Isd & ITC Distribution
This query is : Resolved
11 September 2025
Isd located in Maharashtra
Regular gstn located in Maharashtra
Regular gstn located in Gujrat
Regular gstn located in Karnatak
Regular gstn located orissa
If common service sgst + cgst input received to isd in Maharashtra & attributable to all gstn including regular Maharashtra - can sgst & cgst converted into igst for distributing itc to other than Maharashtra.
If common service igst input received to isd in Maharashtra & attributable to all unit including Maharashtra - can igst distributable to Maharashtra regular gstn as sgst + cgst & other regular gstn as igst.
Transporter send our goods from our gujrat purchasing party to all above unit. But raise his
invoice / bill of supply to only our Gujrat unit.
Our Gujrat unit pay Rcm on GTA service & whole rcm itc consumed by our Gujrat unit.
In this case can RCM distributable vis isd. If yes
Pl mention any specific section / rule / notification.
Regular gstn located in Maharashtra
Regular gstn located in Gujrat
Regular gstn located in Karnatak
Regular gstn located orissa
If common service sgst + cgst input received to isd in Maharashtra & attributable to all gstn including regular Maharashtra - can sgst & cgst converted into igst for distributing itc to other than Maharashtra.
If common service igst input received to isd in Maharashtra & attributable to all unit including Maharashtra - can igst distributable to Maharashtra regular gstn as sgst + cgst & other regular gstn as igst.
Transporter send our goods from our gujrat purchasing party to all above unit. But raise his
invoice / bill of supply to only our Gujrat unit.
Our Gujrat unit pay Rcm on GTA service & whole rcm itc consumed by our Gujrat unit.
In this case can RCM distributable vis isd. If yes
Pl mention any specific section / rule / notification.
16 September 2025
An Input Service Distributor (ISD) in Maharashtra can convert and distribute SGST + CGST input received for common services as IGST to units outside Maharashtra, and IGST input received can be distributed as SGST + CGST to Maharashtra units or as IGST to other state units. However, ITC received under Reverse Charge Mechanism (RCM) for GTA services by a regular GSTIN (e.g., Gujarat unit) used entirely by that unit cannot be distributed via ISD—RCM ITC must be availed and utilized only by the recipient who paid the tax, not by ISD.
16 September 2025
Distribution of SGST + CGST Inputs via ISD
When the ISD and the recipient unit are in different states (e.g., ISD in Maharashtra, recipient GSTN in Gujarat/Karnataka/Orissa), SGST and CGST must be converted into IGST and then distributed to those other-state units.
If distributed to Maharashtra units (same state as ISD), the credits remain as CGST and SGST, without conversion.
When the ISD and the recipient unit are in different states (e.g., ISD in Maharashtra, recipient GSTN in Gujarat/Karnataka/Orissa), SGST and CGST must be converted into IGST and then distributed to those other-state units.
If distributed to Maharashtra units (same state as ISD), the credits remain as CGST and SGST, without conversion.
16 September 2025
Distribution of IGST Inputs via ISD
If common service IGST input is received and attributable to all units, IGST is distributed as IGST to units outside Maharashtra and as CGST + SGST to Maharashtra units (as per recipient state and Rule 39 of CGST Rules).
The ISD allocates ITC to each unit using turnover ratio.
If common service IGST input is received and attributable to all units, IGST is distributed as IGST to units outside Maharashtra and as CGST + SGST to Maharashtra units (as per recipient state and Rule 39 of CGST Rules).
The ISD allocates ITC to each unit using turnover ratio.
16 September 2025
GTA Service and RCM ITC Distribution via ISD
RCM ITC on GTA services: If the Gujarat unit pays RCM on GTA services and avails ITC itself (i.e., services are used entirely by this unit), such ITC cannot be distributed via ISD. The ISD mechanism is not applicable to RCM ITC availed by regular GSTINs—RCM tax must be paid and ITC availed by the actual recipient of service.
Legal Basis: Section 20 of the CGST Act and Rule 39 of the CGST Rules govern ISD distribution. Rule 39 specifically applies only to input services received by the ISD, not for ITC availed through RCM by regular units.
RCM ITC on GTA services: If the Gujarat unit pays RCM on GTA services and avails ITC itself (i.e., services are used entirely by this unit), such ITC cannot be distributed via ISD. The ISD mechanism is not applicable to RCM ITC availed by regular GSTINs—RCM tax must be paid and ITC availed by the actual recipient of service.
Legal Basis: Section 20 of the CGST Act and Rule 39 of the CGST Rules govern ISD distribution. Rule 39 specifically applies only to input services received by the ISD, not for ITC availed through RCM by regular units.
16 September 2025
Relevant Sections, Rules, and Notifications
Section 20 of CGST Act, 2017: Governs ISD mechanism and credit distribution.
Rule 39 of CGST Rules, 2017: Outlines manner of ITC distribution by ISD for different scenarios (intra-state and inter-state).
Notifications: Amendments regarding ISD’s role with RCM ITC (e.g., Notification No. 12/2024-Central Tax; clarified that ISD cannot distribute ITC of taxes paid under RCM by regular registration).
Section 20 of CGST Act, 2017: Governs ISD mechanism and credit distribution.
Rule 39 of CGST Rules, 2017: Outlines manner of ITC distribution by ISD for different scenarios (intra-state and inter-state).
