About Input Service Distributor (ISD):

• 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 the same Permanent Account Number (PAN) as that of the ISD.
• Hence, ISD is a business which receives invoices for services used by its branches.
• It distributes the tax paid to such branches on a proportional basis by issuing an ISD invoice.
• The branches can have different GST Identification Numbers (GSTINs) but must have the same PAN as that of ISD.
• Registration under GST:
  • An ISD is required to obtain a separate registration.
  • Registration is mandatory and there is no threshold limit for registration for an ISD. 
• Relevance of ISD:
  • It is relevant for businesses having multiple branches operating within India. 
  • These businesses are required to obtain GSTIN for each branch from where taxable supplies are made.
  • Based on the purchases of the head office or branch, ITC (Input Tax Credit) in the form of SGST, CGST, or IGST would accrue to the business. 
  • To ensure that the ITC is properly distributed amongst the various branches of the business, the ISD concept has been introduced by the Government.
  • ISD is made available to businesses having a large share of common expenditures, and billing/payment is done from a centralised location. 
• Where ISD doesn’t apply?
  • ISD mechanism is meant only for distributing credit on common invoices pertaining to input services.
  • It is not applicable when input or capital goods are involved.