Notifications Parliament of India / CBIC
ISD (Input Service Distributor) Mandatory for Common Services — w.e.f. 01-Apr-2025
Budget 2024 / Finance Act 2024 — ISD Mandatory from 01-Apr-2025
- Issued
- 2024-07-23
- Effective from
- 2025-04-01
- Act
- CGST Act 2017 s.20
What it says
ISD now mandatory (not optional)
Before the amendment, a business could use cross-charge or ISD for distributing common service ITC. From 01-Apr-2025, ISD is mandatory for distributing ITC on services received at one GSTIN but used commonly across multiple GSTINs.
Who is affected
Any registered taxpayer (company, LLP) with multiple GSTINs in different states that receives common services at the HO/corporate office — e.g., audit fees, IT subscriptions, rent for corporate HQ — must register the HO as an ISD and distribute ITC using Form GSTR-6.
Cross-charge no longer permitted for common services
The practice of raising internal invoices (cross-charge) to transfer ITC from HO to branches is discontinued for services covered under ISD from 01-Apr-2025. Cross-charge continues only for goods and services specifically consumed by a branch.
ISD registration and GSTR-6
ISD GSTIN must be obtained separately. ITC distributed via GSTR-6 (quarterly) to recipient GSTINs. Recipient GSTIN receives ITC in GSTR-2B.
Affected forms and returns
- GSTR-6 (ISD return)
- GSTR-2B (ITC auto-population)
- GST REG-01 (ISD registration)
CBIC is expected to issue a detailed circular clarifying the transition procedure, which services fall under mandatory ISD vs. continue as cross-charge, and the timeline for existing cross-charge arrangements. Verify the operative CBIC circular before making changes to your current ITC distribution mechanism.
Primary source
Budget 2024 / Finance Act 2024 — ISD Mandatory from 01-Apr-2025 — issued by Parliament of India / CBIC under CGST Act 2017 s.20
View official notification ↗