Cross Charge under GST: Meaning, Statutory Rules & Head Office Examples
July 24, 20269 min readAkib Husain
Cross Charge under GST: Meaning, Statutory Rules & Head Office Examples
Legal & accounting guide for multi-branch corporations on Cross Charge vs ISD mechanisms, Rule 28 open market valuation, and Tally Prime inter-branch invoicing.
Who is this for: GST Corporate Structuring
Quick Answer: What Is Cross Charge under GST and When Does It Apply?
Cross Charge is the mandatory invoicing of internally generated services (like executive management, HR, legal, or IT support) provided by a Head Office (HO) to distinct branch registrations under the same PAN. Internal service costs are charged via tax invoices at 18% GST.
- Distinct persons under Section 25(4) require arm's length tax invoicing under Schedule I.
- Cross Charge covers internal HO labor; mandatory ISD covers 3rd-party vendor credits.
- Rule 28 proviso accepts declared invoice value if recipient branch gets 100% ITC.
- TallyPrime manages inter-branch debit notes and credit ledger set-offs seamlessly.
1. Cross Charge vs ISD Comparison Matrix
| Parameter | Cross Charge Mechanism | Input Service Distributor (ISD) |
|---|---|---|
| Nature of Service | Internally generated HO services (HR, Finance, IT) | Third-party vendor input services procured centrally |
| Invoicing Document | Regular Tax Invoice / Debit Note | ISD Credit Distribution Invoice |
| Legal Mandate | Mandatory under Schedule I (Distinct Persons) | Mandatory for common vendor credits from April 2025 |
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Akib HusainExpert Reviewer
Founder & Chief Architect of TrulyInvoice
Last Verified: July 24, 2026
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