GST ISD Registration From 1 April 2025: Common Input-Service Credit and GSTR-6 Filing

An Input Service Distributor (ISD) is an office of a business that receives invoices for input services used by or on behalf of the business’s separate GST registrations. It distributes eligible input tax credit (ITC) to those registrations under the GST rules.

For example, a company may receive an invoice for common software, audit or advertising services at its head office, while GST registrations in several states use those services. The ISD mechanism allocates the eligible credit to the registrations concerned.

GST registrations of the same legal entity in different states are treated as distinct persons. From 1 April 2025, an office that receives input-service invoices for or on behalf of those distinct persons must register as an ISD and distribute the related credit. This changed the earlier position, under which using ISD for certain common input services was generally optional.

Who must register from 1 April 2025?

A business should review its GST arrangements if an office receives third-party invoices for input services that relate to other GST registrations under the same PAN.

There is no turnover threshold for the ISD requirement. If the statutory conditions apply, the office must register as an ISD even if it would not otherwise need GST registration based on turnover. ISD registration is separate from the entity’s regular GST registration.

From 1 April 2025, the amended provisions include specified input services taxed under CGST and IGST reverse-charge provisions in the ISD framework. For reverse-charge services, confirm which registration is liable to pay the tax and whether the resulting credit is eligible before distributing it.

An invoice received at a head office is not automatically distributable. Check whether the service relates to one or more eligible recipient registrations. Credit remains subject to the usual ITC conditions and restrictions, including blocked-credit rules.

ISD, regular GST registration and cross-charge

An ISD registration distributes ITC on input-service invoices. It does not replace a regular GST registration used to make taxable supplies or report output tax.

ISD and cross-charge also deal with different transactions:

• ISD distribution allocates eligible credit on third-party input-service invoices to the relevant GST registrations.
• Cross-charge may apply when one GST registration supplies services to another distinct-person registration, such as certain support services provided internally.

An ISD document distributes credit; it is not a tax invoice for a service supplied by one registration to another. Review the actual service, contract, invoice and recipient facts to determine whether cross-charge is also relevant.

Do not use ISD to distribute credit on goods or capital goods. Those credits are generally dealt with by the GST registration receiving the supply, subject to the applicable ITC rules.

How to distribute common input-service credit

The ISD must determine which recipient registration is entitled to each credit. The amount distributed cannot exceed the available credit. Eligible and ineligible credit must be treated separately.

Credit attributable to one recipient

If a service is attributable to only one GST registration, distribute the credit to that registration. For example, if an invoice relates solely to a project at the Karnataka unit, the credit should not be split among unrelated units just because the invoice was received at the head office.

Credit attributable to multiple recipients

If a service is attributable to more than one recipient, the credit is generally distributed among those recipients in proportion to their turnover in the relevant states or Union Territories.

Recipient’s share = Credit to distribute × Recipient’s turnover ÷ Total turnover of the relevant recipients

For example, suppose ₹1,00,000 of eligible credit relates to a common service used by two registrations. If their relevant turnover figures are ₹60 crore and ₹40 crore, the allocation is ₹60,000 and ₹40,000.

Use the statutory “relevant period” turnover and include the recipients to whom the service is attributable. The relevant period is generally the preceding financial year. Where the required turnover information is unavailable for one or more recipients, the rules provide for using the last quarter for which the details are available. Do not assume the calculation is based on the latest month’s sales.

Tax-head treatment

Distribute credit under the tax head and method prescribed by law. Integrated tax credit is distributed as integrated tax. The rules generally require central and state tax credits distributed to a recipient in another state to be distributed as integrated tax. Treatment can differ when the ISD and recipient are in the same state.

Keep a working paper showing each recipient, the basis for attribution, turnover figures, tax head and calculation. Do not divide credit equally or simply copy the tax components from the supplier’s invoice.

Credit notes and corrections

A supplier credit note or another later reduction in credit may require an adjustment to the ISD distribution. Follow the prescribed rules, including the original distribution ratio where applicable.

If credit was distributed to the wrong recipient or in excess, correct it through the applicable ISD document and return process. The recipient may also need to reverse or adjust credit already claimed.

How to obtain ISD registration

Apply for a separate ISD registration through the GST portal. The application follows the GST registration process, but the applicant must select the ISD category.

