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Understanding the Input Service Distributor under GST
21 Jan, 2026
By Online Legal India
Published On 21 Jan 2026
Category GST
Input Service Distributor (ISD) refers to a taxpayer under GST. They generally distributes the Input Tax Credit (ITC). It is also considered as a crucial GST mechanism. So, it acts as a centralized hub for getting and distributing ITC on common services. ISD registration is mandatory where common input services are procured centrally and ITC is required to be distributed to distinct persons under the same PAN. It is effective from 1st April, 2025. In this blog, you will learn about the Input Service Distributor under GST.
An Input Service Distributor under GST is also called an ISD. It means a taxpayer that receives invoices for services used by its branches. It generally distributes the taxes paid. These taxes paid is called Input Tax Credit (ITC). The company uses the invoices to distribute the central tax payment to several branches. The branches may contain different GSTINs. So, they need to have the same PAN just like ISD.
Listed below are the entities that must register as Input Service Distributors:
a) An entity needs to be an office of a supplier which receives invoices for input services
b) A business must get tax invoices for input tax credit it purchased for its branches. They hold multiple GSTINs (Goods and Services Tax Identification Numbers). These branches comes under the same PAN.
c) A business needs to locate at the place where it bills and receives these common services.
d) ISD can distribute ITC of input services liable under RCM only where the ISD itself is liable to pay tax under RCM and receives the invoice.
e) An entity has the right to apply for several ISD registration. It also applies when the services are received at different offices in different locations or states.
f) You need to start using a specific ISD invoice to share the input tax credit for CGST (or SGST in state laws) paid on these services. It is also important to use the ISD invoice for sharing the input tax credit for IGST paid on the same services. This sharing is for its branch that contain a same PAN but a different GSTIN.
An ISD will not be able to distribute the input tax credit to other branches. The key situations can include:
a) In case the ITC is paid on capital goods and input. The example can include machinery purchased and raw materials.
b) The company will not share Input Tax Credit (ITC) to outsourced manufacturers or service providers.
The ISD is a kind of facility that made available to large businesses. These businesses operates from several locations. It has an expenditure and billing or payments from a single location. They can also distribute the tax credit across several branches. This helps to smoothen the process of credit avail for entities. It also helps to improve the credit flow under GST.
Here are the key documents required for Input Service Distribution registration:
a) Copy of Existing GST Registration Certificate for regular GST registration
b) PAN Card
Copy of the PAN card in the name of the business entity.
c) Proof of Business Constitution
Documents for companies:
d) Proof of Address of ISD Office
It Includes:
1) Utility bill (electricity or water bill) for rented premises.
2) Sale deed or ownership document for owned property.
e) Authorized Signatory Details
1) Identity proof of the authorized signatory.
2) Authorization letter from the business entity for the signatory.
3) A passport-sized photograph.
f) Bank Account Details
Recent bank statement or a cancelled cheque
g) Details of Business Carried Out
It includes the details of:
1) Business Operations
2) Nature of Business
3) Services provided
h) Additional Documents (if requested by the GST officer)
1) Financial statements and self-declaration affidavit that confirms compliance with GST regulations.
2) List of invoices, invoice service agreements, and values received. It also includes a summary of input tax credit (ITC) distribution.
It is applicable for entities that are transitioning into the ISD compliance process. The compliance is effective from 1st April 2025. The registration process is same for regular taxpayer registration.
Below are the steps to get an Input Service Distributor (ISD) registration:
Firstly, you must go to the official GST portal. Then, move to the "Services" option, and select "Registration". Next, you must select the "New Registration" option.
This step allows you to fill out the PART-A for the business details. The details can include:
a) Legal name
b) Trade Name
c) Email Id
d) PAN
e) Mobile Numbers
Then, you must put the one-time password (OTP) for verification. Once you enter the OTP, you will get a Temporary Reference Number (TRN).
You must use the TRN which means Temporary Reference Number to log in. Next, fill out and complete the PART-B. This include the basic business details such as:
a) Registration Reason
b) Promoters
c) Authorized Signatory
d) Place of business
e) Details of goods and services deal with:
Then, you must upload the relevant documents and state specific information. Next, select the "Input Service Distributor" option. You will find it under the "Reason to obtain registration" drop-down.
In this step, you need to submit the ISD registration application with e-verification. Then, you will get an Application Reference Number (ARN). Once approved, you will get an ISD GSTIN.
