GST: ISD Registration compulsory w.e.f. 01-04-2025

The Central Board of Indirect Taxes and Customs (CBIC) has notified that Input Service Distributor (ISD) Registration is complusory w.e.f. 01-04-2025.

An Input Service Distributor (ISD) is a taxpayer who receives bills for the services provided by its branches. It distributes the tax paid, known as the Input Tax Credit (ITC), to such branches proportionally through the issuance of ISD invoices. The branches can have separate GSTINs, but they must have the same PAN as the ISD.

In the Interim Budget of February 2024, the idea of ISD was modified. ISD registration has been made mandatory for taxpayers who have multiple registrations and a common ITC (before, the abovementioned mechanism was voluntary, and cross-charging was permitted).

ISD coverage has also been extended (common expenses that attract RCM transactions are also part of the ISD Mechanism).

CBIC notified the mandatory registration of ISD via issuing a Notification dated 06.08.2024.

The Relevant Text of the Notification is given below:

In exercise of the powers conferred by clause (b) of sub-section (2) of section 1 of the Finance Act, 2024 (8 of 2024), the Central Government hereby appoints, —

(a) the 1st day of October 2024, as the date on which the provisions of sections 13 of the said Act shall come into force;

(b) the 1st day of April 2025, as the date on which the provisions of sections 11 and 12 of the said Act shall come into force.

For Official Notification Download PDF Given Below: