Question

I have branch in Gurgaon and now i want to open head office in Delhi for which I am going to pay rent 50000 per month and 18% GST in the form CGST 4500 and SGST 4500. From head office only decision are made no there function is done. how can i take input tax credit benefit paid on rent for head office.

Answer

There are 3 possibilities for Head office as follow:-

Case 1
The head office is sourcing certain services for the branch and the branch is using the same like security services used in the branch are sourced by the head office or hiring advertisement agency etc.

This is the case where head office is operating as ISD and it should get registered as ISD to distribute the credit to the branch.

Case 2
The head office employed some staff and giving backend support services like maintenance of Accounts, Sales, Marketing, etc.
In this case the head office is giving supply to the branch. The head office should get registered as a normal supplier and raise invoice to the branch for supply of services. The head office will take ITC of rent, etc and utilise it for paying tax.
If your management team is sitting in head office then you should raise invoice for management services.

Case 3
The head office is simply a registered place and not doing any activity which is used by branch, then no registration, the tax paid on rent will be waste.(Reply dt. 26.06.2018)