{"id":10954,"date":"2020-06-18T11:38:49","date_gmt":"2020-06-18T06:08:49","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=10954"},"modified":"2020-06-18T12:09:16","modified_gmt":"2020-06-18T06:39:16","slug":"input-service-distributor-under-gst","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/input-service-distributor-under-gst\/","title":{"rendered":"Concept of Input Service Distributor under GST"},"content":{"rendered":"\n<p class=\"has-drop-cap\">The foundation of the input service distributor under GST has its roots in the earlier tax regime. <strong><em>Applicability of ISD<\/em><\/strong> is only for those entities that are having their several branches all over India under the GST regime. <em><a href=\"https:\/\/corpbiz.io\/gst-registration\"><strong>GST registration<\/strong><\/a><\/em> for all the branches is mandatory from where the taxable supply would get executed. Therefore, we must say that the concept of input service distributor under GST is appropriate for those businesses that are performing its functions with <strong><em>more than one branch in India<\/em><\/strong> while getting registered under goods and service tax is mandatory.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Meaning of Input Service Distributor under GST <\/h2>\n\n\n\n<p>Input Service Distributor under GST is an office of <strong><em>GST-registered persons<\/em><\/strong> receiving tax invoices as per <strong><em>section 31 of the CGST Act<\/em><\/strong> for input services used by all of its branches. As mentioned in <em><strong>Section 2 (61) of the CGST Act 2017<\/strong><\/em><sup><a href=\"https:\/\/www.indiacode.nic.in\/handle\/123456789\/2250?view_type=browse&amp;sam_handle=123456789\/1362\"><strong>[1]<\/strong><\/a><\/sup>, it generates a prescribed document for the distribution of tax credit on input services. <\/p>\n\n\n\n<p>By issuing an input service\ndistributor invoice on a proportional basis, ISD is responsible for\ndistributing the tax paid to such branches. It is necessary for the supplier\noffice that has set its objective to act as an ISD to acquire a separate ISD. <strong><em>GSTIN\nNumber<\/em><\/strong> for all the branches will be different from each other. However,\nall the branches should have a similar PAN number as the PAN number of ISD or\nhead office.&nbsp; <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Need for Registering as Input Service\nDistributor<\/h3>\n\n\n\n<ul><li>All\nthe businesses that use their <strong><em>centralized location<\/em><\/strong> for the payment\nor billing, along with having a significant chunk of common expenditure, get\nthe facility of <strong><em>input service distributor<\/em><\/strong>. The mechanism of ISD has emerged as\nthe boon for business entities by simplifying the credit taking process for\nthem. Furthermore, it facilitates the <strong><em>seamless cash flow<\/em><\/strong> under goods and\nservice tax.<\/li><li>There\nis no threshold prescribed for ISD registration. ISD must get registered in <strong><em>GST\nlaw.<\/em><\/strong> In order to receive incoming supply invoices whose payment would\nget completed under <strong><em>RCM<\/em><\/strong>, ISD should look for taking a separate registration.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Conditions to be accomplished by an Input\nService Distributor under GST<\/h3>\n\n\n\n<p><strong><em>An input service distributor\nunder GST will fulfill the conditions given below in the points-&nbsp;<\/em><\/strong><\/p>\n\n\n\n<ul><li>The amount of tax paid at the time of business functioning on the services by the registered person business would get distributed by ISD to them. <\/li><li>An input service distributor is not liable to accept invoices of all types on which the payment of tax would be on the basis of the <em><a href=\"https:\/\/corpbiz.io\/learning\/analysis-of-reverse-charge-mechanism-under-gst\/\"><strong>Reverse Charge Mechanism <\/strong><\/a><\/em><strong><em>(RCM).<\/em><\/strong> The recipient of taxable service can have the pleasure of taking credit for discharging the tax liability under RCM. <\/li><li>Thus, if it ponders over taking reverse charge supplies, there is a requirement for making sure that it has registered itself just like another normal taxpayer. However, it can&#8217;t take the liberty of distributing the <strong><em>available tax credit<\/em><\/strong>. <\/li><li><strong><em>Distribution of input tax credit<\/em><\/strong> available in a specific month should take place in the same month. Hence, delay in the distribution of credit is not acceptable as well as permissible. ISD should ensure that he won&#8217;t engage himself in the distribution of credit more than its availability. <\/li><li>Distribution of <strong><em>eligible and ineligible credit<\/em><\/strong> must take place separately. Furthermore, the requirement is to distribute the <strong><em>credit of SGST or CGST, GST\/UT, or IGST<\/em><\/strong> in a separate manner. <\/li><li>Suppose that a unit is making exempted supplies or hasn&#8217;t registered yet. In this case, the credit applicable to any such recipient unit would get distributed to it. <\/li><li>Various branches or offices of a company at all the locations may go for separate registrations as ISD. So, there is nothing wrong with saying that the option of more than one input service distributor registration is on for a company or an entity. <\/li><li>If the distributed credit has to go through a reduction for any particular reason, the office should issue an <strong><em>ISD credit note<\/em><\/strong>. <\/li><li>Making separate registration as an ISD is compulsory despite receiving the registration in REG-01 like a regular taxpayer by