of their turnover of the relevant month, i.e., 1:5:3:6. Further, ITC will be distributed to Mumbai, Bangalore and Hyderabad unit as IGST and to Trivandrum unit as CGST and SGST.] 2 10 6 Additional ITC [6 lakh (50lakh × 12%)] on account of debit note received from supplier to be distributed among all four units in proportion of their turnover of the relevant month, i.e., 1:5:3:6. [ITC of IGST is distributed as IGST only.] 0.4 2 1.2 2.4 ITC to be reduced on account of credit note received from supplier, exclusive to Trivandrum unit 9% of (118lakh × 100/118) [ITC of CGST & SGST is reduced as CGST & SGST credit] (9) (9) Total ITC apportioned to each unit 0 0 2.4 0 0 24 0 0 9.2 (1) (1) 2.4 Negative amount apportioned to Trivandrum unit shall be added to its output tax liability since ITC distributed to it by ISD is less than the amount reduced on account of receipt of credit note 1 1

Topics: Input Tax Credit

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