There are several provisions of the CGST Act and related rules for ISD registration:
It outlines the term "Input Service Distributor (ISD)" as an office of a supplier of goods or services. It can also be both to receive tax invoices for input services.
This shows the services which comes under the reverse charge mechanism. The ISD has get it for or on behalf of distinct persons. This is provided for under Section 25 of the CGST Act.
The method in which an ISD needs to distribute the ITC on the received invoices. The system makes the distribution to the recipients for branches or units with several GSTINs under the same PAN.
This rule gives the compliance guidelines for input tax credit distribution by an ISD. It confirms proper documentation and procedures for credit allocation.
It mainly outlines the rules for ISD invoice issuance. This also specifies the process for rising and distributing the input tax credit to eligible recipients.
An ISD invoice refers to a unique type of invoice. It is issued by the ISD under the GST framework. This applies to the distribution of the Input Tax Credit (ITC). An ISD invoice is not similar to the original supplier invoice. It is a credit distribution document, not a tax invoice for supply. These branches or units contains several GSTINs. Still, it comes under the same PAN. The ISD invoice includes the details of:
a) The amount of tax credit being distributed
b) The GSTIN of the receiving branch or unit
c) The nature of the services for which the credit is being allocated.
Thus, it confirms that the tax credit is shared from the ISD to its recipients. This allows them to claim the credit in their GSTR-3B returns.
The format of an ISD invoice is managed by Section 54(1) of the CGST Rules. Here is the format:
• Name and Address of the Input Service Distributor (ISD)
• GSTIN (Goods and Services Tax Identification Number) of ISD
• Unique invoice number
• Date of invoice
• Name and address of the unit/recipient branch
• GSTIN of the recipient branch or unit
• Amount of ITC distributed
• Digital Signature or signature of the authorized person
An Input Service Distributor under GST maintains the proper allocation of ITC to its branches or units registered under the same PAN. The ITC has been distributed on input services through an ISD invoice. The details are also reported in several states or locations. This simplifies the seamless credit flow within an organization. This organization operates in multiple states or locations.
Here are the conditions for the distribution of Input Tax Credit (ITC):
a) The availability of ITC for distribution in a month must be distributed in the same month. The details must also be reported in the form GSTR-6.
b) The taxes are paid under the reverse charge mechanism. This is governed by Sections 9(3) and 9(4) of the CGST Act for distribution among recipient units.
c) The tax credit available to a particular input service. It applies to one recipients that need to be distributed only to that recipient. This credit will not be allocated to other recipients.
d) Input Tax Credit relating to common input services utilized by more than one recipient. The recipients of the ISD must be distributed proportionately. They uses the formula of:
Recipient’s turnover in a State/ Union territory during the relevant period/ Aggregate turnover of all recipients.
e) The ITC on input services used by all recipients of the ISD. The recipient units need to be distributed proportionally by using the same turnover ratio.
f) CGST, SGST, and IGST credits are required to be distributed in the prescribed manner. It also include the applicable rules for ISD under the GST Act.
Any excess or incorrect ITC distributed by an ISD shall be recovered from the recipient unit along with interest, in accordance with Sections 73 or 74 of the CGST Act. Here is the recovery procedure:
a) The input tax credit distribution to all or any recipient in huge amount is available
b) The distribution of ITC in an appropriate ratio to all or any recipient.
c) Given more than what a supplier should get, and this amount will be taken back from the receivers with interest. The provisions of "Demand and Recovery" need to apply to recovery.
Conclusion
The Input Service Distributor (ISD) is an essential mechanism under GST framework. The date effective from April 1, 2025, the ISD registration becomes compulsory for businesses. These businesses handle common input services across branches. This simplifies the flow of Input Tax Credit (ITC) and improves tax efficiency. It also helps to reduce ITC loss and compliance risks. If you still have a query in it, get in touch with Online Legal India.
FAQ
Q1. Who is an Input Service Distributor?
An Input Service Distributor (ISD) means a type of taxpayer under GST. They gets invoices for services that are used by its branches. This distributes Input Tax Credit to its branches on a proportional basis. The branches may include different GSTINs but share the same PAN as that of ISD.
Q2. Can a taxpayer have several ISDs?
Yes, a taxpayer can have several Input Service Distributors (ISDs) under the GST framework.
Q3. Can a company have several ISDs?
Yes, a company can have several ISDs. For example, marketing division, security division, etc.
Disclaimer
This article is for informational purposes only and does not constitute legal advice. Online Legal India is a digital platform. If you require legal assistance, we strongly recommend consulting a qualified lawyer or law firm.
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