getting itself registered under serial number 14 of the ISD registered form. <\/li><li>Only those units would receive the ISD invoice from the input service distributor to whom ISD wants to make the distribution of credit of tax paid on services. Moreover, the intent of issuing the <strong><em>ITC invoice<\/em><\/strong> must be evident. \u00a0<\/li><\/ul>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/inspection-under-gst-a-concise-study\/\">Inspection under GST: A Concise Study\n<\/a><\/mark><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Points that must get covered in the Invoices by\nInput Service Distributor under GST<\/h3>\n\n\n\n<p><strong><em>The relevant points that must get covered in the invoices by input service distributor under GST are as follows<\/em>&#8211; <\/strong><\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" width=\"697\" height=\"506\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/06\/image-111.png\" alt=\"Invoices by Input Service Distributor under GST\" class=\"wp-image-10955\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/06\/image-111.png 697w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/06\/image-111-300x218.png 300w\" sizes=\"(max-width: 697px) 100vw, 697px\" \/><\/figure><\/div>\n\n\n\n<p>There is an exception regarding\nno need of numbering of documents in a serial order. This exception is\napplicable if ISD is a financial institution or a banking company (also\nincluding NBFC), then there is no need to number the documents serially. <\/p>\n\n\n\n<div class=\"shadow1\"><strong>Note:<\/strong> All the taxpayers registered as ISD in GST must file the GSTR-06, i.e., a monthly return. The GST Act indicates that the due date for submitting GSTR-06 is the 13th of the next month.<\/div>\n\n\n\n<h3 class=\"wp-block-heading\">Circumstances in Which Input Service Distributor\nis not applicable<\/h3>\n\n\n\n<p><strong><em>Input service distributor cannot take a step ahead for the distribution of ITC in two circumstances.<\/em><\/strong><\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" width=\"551\" height=\"336\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/06\/image-112.png\" alt=\"ITC in two circumstances\" class=\"wp-image-10957\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/06\/image-112.png 551w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/06\/image-112-300x183.png 300w\" sizes=\"(max-width: 551px) 100vw, 551px\" \/><\/figure><\/div>\n\n\n\n<h3 class=\"wp-block-heading\">Recovery System for Inappropriate Distribution\nof Tax Credit by ISD&nbsp; <\/h3>\n\n\n\n<p><strong><em>As per the GST Act, the following\nwould get adjudged to be the wrongful distribution of tax credit by input\nservice distributor- <\/em><\/strong><\/p>\n\n\n\n<ul><li>Distributed in an inapt ratio to one recipient\nor all the recipients<\/li><li>Distributed credit to one recipient or all the\nrecipients in case of the availability of the excess amount for distribution<\/li><li>Distributed in surplus of what the supplier is\nauthorized and would get recovered from such a recipient as well as interest\nand the <strong><em>Demand and Recovery provisions<\/em><\/strong> need to apply for effecting such\nrecovery.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Closing Remarks<\/h2>\n\n\n\n<p>In recent years, the <strong><em>concept of Input Service Distributor under GST<\/em><\/strong> has achieved popularity, and by looking at the trend, we must say that it will achieve even more in the future. It got introduced to avoid the accumulation of ITC. At <em><a href=\"https:\/\/corpbiz.io\/\"><strong>Corpbiz<\/strong><\/a><\/em>, our experts are working day and night to assist you with the <strong><em>GST registration process<\/em><\/strong> and help you understand more about ISD.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/taxation-of-educational-institutions-under-gst\/\">\nKnow about the Taxation of Educational Institutions under GST\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The foundation of the input service distributor under GST has its roots in the earlier tax regime. Applicability of ISD is only for those entities that are having their several branches all over India under the GST regime. GST registration for all the branches is mandatory from where the taxable supply would get executed. Therefore, [&hellip;]<\/p>\n","protected":false},"author":19,"featured_media":10960,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[16],"tags":[674],"acf":{"service_id":"68"},"authorName":"Margesh Rai","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2024\/03\/Margesh.png","authorDescription":"With 10+ years of creative writing experience and 500+ blogs and thought leadership articles to his credit, Margesh Rai has left a significant impact in the field of content marketing. A published author and poet, Margesh Rai has experience writing for 20+ segments, such as Legal, Fintech, SAAS, Dairy, Real Estate, Hospitality, Recruitment, Sustainability, etc.","postViews":7727,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/10954"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/19"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=10954"}],"version-history":[{"count":15,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/10954\/revisions"}],"predecessor-version":[{"id":10974,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/10954\/revisions\/10974"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/10960"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=10954"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=10954"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=10954"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}