What the notification does
CBIC clarifies issues regarding the valuation of inter-branch supplies and head office shared services among distinct persons under Section 25(4) of the CGST Act:
- Where the recipient unit is eligible for full ITC, the invoice value is deemed to be open market value in terms of the second proviso to Rule 28(1).
- Internally generated services between branches can be invoiced based on verifiable cost allocations without mandatory salary cost integration.
- Distribution of credit through the Input Service Distributor (ISD) route remains mandatory for third-party procured services.
Who it affects
Enterprises operating with GSTINs across multiple Indian states sharing IT, human resources, accounting, and marketing overheads.
Points for finance teams
| ACTION | BY WHEN | OWNER |
|---|---|---|
| Review cross-charge methodology and branch allocation ratios | Quarterly review | Tax manager |
| Verify full credit eligibility at receiving branch GSTINs | Before monthly billing | Accounts team |
The firm's note
Clarifies that open market value mechanisms for corporate cost allocations across branch offices are governed under Rule 28 second proviso where the recipient unit is entitled to full input tax credit. Businesses with multi-state footprints should review cross-charge debit notes.
Disclaimer. This note is a summary prepared by M Rishabh & Associates for general information as on 26 October 2026. It is not professional advice. Refer to the official notification for the full text, which prevails in case of any difference. See the full disclaimer.