Concept of the input service distributor under GST

Input service distributor  is the concept which effects the optimise distribution of the input tax credit among the branches. Input services distributor received the invoice for services which are used by its branches. Input tax credit is distributed in the proportional basis with the issue of the ISD Invoice. These branches have same PAN but different GSTIN such as Input services distributor. 

Input service distributor distributes the input tax credit to it branch for full utilization of the ITC. Get help from Profesional Utilities to solve any problem related to the GST.

Table Of Content

What is the Input service distributor meaning in GST?

Input services distributor refers to the concept under GST Regime in which tax invoice is received by the office of the supplier and credit is distributed to its branches or units.

Documents required for ISD regisrstion under GST

• Bank Detail
• Proof of the Constitution of business and Minstry of Corporation Affair issue certificate of incorporation.
• Company’s PAN Card.
• Photograph of Authorised signatory and directors
• Principle place of business’s address proof
• Article of Association or Memorandam of association
• Any proof of the appointment of the authorised signatory like authorised signatory appointed by board resolution.
• Address proof and PAN Card of the all directors of the company.
• Copy of the Aadhar Card and PAN Card of the authorised signatory. Authorised signatory must be indian in branch registration or foreign companies. 

ISD Invoice 

• Goods and services tax identification number, name and address of the Input Service Distributor.
• Serial number containing numerals or alphabets or numerals 
• Date of issue of the invoice.
• Recipient’s Goods and Services Tax Identification, Name and address
• Amount
• Digital Signature or signatore of the authorised representative or Input Service Distributor.

Distribution of credit of the input service distributor

For the distribution of the input tax credit following procedures need to be followed- 

• In the same month in which input tax credit is received should be distributed.
• In GSTR 6 Detail is furnished about the input tax credit.
• Ineligible ITC and ITC against UTGST,  CGST, IGST, SGST,  are separately distributed.
• If ISD and recipient is located in the different unoin/state territory then ITC of SGST, CGST or UTGST is distributed as IGST as aggregate SGST, CGST or UTGST.
• If ISD and recipient is located in the same unoin/state territory then ITC of the SGST,CGST or UTGST is distributed as SGST,CGST or UTGST
• Then invoice is issued by the Input Service distributor in which ITC is distributed.
• Input service distributor in case of additional ITC issue debit note and in case of the reduction of the ITC credit note is issued. ITC is distributed in same ratio as it is distributed in original invoice.

Function of the Input Service Distributor

The main function of the input service distributor is distribution of ITC to its different units or branches. This ITC is distributed among the different branches or units is subjected to certain condition or their requirement. It facilitates efficient distribution of the ITC.

Exemption of the Input Service distributor

Input tax credit is cannot be distributed by the ISD in certain case - 

• If machinery and raw material is purchased and input tax credit is paid on the capital goods and input.
• For service provider or outsourced manufacturer distribution cannot be done. 

Condition that need to be filled by the Input tax distributor

Invoicing - Input Service Distributor invoice has to be issued to the recipient for the amount of the tax to be distributed.\

Return - In GSTR-6 amount of the tax credit available should be less than the tax credit distributed on the end of the relevant month.

Registration  - Input Service Distributor should registered as ISD against normal taxpayer under the GST. Then credit shall be distributed on the declaration.

Conclusion 

Under this mechanism Input Tax Credit is distributed among the multiple location by its main units. The main purpose of the input services distributor is distribution to different location eligible ITC where generation of the tax liability take place. In invoice taxes are distributed in a way like  ITC of the SGST,CGST or UTGST is distributed against SGST,CGST or UTGST. 

Why Professional Utilities?

At Professional Utilities, we leverage our industry knowledge and expertise to help businesses navigate complex regulations, minimize risks, and optimize operations for maximum efficiency and profitability.

One Stop Corporate Solution

PAN India
Services

Free Expert
Assistance

Google Verified
Business

Dedicated Support
Staff

Money-Back
Guarantee

What are the purposes of an input service distributor?

The purpose of the input service distributor in Goods and Services Tax (GST) system that enables companies with various locations to distribute the Input Tax Credit (ITC) they have received to the branches or units that need it.

What does ISD in GST stand for?

ISD in GST stands for Input Service distributor in GST which is a company or office that collects tax invoices for the input services used by its branches or units

What is ISD in GST due date of the return?

Only on or after the 11th of month M+1 and on or before the 13th of month M+1 may SD Returns for month M be filed.

Does an ISD invoice require an IRN?

Yes IRN must be included on every invoice that the supplier issues to his customer. Every invoice raised by a GSTIN in the entire GST system during a fiscal year would have a different ID number.

Speak Directly to our Expert Today

Get in Touch

Expert Consultation

Affordable

Client Support