The GST Council has its ears to the ground and is seeking to
resolve to remove ambiguities. One such recommendation of the
Council was to resolve a longstanding debate on whether
transferring credit through the Input Service Distributor (ISD) is
mandatory or whether a "cross-charge mechanism" can be
adopted. The GST Council clarified that the GST law does not
mandate taking ISD registration and also positively affirmed that
the same can be transferred by raising a tax invoice, i.e., by
cross-charging. Contrastingly, the Council also recommended that
suitable amendments be made to the law to mandate the ISD mechanism
prospectively.
The clarification has blessed the approach embraced by a
substantial majority of businesses. This clarification provides
greater clarity and confidence to the industry, enabling them to
continue employing cross-charge mechanisms for credit transfers,
eliminating the necessity for additional ISD registration. It would
undoubtedly prevent
