Registration Requirement:

Taxpayers having multiple active GST registrations on a common PAN are required to obtain ISD registration.

receiving tax invoices for input services on behalf of distinct persons must register as ISD.

2. Credit Distribution:
3. ISD distribution shall be made for CGST/SGST/IGST credits on invoices received for common input services.
4. ISD distribution is also required for common input services received under Reverse Charge Mechanism, from both registered and unregistered suppliers
5. Distribution is only applicable on common Input Services.

3. Mode of Distribution:
4. Credit specific to a recipient is distributed only to that recipient.
5. Credit of common Input Services attributable to multiple recipients under same PAN must be distributed pro rata based on recipients’ turnover during the relevant period.
6. Credits are distributed as central or state or integrated tax, supported by prescribed documentation depending upon registration of supplier and recipient state as follows:
   1. IGST -Integrated tax credit shall be distributed as integrated only.
   1. For CGST and SGST –
      1. Central/State/UT tax credit is distributed based on recipient location.
      1. In respect of a recipient located in the same State as ISD, CGST and SGST credit shall be distributed as CGST and SGST credit.
      1. In respect of a recipient located in a different State from ISD, CGST and SGST credit shall be distributed as IGST credit.
7. ITC for a month must be distributed in the same month via FORM GSTR-6.
8. The distribution cannot exceed the available credit.
9. The ISD shall, separately distribute the amount of  ineligible  input  tax  credit  (ineligible under Section 17(5) or otherwise) and the amount of eligible input tax credit.

4. Documents to be issued by ISD:
5. Input Service Distributor invoice: Distribution of ITC must be made via invoice to be issued by ISD to each recipient.
6. Input Service Distributor Credit Note: For reduction of credit in case the ITC has already been distributed, ISD shall issue an ISD Credit Note.
7. Any additional amount of ITC on account of issuance of a debit note to an ISD shall be distributed in the same manner as provided under the section and rule.
8. Any reduction in ITC on account of issuance of a credit note to an ISD by a supplier, shall be attributed as follows:
   1. reduced from the amount to be distributed in the month in which the credit note is included in the return in FORM GSTR-6: or
   1. added to  the  output  tax  liability  of  the  recipient   where  the  amount so apportioned is negative on account of short amount for distribution to that recipient

5. Basis for pro-rata distribution of ITC:
6. Distribution on pro-rata basis to be made based on Turnover of the recipient in the preceding financial year.
7. If some or all recipients of the credit do not have any turnover in the preceding financial year, turnover of  the  last  quarter  for which  details of such turnover of all the recipients are available, previous to the month during which credit is to be distributed.
8. For distribution of credit shall be made as per the number of recipients to whom the credit attributes ie., in case of distribution of ITC to some out of all recipients, turnover of those specific recipients shall be considered.

6. Submission of ISD Return
7. ISD must file a return in FORM GSTR-6 due by 13^th of every month

Invoices issued to ISD shall auto-populate in FORM GSTR-6A