Input service Distributor
Rule 2(m) defines “input service distributor” (ISD) - means an office of the manufacturer or producer of final products or provider of output service, which receives invoices issued under rule 4A of the Service Tax Rules, 1994 towards purchases of input services and issues invoice, bill or, as the case may be, challan for the purposes of distributing the credit of service tax paid on the said services to such manufacturer or producer or provider, as the case may be;
Interestingly this definition could lead to many interpretations. The definition sets out that the input service distributor is not an independent person. The ISD is an office of the service provider or manufacturer in who receives the bills though the services are rendered at the factory or premises or branches.
The Input Service Distributor typically would be the marketing and selling office, corporate office, head office, which receives all the invoices for various services, which are used across the various factories, branches, sales offices, depots and service centres of the company. The Group of Companies / entities having a common marketing would not be able to work as ISD at this point of time. In the years to come this facility maybe also extended to independent service providers/ group concerns with some initial restrictions.
These ISDs are now required to be registered and file the returns indicating the credits availed and those passed on.
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