GST Input Service Distributor (ISD) — Registration, Distribution and Compliance

An Input Service Distributor (ISD) is an office of a GST-registered person that receives tax invoices for input services used by its branches and distributes the Input Tax Credit (ITC) of those services to the branches. The ISD mechanism is particularly relevant for large businesses with multiple branches or state registrations. Here is the complete guide.

What Is an ISD and When Is It Needed?

• A Head Office (HO) or corporate office that receives invoices for services used by multiple branches (e.g., IT software license, advertising, professional services benefiting multiple states)
• The HO receives the invoice and the GST ITC — but the services are actually consumed by branches in different states
• The ISD mechanism distributes the ITC from the HO to the respective branches
• Without ISD: Branches cannot directly claim ITC on invoices addressed to the HO in another state

ISD Registration

• The HO/distributing office must obtain a separate GST registration as an ISD (in addition to its regular GSTIN)
• ISD registration is obtained from the same state — same PAN, different GSTIN with "ISD" suffix
• Not mandatory — a business can use "cross-charge" as an alternative (issue tax invoice from HO to branches for shared services)

ITC Distribution Rules

• ITC is distributed to branches in proportion to their turnover in the state during the month / total turnover of all states in the same period
• IGST, CGST and SGST components are distributed correctly — CGST of one state cannot be distributed to another state's SGST
• ITC distributed cannot exceed ITC received by the ISD
• ISD issues an ISD invoice (Input Service Distributor Invoice) to each branch mentioning the ITC being distributed

Compliance — GSTR-6

• ISD must file GSTR-6 every month by the 13th of the following month
• GSTR-6 contains: ITC received from suppliers (auto-populated in GSTR-6A), ITC distributed to branches, excess ISD credit
• The receiving branches see the distributed ITC in their GSTR-2B and can claim it

Conclusion

The ISD mechanism provides a structured, transparent way to distribute shared service ITC across branches — essential for multi-state businesses. SPOTON provides ISD registration, GSTR-6 filing and ITC distribution advisory for companies with multiple branches across India. Contact us for expert GST compliance services.