Input Service Distributor (ISD) in GST

By Registrationwala

29th April 2017


Input Service Distributor (ISD) implies an office of the supplier of goods, benefits and services or both which receives tax invoices towards receipt of input services and issues an endorsed record for the reasons for distributing the credit of central tax (CGST), State tax (SGST)/ Union territory tax (UTGST) or integrated tax (IGST) paid on the said benefits to a merchandiser claiming taxable products or benefits or both having same PAN as that of the ISD.

An ISD is necessary to acquire a different registration despite the fact that it may be independently registered. The starting point from claiming enrolment or registration is not pertinent to ISD under the present regime (i.e. under Service Tax) and would not be relocated in GST regime. All the existing ISDs will be obliged to acquire a fresh registration under new regime in case they want to work an ISD.

Input Tax Distributor under GST

The ideas of Input Service Distributor under GST and other different interconnected laws have been kept adjusted to maintain the existing position.

Under present tax regime the concept of Input Service Distributor comprise of

  • An office of the seller of final products or provider of output service
  • Which receives invoices issued under rule 4A of Service Tax Rules, 1994 towards acquire of input services
  • Issue invoice, bill or challan for the cause of distributing the credit of service tax paid on the facilities to such sellers or providers.

Therefore, the accessible CENVAT to ISD is distributed by it to its units and outsourced producers. Input Service Distributor under GST Model contains

  • an office of the supplier of goods and / or services which
  • receives tax invoices issued under section 28 towards receipt of input services and
  • issues a determined document for the purposes of distributing the credit of CGST (SGST in State Acts) and / or IGST paid on the said services to a supplier of taxable goods and / or services having same PAN as that of the office referred to above

The meaning and rules are quite alike under both the models with very little dissimilarity

Differences under both the models

ISD may issue a record to an office carrying the same PAN similar to ISD. Contrary to the present model credit cannot be disseminated to outsourced producers or service suppliers. The basis might be due to the shift of taxable event manufacture to supply. The tax liability might emerge at the time of supply which would be eventually paid by ISD on utilization of available input tax credit.

Registration and filing of Returns under GST

  • Relocation of existing registration would not apply ISD, consequently it is required to apply anew for enrolment. Here it is worth a note that a tax paying citizen may apply as a "Supplier of Service" and also an "Input Service Distributor" at the same time unlike the present situation. Separate enlistment number would be accommodated for this application.
  • On the off chance of being registered as an ISD return is to be documented by 13th day of the succeeding month though to be enrolled as Supplier of Service return is to be recorded by 12th day of the succeeding month.

Distribution of Credit by Input Service Distributor

The credit of CGST, IGST and SGST shall be spread, in the manner as per below chart

Conditions for distribution of Credit

  • Endorsed reports must be issued to the receipts of credit containing recommended points of prescribed details
  • Measure of credit distributed must not surpass sum accessible to distribution
  • Credit of tax paid on input services attributable to a recipient of credit shall be distributed only to that recipient;
  • Credit of tax paid on input services attributable from all or more than one beneficiary of credit should be distributed only amongst such or all recipient(s)to whom the input service is attributable and such distribution shall be pro rata on the following basis
  • turnover in a State of such recipient, amid the significant period, to the total of the turnover of every single such beneficiary to whom such input service is attributable and which are operational in the present year, amid the said pertinent period
  • assuming a few or all recipients of the credit do not have any turnover in their States in the financial year preceding the year amid which the credit is to be circulated, the last quarter for which details of such turnover of the considerable number of recipients are accessible, previous to the month during which credit is to be distributed.

Transitional Provisions

  • The input tax credit on any service received before the designated day might be qualified for distribution as credit regardless of the possibility that the invoice(s) is received on or after the appointed day.
  • The measure of input tax credit conveyed forward in a return documented under earlier law would be permitted under Model GST Law
  • GST administration accommodates for distribution of credit for such services which were received before the appointed day yet invoices are received later. Services which have been received after appointed date and invoice also received later, it would be reserved under GST regime for the first time. and no transition provisions will apply here.
  • Input assess credit would not require carry over of reports and no time limits for taking such credit


The arrangements under existing tax laws have been kept adjusted under Model GST Law in order to continue all the benefits available to Input Service Distributor with stability.


Input Service Distributor (ISD) in GST