Input Service Distributor under GST

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Input Service Distributor under GST is an important concept to know for every business. ISD(Input Service Distributor)GST Registration is a must-know especially for the businesses having multiple GST Registration across the different states of India. It is also beneficial for businesses looking to expand their business in multiple states. In this article, we will understand all about the Input Service Distributor under GST.

What is an Input Service Distributor under GST?

In simple words, ISD Mechanism under GST is an effective way to distribute the input tax credit through a centralized system.

Thus, a taxpayer as an Input Service Distributor under GST generates ISD Invoices to proportionally distribute the ITC across all the business branches having the different GST Number but the same PAN Card.

As per the CGST’S Act 2017 under Section 2(61), you can define the Input Service Distributor as:

  • It is a provider of products and/or services’ offices.
  • Tax invoices for input services are received by the specified office.
  • The said office distributes CGST, SGST, IGST, and UTGST credit to a supplier of goods or services with the same PAN.
  • For credit distribution, the authorized office issues a tax invoice or other requisite forms.

Understand the Input Service Distributor under GST with an example

For example, XYZ is a company having headquarters in Noida and it has other offices or branches at Calcutta, Bangalore, Mumbai. Now, the Head Office is paying for the software maintenance on behalf of all the offices after receiving the individual invoices. XYZ has to claim the input tax credit. However, they have to claim the ITC for all the branches and not only for Noida. As a result, XYZ will become an Input Service Distributor under GST. The company will issue an ISD Invoice to the software company to claim the credit of CGST/SGST or IGST Paid.

Why have GST Registration as ISD?

The registration as Input Service Distributor under GST allows organizations having multiple offices to easily claim the input tax credit. In addition, It simplifies the process of GST Invoicing and GST Return Filing.

Compliances for Input Service Distributor under GST

Following are the mandatory compliances for Input Service Distributor under GST:

  • GST Registration: Every ISD needs to register itself as an ISD despite having GST Registration as a normal taxpayer. The organization will have to specify it under S.No. 14 in the GST Registration Application Form. ISD can distribute Input Tax Credit only after mentioning it in the application form. You can have GST Registration as an ISD effortlessly via connecting our GST Professionals at 8881-069-069.
  • GST Invoicing: ISD has to generate invoices in a specific format to claim the input tax credit. You can easily generate GST invoices through InstaBill – GST Billing, eInvoice & Accounting App.
  • GST Return Filing:  The amount of tax credit distribution must not exceed the amount of tax credit available with the ISD at the end of the relevant month, which must be submitted in GSTR-6 by the ISD by the 13th of the following month. The GSTR-2B return can be used by the ISD to obtain information on the ITC. The tax credit beneficiary can see the tax credit that ISD has distributed in GSTR-6A, which is manually from the supplier’s return. The receiving branch, in turn, can claim it by stating it in GSTR-3B. Thus, to file GST Return filing seamlessly through the assistance of taxation experts including Chartered Accountants, Lawyers, etc. you may also contact us at [email protected] or request a call back via submitting details at –

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Credit Distribution Restriction as Input Service Distributor under GST

  • Firstly, The tax credit available for any specific input services utilized exclusively by one of the receivers can only be given to that beneficiary for credit purposes, not to other recipients.
  • Second, the tax credit applicable against input services utilized by more than one ISD receiver should be applied proportionately in the ratio of all such recipients’ operating turnover throughout the year.
  • Similarly, The tax credit available against the input services utilized by all ISD recipients will be distributed proportionately. It will be depending on the turnover of all ISD recipients who are operational throughout the year.
  • ITC should be disbursed independently to those who are ineligible and those who are eligible to apply.
  • Lastly, Separate Input Tax Credits for CGST, SGST/UTGST, and IGST must be released.

Can we have multiple GST Registration as ISD?

Yes, you can have multiple GST Registration in India as there can be different ISDs too.

Is separate declaration required for internal and outbound supplies?

No, ISDs simply need to file a Form GSTR-6 return. It contains information such as

  • the credit they got from the service supplier
  • and the credit they disbursed to the receiving units.

Thus, there is no need to file a separate declaration of internal and outbound supplies as GST return encompasses these features.

GST Burden shifts to Food & Cab, e-commerce operators

Moreover, If you want any other guidance relating to GST Registration in India, please feel free to talk to our business advisors at 8881-069-069.

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