The Concept of ISD is no new under GST and even under pre-GST regime. Any office receiving common input services is required to distribute corresponding ITC to the beneficiary branch offices. Illustrative common input services are Security service, Advertisement Service, Audit and Accounting service etc.
Till 31st March, 2025, Common ITC is not mandatorily required to be distributed through ISD mode, i.e., the office receiving common Input service may raise an invoice under cross charge mechanism to the beneficiary branch office. Accordingly, the registered person is not required to obtain a separate GST registration as ISD.
However, w.e.f., 1st April, 2025, the definition of ISD and corresponding provisions are changed to provide for mandatory distribution of common ITC through ISD channel. Accordingly, any office receiving common Input service are required to obtain separate GST registration as ISD prior to 1st April, 2025 and distribute the common ITC through ISD mode.
Apart from hefty penalties, the non-compliance of ISD provisions may result into issuance of Show Cause Notices as well.