The general portal steps are:

1. Log in to the GST portal and go to Services → Registration → New Registration.
2. Enter the entity’s PAN and select the state or Union Territory where the ISD office is located.
3. Complete Part A to obtain a Temporary Reference Number.
4. Continue to Part B and select “Input Service Distributor only” as the reason for registration.
5. Enter the required business and authorised-signatory information, submit the application and track its status.
6. After approval, use the ISD GSTIN for the relevant invoices and returns.

Plan registration before the office begins receiving invoices for common services under the new arrangement. Coordinate with suppliers so they use the correct GSTIN when an invoice should be issued to the ISD. Incorrect billing details can complicate credit eligibility and distribution.

Filing Form GSTR-6

An ISD must file Form GSTR-6 for every calendar month or part of a month for which it is registered. The normal due date is the 13th day of the following month, unless the government extends it. GSTR-6 is a monthly return, not a quarterly one.

The return reports input-service invoices received by the ISD and the credit distributed to recipients. It also allows the ISD to report amendments, credit notes and other adjustments. The return should agree with the ISD’s invoices, credit notes, supplier documents and distribution calculations.

A practical monthly process is:

1. Download and review the auto-drafted inward-supply details on the portal.
2. Reconcile supplier invoices with the ISD purchase ledger and confirm that each invoice uses the correct GSTIN.
3. Identify whether each service is attributable to one recipient or several.
4. Check ITC eligibility, including blocked or restricted credit.
5. Calculate the distribution using the applicable attribution and turnover rules.
6. Issue ISD invoices or credit notes to the recipient registrations.
7. File GSTR-6 by the due date and save the acknowledgement and supporting workpapers.

The return requirement applies for every calendar month or part of a month for which the ISD is registered, including months with no credit to distribute. Check the GST Portal’s current nil-filing procedure.

What recipient registrations should check

Receiving GST registrations should reconcile ISD documents with the credit in their GST records. ISD-filed documents may appear in the recipient’s GSTR-2B. Check the ISD GSTIN, document number, tax amount, tax head and return period before taking credit.

The recipient must still meet the conditions for claiming ITC. An ISD document does not make blocked or otherwise ineligible credit claimable. Report the credit in the appropriate GSTR-3B field, subject to eligibility and any required reversal.

TaxClear’s GSTR-2B and ITC reconciliation guide explains how to review credits in recipient records. For help with GST registration and return compliance, see TaxClear’s GST services.

Records to maintain

Keep a monthly ISD file with:

• Supplier invoices, debit notes and credit notes;
• The ISD registration certificate and recipient GSTIN details;
• A record of which registrations used or benefited from each service;
• The basis for direct attribution or common allocation;
• Turnover figures and the shared-credit calculation;
• ISD invoices and credit notes issued to recipients; and
• GSTR-6 working papers, filing acknowledgements and reconciliation with recipient GSTR-2B records.

A clear audit trail helps explain why a service was allocated to particular registrations and how the amount was calculated.

Common mistakes to avoid

• Continuing to use a head-office regular GSTIN for common-service credit without reviewing the ISD requirement.
• Treating every head-office invoice as a common expense without checking attribution.
• Distributing credit on goods or capital goods through the ISD mechanism.
• Sharing credit equally when the turnover formula applies.
• Distributing blocked or otherwise ineligible credit.
• Using the wrong tax head for a recipient in another state.
• Failing to adjust credit after a supplier credit note or correction.
• Treating ISD registration as a substitute for cross-charge.
• Missing the monthly GSTR-6 due date or failing to reconcile recipient credit.

Frequently asked questions

Is ISD registration compulsory from 1 April 2025?

It is compulsory where an office receives input-service invoices for or on behalf of distinct GST registrations and the statutory conditions apply. There is no separate turnover threshold.

Does every company with branches need ISD registration?

Not automatically. Check whether an office receives third-party input-service invoices for or on behalf of other GST registrations. The invoice and service facts determine whether the rules apply.

Can ISD distribute credit on goods or capital goods?

No. The ISD mechanism covers input services. Credit on goods and capital goods is dealt with under the rules applicable to the GST registration receiving those supplies.

What is the due date for GSTR-6?

GSTR-6 is normally due by the 13th day of the month following the tax period, unless the due date is extended.

Does ISD registration remove the need for cross-charge?

No. ISD distributes eligible credit on input-service invoices. Cross-charge may apply to a separate supply between distinct-person registrations. Review each transaction on its facts.