Input Service Distributor (ISD) is a type of business model that allows companies to distribute and allocate input tax credits (ITC) to their various branches or units. In simpler terms, an ISD is a unit or branch of a company that receives invoices for services rendered to the company and distributes or allocates these invoices to other branches or units of the same company.
The concept of Input Service Distributor was first introduced under the Service Tax Rules, 1994. With the introduction of Goods and Services Tax (GST) in India, the concept of Input Service Distributor has been retained and modified to suit the GST regime.
Under the Revised Model GST Law, an Input Service Distributor is defined as a supplier of goods or services or both, which receives tax invoices issued under Section 31 towards the receipt of input services and issues a prescribed document for the purposes of distributing the credit of central tax (CGST), State tax (SGST) 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 said Input Service Distributor.
In simple terms, an Input Service Distributor is a taxpayer who supplies goods or services to one or more branches or units of the same company and distributes or allocates the ITC of CGST, SGST or IGST paid on the said services to the respective branches or units. Money plays a crucial role in the functioning of an ISD. The ISD has to ensure that the credit of tax paid on input services is properly distributed to the respective branches or units. The ISD cannot distribute the credit of tax paid on input services to any branch or unit that is not registered under the GST regime.
- Name, address and GSTIN of the Input Service Distributor
- A consecutive serial number containing alphabets or numerals or special characters such as hyphen or dash or slash, unique for a financial year
- Date of issue of the invoice
- Name, address and GSTIN of the recipient to whom the credit is being distributed
- Amount of the credit distributed
- The amount of tax charged in respect of such credit
- Invoice-wise details of the input services received- Invoice-wise details of the credit distributed
- The details of the recipient branches or units to whom the credit has been distributed
In conclusion, an Input Service Distributor plays a crucial role in the distribution and allocation of input tax credits to the respective branches or units of a company. Money plays a crucial role in the functioning of an ISD as it has to ensure that the credit of tax paid on input services is properly distributed. The ISD has to issue an ISD invoice and file a monthly return in form GSTR-6 to comply with the GST laws.
GST Rates and HSN Code for Men's Underpants and Briefs in India
It Is Raining Discounts as Electronic Retailers Prepare for GST
Constitution of GoM for Boosting Real Estate Sector under the GST Regime