Input Service Distributor in GST

• Introduction: The concept of ISD (Input Service Distributor) registration applies when services are provided to multiple locations but receive tax invoices to a single location. Since the services are related to other locations, the corresponding credit for these services should be transferred to those locations that have their own registrations. This is because the output services are being provided at those other locations.

• ISD Registration: The concept of ISD under GST is a legacy carried over from the Service Tax Regime. An ISD will have to compulsorily take a separate registration, and the same shall be applied in the form GST REG-1 by selecting the option ISD from the dropdown.

• Issue an ISD Invoice: For the purposes of distributing the input tax credit, an ISD has to issue an ISD invoice as per the GST law, clearly indicating in such invoice that it is issued only for the distribution of input tax credit.

• GST return for ISD and due date: Return under form GSTR 6 is to be filed for the distribution of input tax within thirteen days after the end of the month to furnish information on all ISD invoices issued.

• Ratio in which credit is to be distributed by the ISD: The credit has to be distributed only to the unit to which the supply is directly attributable. If input services are attributable to more than one recipient of credit, the distribution shall be on a pro-rata basis of turnover in the State/Union Territory.

Thus, the concept of ISD is a facility made available to businesses that have a large share of common expenditures, and billing and payment are done from a centralized location.