Input Service Distributor

Input Service Distributor (ISD) Under GST: New Rules, Registration & Return Filing Guide 2025.

New GST rule in 2025 makes ISD registration mandatory. Learn how to register, distribute ITC, and file GSTR-6 easily with real examples.

If your business has multiple GST registrations (GSTINs) under the same PAN, there’s a big update you need to know in 2025 — ISD Registration is now mandatory for distributing Input Tax Credit (ITC) across branches.

Earlier, businesses were using cross-charge methods to share common expenses like software subscriptions, legal fees, or rent. But starting April 1, 2025, the government has put a full stop to that. From now on, Input Service Distributor (ISD) is the only way to distribute eligible input tax credit across different units.

Let’s break down what this means for you — in simple words.

What is ISD (Input Service Distributor)?

An Input Service Distributor (ISD) is a separate GST registration (even if under the same PAN) used to distribute input tax credit (ITC) from common services like:

Rent for head office
Consultancy/legal services
Software and subscriptions
Centralized advertising expenses

The ISD doesn’t make any outward supply — it only distributes the ITC through an invoice to other GSTINs of the same company.

Feature	Before April 2025	After April 1, 2025
Common ITC Sharing	Cross-Charge or ISD (Optional)	Only through ISD (Mandatory)
Legal Framework	Flexible, no penalties for cross-charge	Non-compliance = Wrong ITC claim
Document Used	Tax Invoice / Debit Note	ISD Invoice only
Registration	ISD optional	ISD Registration Mandatory

Why This Change Was Introduced

To avoid tax evasion and duplicate credit
To bring uniformity and transparency in ITC sharing
To ensure only eligible credits are passed to correct branches
To reduce misuse of cross-charge mechanism

Steps to Register for ISD in 2025

Who Needs to Register?

Businesses with more than one GSTIN under the same PAN
Those who receive common input services at Head Office/Corporate Office
Those wanting to distribute ITC legally to branches

How to Register:

Log in to https://www.gst.gov.in
Go to Services → Registration → New Registration
Choose “ISD – Input Service Distributor” as the type
Fill in business details, contact info, and verify with OTP
Upload required documents (PAN, address proof, authorisation letter)
Submit and wait for ARN and GSTIN approval

How to Register:

Log in to https://www.gst.gov.in
Go to Services → Registration → New Registration
Choose “ISD – Input Service Distributor” as the type
Fill in business details, contact info, and verify with OTP
Upload required documents (PAN, address proof, authorisation letter)
Submit and wait for ARN and GSTIN approval

Time to process: Usually 3–7 working days.

How to Distribute ITC Through ISD

Once registered:

Collect all common invoices for services used by multiple units.
File GSTR-6 monthly (ISD Return).
Issue ISD Invoice to other GSTINs for their share of credit.
Use the correct HSN codes, and mention tax amounts clearly.

Don’t forget: ITC must be distributed in the same ratio as the turnover of each unit for the relevant period.

Return Filing: GSTR-6

Form	GSTR-6
Who Files?	ISD Registered Entity
Frequency	Monthly
Due Date	13th of next month
Purpose	Distribute ITC to other units based on received servicese

Penalties for Non-Compliance (From 2025)

If you continue cross-charging without ISD registration:
The ITC passed may be disallowed
You could face interest and penalties
Risk of getting a GST notice

Example Scenario

Company Name: XYZ Pvt Ltd

HO in Mumbai, branches in Delhi and Bangalore

HO receives a ₹1,00,000 legal invoice with ₹18,000 GST

Turnover ratio (Delhi: 60%, Bangalore: 40%)

As ISD, Mumbai office will issue ISD invoices:

To Delhi: ₹10,800 ITC (60%)
To Bangalore: ₹7,200 ITC (40%)

Conclusion

In 2025, ISD is no longer optional — it's a must for any business distributing common input tax credit across locations. The good news? It's not as complicated as it sounds.

Just get your ISD registration, use the right process, and keep your returns up to date. This way, you stay compliant, avoid penalties, and make full use of your eligible GST credits.

Need Help with ISD Registration or GST Compliance?

We assist businesses in:

ISD Registration
GSTR-6 filing
ITC reconciliation
Full GST compliance setup