INPUT SERVICE DISTRIBUTOR: MEANING OF ISD UNDER GST

  • Blog|GST & Customs|
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  • By Taxmann
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  • Last Updated on 24 December, 2020

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An ‘Input Service Distributor’ is defined in Section 2(61), as an office of the supplier of goods or services or both which receives tax invoices issued under Section 31 towards the receipt of input services and issues a prescribed document for the purposes of distributing the credit of CGST, SGST, IGST or UTGST paid on the said services to a supplier of taxable goods or services or both having the same Permanent Account Number as that of the said office.
 
The essential conditions for qualifying as an input service distributor are:
 
• The Input Service Distributor should be an office of the supplier;
 
• Such supplier can be a supplier of goods or services or both;
 
• Such office should receive tax invoices issued in respect of receipt of input service. Tax invoices received in respect of input goods are not eligible for ISD benefits;
 
• Such office should issue a prescribed document for the purposes of distributing credits of CGST, SGST, IGST or UTGST, to a supplier of taxable goods or services or both having same Permanent Account Number as that of the said office.

Who can receive credit from an ISD?

An ISD can distribute credit only to a unit which is a supplier of goods or services and has the same Permanent Account Number as that of the Input Service Distributor.

Registration of ISD:

1. Compulsory Registration: As per Section 24 of the CGST Act, every ISD, whether or not separately registered under GST law, have to compulsorily take registration under GST law.
 
2. Procedure for Registration of an Input service distributor and registered person is same under GST law.

ISD Invoice Format Under GST:

1. ISD Invoice has to be issued for distribution of ITC. ISD Credit note has to be issued for the reduction of credit in case of ITC already distributed. As per sub-rule (1) of rule 54, ISD invoice or credit issued by an ISD shall contain the following details: a. Name, address and GSTIN of the Input Service Distributor; b. Consecutive Serial number (Not exceeding 16 characters); Further      • It can be in one or multiple series,      • Containing alphabets or numerals or      • Special characters hyphen or dash and      • Slash symbolized as “-“ and “/” respectively,      • Any combination thereof, unique for a financial year; c. Date of its issue; d. Name, address and GSTIN of the recipient to whom the credit is distributed; e. Amount of the credit distributed; f. Signature or digital signature of the ISD or his authorized representative   2. If ISD is an office of banking company Exception for Insurer, Banking or Financial Company or NBFC If supplier of taxable service is an insurer or a banking company or a financial institution, including a non-banking financial company, then; a. A tax invoice or any other document or by whatever name called can be issued; b. Whether issued or made available, physically or electronically c. Whether or not serially numbered, and d. Whether or not containing the address of the recipient of taxable service But containing other information as mentioned under rule 46.

Returns by ISD:

1. Monthly Return: ISD has to furnish the return in FORM GSTR-6 electronically within 13 days after the end of such month. Containing the tax invoices on which credit has been received.
 
2. ISD on the basis of information contained in FORM GSTR-6A may either accept or reject the details, on or before the 17the day, but not before the 15th day, of the month succeeding the tax period.
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