Mandatory ISD Registration for Multi-State GST Companies by 2025

Starting April 1, 2025, companies with multi-state branches must register as Input Service Distributors (ISD) under GST law. This mandate, introduced in the Finance Bill 2024, aims to ensure effective distribution of input tax credit. The government has given businesses ample time to prepare for the transition.

Starting April 1, 2025, companies with a presence in multiple states will be required to register as Input Service Distributors (ISD) under Goods and Services Tax (GST) authorities. This is based on a mandate introduced in the Finance Bill, 2024, earlier this year.

According to the amended GST law, multi-state businesses must register as ISD to distribute input tax credits (ITC) for services availed across their branches. The Central Board of Indirect Taxes and Customs (CBIC) has notified this new regulation, specifying more details on the prescribed mechanism in GST rules.

Experts like Rajat Mohan, Executive Director at Moore Singhi, and Abhishek Jain, Partner at KPMG India, highlighted that this move aims to enhance operational transparency. They also noted that excluded sectors such as alcohol, petroleum, education, real estate, and health must align their processes to manage tax credits effectively, with sufficient time for businesses to prepare for compliance.