What is the procedure and timeline for registration as ISD?
I. As such there is no specific procedure, we only need to select the reason of registration as an ISD in Form GST REG-01 for registration.
II. It is preferred that the Input Service Registration should be taken in the name of Head Office.
III. There is no such specific timeline for registration as an ISD.
Apportionment of Credit & Manner thereof
Input tax credit is required to be distributed to one of the recipients ‘R1’ whether registered or not, from amongst the total of all the recipients to whom ITC is attributable including those who supply the exempt supply.
C1= (t1 / T) x C
“C” is the amount of credit to be distributed.
“t1” is the turnover of recipient.
“T” is the aggregate of the turnover, during the relevant period, of all recipients to whom the input service is attributable in accordance with the provisions of section 20.
Turnover of which period is to be considered?
Whether all the recipients of credit have turnover in in the financial year preceding the year during which credit is to be distributed?
- Yes – the said financial year; or
- No – 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;
Compliances post Registration – Special Requirements
I. Returns to be filed by ISD:
a. ISD should file monthly returns in Form GSTR-6 within 13 days after the end of the month but it can only be filed after 10th of the month
II. Invoice to be issued by ISD:
Apart from general requirements of Invoice, there are some specific requirements in the Invoice to be issued by ISD.
a. The ISD issuing invoice should clearly mention that the invoice is issued only for distribution of input tax credit.
b. The invoice raised by an ISD should contain the amount of the credit distributed.
III. Invoice to be issued by Branch to the ISD:
a. A Registered person having the same PAN and State Code as an ISD, may issue an Invoice / Debit Note / Credit Note to transfer the Credit of common input services to the ISD.
Apart from the general requirements of Invoice, there are some specific requirements in the Invoice to be issued by ISD.
b. Invoice raised by the branch should contain the following:
i. GSTIN of the supplier of common service and original invoice number whose credit is sought to be transferred to the ISD;
ii. taxable value, rate and amount of the credit to be transferred.
The taxable value in the invoice issued shall be the same as the value of the common services.
Are there any concern areas for an ISD registrant?
Yes, there are some concern areas for ISD Registrant:
1. Manner of Apportionment of Credit:
i. Separate Distribution of Eligible & Ineligible Credit.
ii. If any service is used for any specific branch, then the said credit is not to be distributed among all.
2. Payment of Tax under RCM pertaining to common expense:
i. Invoice has to be received in that branch (which has the same PAN and State Code as an ISD).
ii. The said branch will pay tax under RCM and raise an Invoice in the name of ISD by mentioning the GSTIN of the supplier of common service and original invoice number whose credit is sought to be transferred to the ISD.
iii. ISD will distribute credit to all the branches by raising the separate Invoice to all the concerned branches.
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