ISD input service distributor which category of bills to shift to ISD GSTIN ?

For an Input Service Distributor (ISD), vendors should bill the ISD GSTIN only for third-party input services that are procured centrally and used by/benefit two or more GSTINs under the same PAN. If a service is used exclusively by one factory GSTIN, it should continue to be billed to that factory GSTIN.

Expenses to bill to ISD GSTIN

Expense / service	Bill to ISD when…
Statutory audit, tax audit, internal audit, certification fees	Audit covers the company/group or multiple units
Legal, company secretarial, corporate advisory, litigation fees	Service relates to the company/group, not one factory only
Management consultancy, ERP/implementation consulting, business-process advisory	Benefit extends across head office and factories
Accounting, bookkeeping, payroll processing, BPO/accounting support	Service is centrally procured for multiple locations
IT support, AMC for IT equipment/software, network, cybersecurity, helpdesk	Common IT service used by multiple GSTINs
Software licences/SaaS subscriptions, ERP licences, cloud hosting, data storage	Licence/subscription is group-wide or used by multiple units
Website development, hosting, domain, email, digital marketing, SEO, online advertising	Marketing is for the company/brand, not one factory alone
Advertising, media buying, exhibitions, trade fairs, sales promotion, brand-building expenses	Expense relates to the company/brand or multiple units
Group insurance—health, accident, general/business insurance	Policy covers employees/assets of multiple units
Training, learning & development, seminars, conferences	Employees from multiple GSTINs attend/benefit
Recruitment, HR consultancy, background verification, HR outsourcing	Recruitment/service is for multiple units
Telephone, internet, leased line, telecom, communication charges	Common connection/service used by multiple locations
Courier, courier contract, centralised logistics coordination services	Service is central/group-level
Security services, housekeeping, facility management at head office/corporate office	Corporate-office services support multiple units
Membership fees, professional subscriptions, industry-body subscriptions	Membership is in company name and benefits all units
Market research, data analytics, business intelligence, rating/credit-report charges	Used for company-wide decisions
Bank charges for corporate/current accounts, loan-processing/professional fees relating to group finance	Only where the charge is genuinely an input service benefiting multiple GSTINs; review each case
Repair & maintenance AMC for common corporate assets	Asset/service supports multiple units
Testing, analysis, certification charges	Benefit multiple units/products
Freight/logistics-related service charges	Only if centrally procured as an input service and used by multiple GSTINs; goods and freight need separate analysis

These categories are commonly identified as ISD-eligible common services, including audit, legal/professional, software, cloud, advertising, HR, IT, telecom, insurance, and consultancy services.

Expenses that should normally remain on factory GSTIN

• Raw material, packing material, consumables, spares, tools, capital goods purchased for one factory.
• Factory-specific electricity, water, fuel, rent, property tax, municipal charges.
• Factory-level labour contract, security, housekeeping, canteen, transport used solely by that factory.
• Factory-specific repairs, maintenance, testing, certification, insurance.
• Services used exclusively by one GSTIN, even if the invoice is received at head office. Such invoices should be billed directly to that consuming GSTIN rather than ISD.[taxguru][hnallp]

Practical vendor instruction

Ask vendors to issue invoices as follows:

Invoice to: [Company Legal Name] — Input Service Distributor
GSTIN: [ISD GSTIN]
Service description: Clearly mention the service and period.
Place of supply / billing location: As applicable under GST.
Note: This invoice relates to common/group-level input services and will be distributed through ISD.

Also update vendor master data, agreements, POs, and recurring billing instructions so that vendors report the invoice under the ISD GSTIN in GSTR-1; otherwise the credit will not correctly appear for ISD distribution.

Important caution

Do not mechanically shift every indirect expense to ISD. The test is whether the invoice is for an input service, received centrally, and attributable to another GSTIN or two or more GSTINs under the same PAN. Goods, capital goods, blocked credits, and services used exclusively by one unit should not be routed through ISD.

Sources : [clevercoins][hnallp]