ISD Controls - Attribution Matters More Than Labels

The notification amends Rules 36, 39, 54 and 60 of the CGST Rules, 2017, affecting the documentation, distribution and reporting of input tax credit through an Input Service Distributor. Rule 36 is revised to refer to credit being distributed by an ISD, while Rule 39 expressly adds central tax alongside integrated tax in the relevant provision and removes the word “common” from Rule 39(1A). Rule 54 replaces references to “common input services” with language concerning input services attributable to one or more distinct persons and clarifies the description of services whose credit is sought to be transferred to the ISD. Rule 60 is amended to include the ISD in the auto-drafted statement mechanism through FORM GST GSTR-6A.

The central operational message is that the accounting label assigned to a service does not, by itself, establish the correct ISD treatment. Businesses must identify the distinct persons to whom the service is attributable, establish the eligibility of the underlying credit and apply the prescribed distribution mechanism. These wording and reporting changes should not be interpreted as a blanket expansion of ITC eligibility or as authority to distribute every centrally procured service to every registration.