The Central Board of Excise and Customs (CBEC) has release concept note on Input Service Distributor.
Input Service Distributor (ISD) means an office of the supplier of Goods or Services or both which receives tax invoices towards receipt of input services and issues a prescribed document for the purposes of distributing the credit of central tax (CGST), State tax (SGST)/ Union territory tax (UTGST) or integrated tax (IGST) paid on the said services to a supplier of taxable goods or services or both having same PAN as that of the ISD.
ISD mechanism is meant only for distributing the credit on common invoices pertaining to input services only and not goods (inputs or capital goods).
The concept of ISD is adopted from the Service Tax regime to the new Goods and Services Tax. An ISD will have to compulsorily take a separate registration as such ISD and apply for the same in form GST REG-1.
There is no threshold limit for registration for an ISD. The other locations may be registered separately.
The concept of ISD is a facility made available to business having a large share of common expenditure and billing/payment is done from a centralized location. The mechanism is meant to simplify the credit taking process for entities and the facility is meant to strengthen the seamless flow of credit under GST.
Read the full text of the Concept Note below.