Notifications: Amendments regarding ISD’s role with RCM ITC (e.g., Notification No. 12/2024-Central Tax; clarified that ISD cannot distribute ITC of taxes paid under RCM by regular registration).
16 September 2025
SGST/CGST can be distributed as IGST to out-of-state units via ISD.
IGST can be distributed as SGST + CGST within the ISD's state and as IGST outside.
RCM ITC availed by regular registration (not ISD) cannot be distributed via ISD; must be utilized by the recipient unit only.
Legal references: Section 20 and Rule 39 of CGST Rules, Notification No. 12/2024-Central Tax.
IGST can be distributed as SGST + CGST within the ISD's state and as IGST outside.
RCM ITC availed by regular registration (not ISD) cannot be distributed via ISD; must be utilized by the recipient unit only.
Legal references: Section 20 and Rule 39 of CGST Rules, Notification No. 12/2024-Central Tax.
18 September 2025
But sir can Gujrat unit raise invoice on isd for rcm paid by gujrat unit. Then gujrat isd distribute itc to beneficiary unit. Because from gujrat goods transported to various state to our branches.
Is it right whole itc on gta can consume only gujrat.
Need not essential to distribute rcm itc to distinct person. Is gta service not qualify in common service.
Is it right whole itc on gta can consume only gujrat.
Need not essential to distribute rcm itc to distinct person. Is gta service not qualify in common service.
18 September 2025
The regular GST registration (the "normal" GSTIN) that pays RCM on GTA services must be in the same state as the ISD in order to transfer that ITC to the ISD by raising an internal invoice under Rule 54(1A).
Thus, a regular Maharashtra GSTIN can transfer RCM ITC to the Maharashtra-based ISD, which will then distribute the ITC (including to units in Gujarat) as IGST for “distinct persons” in other states, and as CGST/SGST for recipients in Maharashtra.
However, a regular GSTIN in Gujarat CANNOT directly transfer its RCM ITC to an ISD located in Maharashtra. Only the Gujarat ISD (if registered) or Gujarat GSTIN (if the ISD is in Gujarat) can be part of such a transaction.
Thus, a regular Maharashtra GSTIN can transfer RCM ITC to the Maharashtra-based ISD, which will then distribute the ITC (including to units in Gujarat) as IGST for “distinct persons” in other states, and as CGST/SGST for recipients in Maharashtra.
However, a regular GSTIN in Gujarat CANNOT directly transfer its RCM ITC to an ISD located in Maharashtra. Only the Gujarat ISD (if registered) or Gujarat GSTIN (if the ISD is in Gujarat) can be part of such a transaction.
18 September 2025
If RCM is paid by the Gujarat regular GSTIN, the ITC must first be availed in Gujarat. It cannot be internally transferred to a Maharashtra ISD unless there is an ISD registration in Gujarat.
Only normal GSTINs and ISDs within the same state can do the transfer using the internal ISD invoicing process—cross-state ITC transfer via ISD is not permitted for RCM ITC. Each state unit must handle its own RCM obligations directly.
Only normal GSTINs and ISDs within the same state can do the transfer using the internal ISD invoicing process—cross-state ITC transfer via ISD is not permitted for RCM ITC. Each state unit must handle its own RCM obligations directly.
18 September 2025
Once ITC is accumulated by a Maharashtra ISD from Maharashtra units, it can allocate IGST to Gujarat and other out-of-state branches, and CGST/SGST within Maharashtra.
Any ITC accumulated on RCM by the Gujarat regular GSTN cannot be moved to Maharashtra ISD for subsequent distribution.
Any ITC accumulated on RCM by the Gujarat regular GSTN cannot be moved to Maharashtra ISD for subsequent distribution.
18 September 2025
ISD must be registered in the same state as the GSTIN availing the RCM ITC for seamless transfer and cross-entity distribution.
If common GTA services are availed by multiple state units (e.g., goods dispatched from Gujarat to multiple branches), ideally each state should pay its proportional RCM liability, and that ITC is consumed or distributed only within that state via its own ISD mechanism if registered.
Centralized ISD compliance (from 1st April 2025) does not override the restriction on cross-state RCM ITC transfer.
If common GTA services are availed by multiple state units (e.g., goods dispatched from Gujarat to multiple branches), ideally each state should pay its proportional RCM liability, and that ITC is consumed or distributed only within that state via its own ISD mechanism if registered.
Centralized ISD compliance (from 1st April 2025) does not override the restriction on cross-state RCM ITC transfer.
18 September 2025
For proper distribution of RCM ITC via ISD, the regular GST registration paying RCM and the ISD must be in the same state; cross-state “internal transfer” of RCM ITC to another state’s ISD is not allowed under current GST rules.
18 September 2025
Many many lot of thanks for you sir, each point describe elaborately with legal manner
Once again Thanks.
धन्यवाद 🌹🌹🌹
Once again Thanks.
धन्यवाद 🌹🌹🌹
18 September 2025
Many many lot of thanks for you sir, each point describe elaborately with legal manner
Once again Thanks.
धन्यवाद 🌹🌹🌹
Once again Thanks.
धन्यवाद 🌹🌹🌹
Message likes :
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18 September 2025
You are welcome.
18 September 2025
Good Luck.
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