GST Returns

GST Provisions for Input service distributor (ISD)

Input service distributor

In this article, we are going to discuss Input Service Distributor and rules regarding Input Tax Credit. In order to gain some clarity about this topic, first, we have to understand the meaning of Input Service Distributor.

Definition of Input Service Distributor

Central Goods and Service Tax Act, 2017 provides its definition in Sub-Section (61) of Section 2.It means an office of the supplier of goods or services or both that receives tax invoices issued under section 31 towards the receipt of input services and issues a prescribed document for purpose of distributing the credit of central, state, integrated or union territory tax paid on the said services to the supplier of taxable goods or services or both having same PAN as that of the said office. Input service distributor is a business which receives invoices for services used by its branches. It distributes the tax paid to branches on a proportional basis by issuing an ISD invoice.

When does the Tax Liability Arise to ISD (Input Service Distributor)?

As one of the major features is the distribution of input credit, it is compulsory for them to get GST Registration Certificate and acquire a GSTIN.

But, the tax liability to ISD would arise at the time of supply of services, which would be paid on the utilization of available input tax credit.

What is GSTR 6?

GSTR 6 is a monthly return that must be filed by an Input Service Distributor. It has details of Input Tax Credit received by an Input Service Distributor and distribution of Input Tax Credit.

As per the GST Act, the due date of filing GSTR 6[1] is 13 of the next month. GSTR 6 has to be filed by every Input Service Distributor even if it is a nil return.

Distribution of ITC by ISD

Input Tax Credit accumulated can be of two sorts:

Distribution of ITC by ISD
  • Eligible:  which can be used for setting off against output tax liability.
  • Ineligible: which cannot be used for setting off against output tax liability.

Both needs to be distributed in the same manner. Input Tax Credit on any goods or services or both used by the taxable person for construction of immoveable property on his own account including any goods or services or both used in the course or expansion of business should be distributed separately for the ineligible Input Tax Credit and eligible Input Tax Credit.

Input Tax Credit on account of IGST has to be distributed as IGST only. Input Tax Credit of CGST and SGST/UTGST in respect of recipient located in the same state/UT is distributed as it is respectively. Input Tax Credit of CGST, SGST/UTGST in respect of recipient located in different states has to be distributed as IGST i.e., CGST+SGST/UTGST= IGST.


The concept of Input Service Distributors is made available to business having large share of common expenditure. The mechanism simplifies the credit taking process for entities and the facility is expected to strengthen the seamless flow of credit under GST.

Read our article:An Exhaustive List of GST Notifications Issued: Extension of due dates

Ashish M. Shaji

Ashish M. Shaji has done his graduation in law (BA. LLB) from CCS University. He has keen interests in doing extensive research and writing on legal subjects especially on corporate law. He is a creative thinker and has a great interest in exploring legal subjects.

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