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Dear Professional Colleagues,

Greetings of the Day !

The Central Board of Indirect Taxes and Customs (GST Policy Wing) issued Circular No. 199/11/2023-GST dated July 17, 2023 regarding Clarification regarding taxability of services provided by an office of an organisation in one State to the office of that organisation in another State, both being distinct persons.



  • It is clarified that in respect of common input services procured by the HO from a third party, HO has an option to distribute ITC in respect of such common input services by following ISD mechanism.
  • As per the present provisions, it is not mandatory for the HO to distribute such input tax credit by ISD mechanism. HO can also issue tax invoices to the concerned BOs in respect of common input services procured from a third party, and the BOs can then avail ITC on the same subject to the provisions of section 16 and 17 of CGST Act.
  • Distributing the ITC in respect to common input services procured from a third party can be made by the HO to a BO through ISD mechanism only if the input services are attributable to the said BO.


  • In cases where full input tax credit is available to a BO, the value declared on the invoice by HO to the said BO regarding the supply of internally generated services shall be deemed to be the open market value of such services. This is irrespective of the fact whether the cost of any particular component of such services, like employee cost etc., has been included or not in the value of the services in the invoice.


  • In such cases where full input tax credit is available to the recipient, if HO has not issued a tax invoice, the value of such services may be declared as Nil, and be deemed as open market value.


  • In respect of internally generated services provided by the HO to BOs, the cost of salary of employees of the HO, involved in providing the said services to the BOs, is not mandatorily required to be included while computing the taxable value of the supply of such services, even in cases where full input tax credit is not available to the concerned BO.


AMRG comments

Principles of taxation under cross-charge and internally generated services are comprehensively changed tonight for the industry's good. We believe Multi-location businesses can save huge on compliances and litigation by structuring the taxes around it.


Broad changes

- Where Full ITC is available, value of such services for cross charge may be declared as Nil by HO to BO.

- No charge of GST on salary.

- ISD is not mandatory, and invoices can also be issued by way of cross-charge.

Hope you find it interesting and useful to read.

For any clarification/ feedback, feel free to write us at

Best regards,



About Us

AMRG & Associates is an established Chartered Accountants firm. It came into existence in 1984 and since then has grown its branches across major Indian cities such as Delhi, Mumbai and Chandigarh. Since its inception, it has become one of the leading chartered accountants’ firms in North India. AMRG & Associates offers its clients a wide range of exceptional services through the expertise of its highly motivated group of trained professionals. The firm provides expertise in financial and business advisory, tax and regulatory, audit and assurance and risk advisory services.

AMRG & Associates has a client base of 200+ companies & individuals. The firm's approach to service delivery helps to provide value-added services to its wide clientele. Our differentiation is derived from a rapid performance based, industry-tailored and technology-enabled business advisory services delivered by talented professionals in the country.

Corporate office (Delhi, India) : AMRG Tower, 23, Paschim Vihar Extension, Main Rohtak Road, New Delhi -110063, T - 011-47322696 / 97

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© -2022 AMRG & Associates All Rights Reserved. This document has been written for the general interest of our clients and professional colleagues and is subject to change. This document is not to be construed as any form of solicitation. It is not intended to be exhaustive or a substitute for legal advice. We cannot assume legal liability for any errors or omissions. Specific advice must be sought before taking any action pursuant to this document.

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