Input Service Distributer

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What is the meaning of Input service Distributor

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As per Rule 2 of CCR 2004, an ISD means

"an office of Manufacturer of Final Products or Provider of Output Services,

which receives Invoices towards purchase of Input Services

and issues Invoice, Bill or Challan

for distributing the credit of service Tax paid on said Service."

In simple terms, what happens sometimes,Invoice is raised in the name of Head office but Services are actually received in the factories or premises of Service Provider

In addition, there are bills for certain Services which are not specific for any Factory/Premises such as Advertisement, Market Research etc. which would also be received only in Head office.

Main issue in such cases is as to what would be the procedure for passing on the credit of Tax in such Situations.For distribution of Such Credit, Head office would be called ISD & it will have to issue Invoices on Its Factories where Services are receied for the distribution of Credit.However ISD would have to ensure taht Total credit so distributed does not exceed the amount of service Tax paid by ISD

Such Head Office would have to obtain Service Tax Registeration as ISD. 

a complete answer by mr. Ritesh


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