Q 1. What is Input Service Distributor (ISD)?
Ans. As per Section 2(56) of MGL, ISD means an office of the
supplier of goods and / or services which receives tax invoices issued under
section 23 towards receipt of input services and issues tax invoice or such
other document as prescribed for the purposes of distributing the credit of CGST
(SGST in State Acts) and / or IGST paid on the said services to a supplier of
taxable goods and / or services having same PAN as that of the office referred
to above. For the purpose of distributing the credit, ISD is deemed as supplier
of services.
Q 2. What are the requirements for registration as ISD?
Ans. An ISD is required to obtain registration as a deemed supplier
of services [section 19 read with para 5(vii) of Schedule III]. The threshold
limit of registration is not applicable to ISD. The registration of ISD under
the existing regime (i.e. under Service Tax) would not be migrated in GST
regime. All the existing ISDs will be required to obtain fresh registrations
under new regime in case they want to operate as an ISD.
Q 3. What are the conditions/restrictions for distribution
of credit?
Ans. The distribution of credit would be done subject to the
following conditions:
a. Credit should be distributed through tax invoice or other
document as prescribed;
b. Amount of credit distributed should not exceed the amount
of credit available;
c. Credit should be distributed only to such suppliers to
whom such services are attributable;
d. Credit in respect of services attributable to more than
one supplier should be distributed proportionately on the basis of turnover of respective
supplier during the preceding financial year.
Q 4. Is the ISD required to file return?
Ans. Yes, as per Section 27(6) of MGL, ISD is required to file
monthly return by 13th of the following month in form GSTR-6.
Q 5. Can a company have multiple ISD?
Ans. Yes, different offices like marketing division,
security division etc. may apply for separate ISD.
Q 6. What are the provisions for recovery of excess/ wrongly
distributed credit by ISD?
Ans. Sections 18(1) and 18(2) provide for recovery of excess/wrongly
distributed credit by initiating action against the ISD itself or against the
recipient of credit so distributed under section 51 of the Model GST Law.
Q 7. Whether CGST and IGST credit can be distributed by ISD
as IGST credit to units located in different States?
Ans. Yes, CGST credit can be distributed as IGST and IGST credit
can be distributed as IGST by an ISD for the units located in different States
(Section 17(1)).
Q 8. Whether SGST credit can be distributed as IGST credit
by an ISD to units located in different States?
Ans. Yes, an ISD can distribute SGST credit as IGST for the units
located in different States. (Section 17(2))
Q 9. Whether the ISD can distribute the CGST and IGST Credit
as CGST credit?
Ans. Yes, CGST and IGST credit can be distributed as CGST credit
by an ISD for the units located in same State.
Q 10. Whether the SGST and IGST Credit can be distributed as
SGST credit?
Ans. Yes, ISD can distribute SGST and IGST credit for the units
located in same State.
Q 11. What are the documents through which the credit can be
distributed by an ISD?
Ans. The document under which the credit can be distributed
is yet to be prescribed. The Act provides that the credit can be distributed
only through prescribed document.
Q 12. How to distribute common credit among all the units of
an ISD?
Ans. The common credit used by all the units can be distributed
by ISD on pro rata basis i.e. based on the turnover of each unit to the
aggregate turnover of all the units to which credit is distributed.
Q 13. The ISD may distribute the CGST and IGST credit to
recipient outside the State as_______
(a) IGST
(b) CGST
(c) SGST
Ans. (a) IGST.
Q 14. The ISD may distribute the CGST credit within the
State as____
(a) IGST
(b) CGST
(c) SGST
(d) Any of the above.
Ans. (b) CGST.
Q 15. The credit of tax paid on input service used by more
than one supplier is ________
(a) Distributed among the suppliers who used such input
service on pro rata basis of turnover in such State.
(b) Distributed equally among all the suppliers.
(c) Distributed only to one supplier.
(d) Cannot be distributed.
Ans. (a) Distributed among the suppliers who used such input
service on pro rata basis of turnover in such State.
Q 16. Whether the excess credit distributed could be
recovered by the department?
Ans. Yes, excess credit distributed could be recovered along
with interest from an ISD by the department.
Q 17. What are the consequences of credit distributed in
contravention of the provisions of the Act?
Ans. The credit distributed in contravention of provisions of
Act could be recovered from the unit to which it is distributed along with
interest.