GST glossary
ISD
Input Service Distributor
An Input Service Distributor (ISD) is a separate GST registration that an office of a business takes to pass on the input tax credit on services it receives for its branches in other states. Since 1 April 2025 this route is compulsory for such common services.
Why it matters to your business
When your head office pays for a service that all your branches use, the GST on that bill sits in the head office’s registration. The branches in other states, which pay output tax, cannot use it. The ISD route moves that credit to the registrations that should have it, so no branch pays cash while credit lies unused elsewhere.
How it works
As of October 2026:
- The office that receives the common invoices takes an ISD registration, separate from its normal GSTIN.
- Vendors bill those services to the ISD’s GSTIN.
- Each month the ISD issues an ISD invoice to each branch for its share, and reports the distribution in GSTR-6 by the 13th.
- The credit must be distributed in the same month in which it becomes available.
- An ISD distributes credit on services only. Goods moved between branches go on a tax invoice as a normal supply.
An example
A distributor with registrations in Maharashtra and Gujarat pays ₹1,00,000 plus ₹18,000 GST for a yearly software subscription used by both. Last year Maharashtra had 60% of the turnover and Gujarat 40%. The ISD distributes ₹10,800 of the credit to Maharashtra and ₹7,200 to Gujarat.
Common mistakes
- Taking the whole credit in the head office’s normal registration.
- Asking vendors to bill common services to a branch GSTIN in place of the ISD’s.
- Distributing the credit late, or in a ratio other than turnover.
Questions about ISD
Who needs an ISD registration?
A business with GST registrations in more than one state under the same PAN, whose head office receives invoices for services that its other registrations also use, such as audit fees, software subscriptions or advertising.
Is ISD registration compulsory?
Yes, from 1 April 2025, for distributing the credit on common input services received by one office for other registrations of the same PAN. Before that date a business could choose between ISD and cross-charging its branches.
How is the credit divided between branches?
Credit that belongs to one branch goes wholly to that branch. Credit common to several is divided in the ratio of their turnover in the previous financial year.
Which return does an ISD file?
GSTR-6, every month, by the 13th of the next month. The credit distributed then shows in each branch's GSTR-2B.
Updated .