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of <h1>GST Input Service Distributor Rules: ITC Distribution, Turnover-Based Allocation, and Finance Bill 2025 Amendments</h1> An Input Service Distributor (ISD) registered under GST distributes input tax credit (ITC) received on input services to distinct persons having the same Permanent Account Number (PAN). The distribution must occur within the same month, not exceed available credit, and be allocated to recipients based on their turnover proportion in the relevant period. Credits on central tax, state tax, union territory tax, and integrated tax are distributed separately, with specific rules for inter-state and intra-state recipients. ISDs must issue prescribed invoices or credit/debit notes for distribution or adjustment of credit. Excess credit distributed must be recovered with interest under applicable provisions. The Finance Bill 2025 amends the definition and provisions related to ISD to explicitly include distribution of ITC on inter-state supplies subject to reverse charge, effective from April 1, 2025. ISD differs from cross-charge mechanisms, which involve taxable supplies between business units with separate registrations.
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