ISD Registration in REG-01 and the Same-State Condition

ISD Registration in REG explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.

ISD registration looks like ordinary registration — same portal, same form, same documents. The decision that actually matters is made before any of that: which State to register in. And the answer depends entirely on whether the entity has reverse charge credit to distribute.

Section 24 makes ISD registration compulsory irrespective of turnover, and section 25 requires a separate application. The form is REG-01, and the process is the ordinary one — PAN validated against the CBDT database, mobile and email validated by OTP, a TRN, then Part B, then verification by DSC or EVC, with an acknowledgement in REG-02. The one ISD-specific decision: if the credit arises from forward charge, the ISD may be registered in any State; if it arises from reverse charge, the ISD must be in a State where the entity also holds a regular registration that can pay the tax.

The four key features

The Handbook lists them:

• Separate registration — ISD registration is distinct from regular GST registration.
• No threshold exemption — "Unlike regular GST registration (which has a turnover threshold limit of ₹10 lakh, ₹20 lakh or ₹40 lakh, as the case may be), ISD registration is mandatory regardless of threshold limit."
• Same PAN — the ISD and the recipient units must belong to the same legal entity.
• Services only — ISD registration applies to distribution of ITC on input services, not goods.

And the statutory hooks: section 24 lists the cases of compulsory registration, and the substituted section 20(1) now requires an office receiving such invoices to be registered as an ISD under clause (viii) of section 24. Section 25 "specially provides that every person being an ISD shall make a separate application for registration as such ISD."

The same-State condition

This is the ISD-specific rule, and the Handbook states it as a note to the registration process:

"Services are taxable either under forward charge or reverse charge. If tax on input services has been charged by the supplier under forward charge, ISD registration can be taken in any State even if there is no regular registration of another entity having same PAN in the same State. If the tax on input services is payable under reverse charge, the registration of ISD needs to be in the same State in which tax has been paid under reverse charge by the regular registration. In other words, the payment of RCM liability is to be paid from the regular registration registered in the same State as that of ISD."

The reason is structural. An ISD cannot pay tax. Section 20(2) allows it to distribute RCM credit "paid by a distinct person registered in the same State as the said Input Service Distributor", and rule 39(1A) lets that transfer happen only from a registered person with the same PAN and State code. The rule 39(1A) route →

So the practical rule is: locate the ISD where you already have a regular registration. Almost every multi-State group has common reverse-charge spend — legal fees, GTA freight, security services, director's fees, imported services. An ISD in a State with no regular registration cannot handle any of it.

The process

Step 1 — access the portal. Visit www.gst.gov.in and click Services > Registration > New Registration.

Step 2 — Part A. Under "I am a", select "Taxpayer". Enter the PAN, select the State/UT, enter the legal name as per PAN records, and a valid email ID and mobile number for OTPs. The PAN is validated online against the CBDT database; the mobile and email are validated by OTP. On successful verification a temporary registration number (TRN) is generated and communicated.

Step 3 — Part B of REG-01. Log in with the TRN and complete:

• Business details — legal name, address and contact details of the ISD;
• Constitution-based details — proprietor, partners or directors;
• Principal place of business — "the location of the ISD from where credit will be distributed";
• Authorised signatory details;
• Bank details — optional at registration, required later.

The bank-details note is worth reading twice: "ISD never performs payment function, except payment of late fees and penalty if any. If separate account is not opened, you may give bank details of the distinct person in the same State. If you do not give the details, portal will not permit filing of the returns."

Step 4 — upload documents:

• Photographs — proprietor, partners, karta, managing director, managing trustee, authorised signatory.
• PAN — proprietor, company, HUF, partnership firm, authorised signatory.
• Aadhaar — proprietor, karta, partners, authorised signatory.
• Proof of constitution — partnership deed, registration certificate or proof of constitution for a society, trust, club, government department, AOP/BOI, local authority or statutory body, or the certificate of incorporation for a company.
• Proof of principal place of business —

(a) own premises: latest property tax receipt, municipal khata copy or electricity bill; (b) rented or leased: a valid rent or lease agreement with ownership proof of the lessor; (c) other or shared premises: a consent letter with ownership proof of the consenter; (d) rented premises with no agreement available: an affidavit with proof of possession such as an electricity bill; (e) SEZ: the necessary documents or certificates issued by the Government of India.

• Bank account proof, where furnished — first page of the passbook or bank statement, or a cancelled cheque.
• Letter of authorised signatory — for a partnership firm, company or HUF, an authorisation or copy of the Board or Managing Committee resolution for each authorised signatory.

The Handbook reproduces the declaration format — a solemn affirmation by the proprietor, partners, karta, whole-time directors or trustees authorising a named person by resolution number and date to act as authorised signatory, with all their actions binding on the business, followed by that person's written acceptance.

Step 5 — verify and submit. Verify by EVC or DSC and submit. "On receipt of application, an acknowledgement shall be issued electronically to the applicant in Form GST REG-02."

Multiple ISD registrations

The FAQ answers it directly: "Yes, there is no prohibition for taking ISD registration in state where there is common ITC to be distributed."

That is worth planning around. A group with two significant procurement hubs — say a corporate office in Maharashtra and a shared-services centre in Karnataka, both receiving third-party common invoices — can register both as ISDs rather than forcing all vendor billing through one State.

And where no ISD is needed at all: "If all branches receive separate invoices for services utilized, and there are no common services for which a single invoice is raised by supplier, ISD registration is not necessary."

Key takeaways

• ISD registration is compulsory under section 24, with no threshold, and needs a separate application under section 25.
• The substituted section 20(1) now writes the registration requirement into the charging provision itself.
• The form is REG-01, with the ordinary PAN/OTP/TRN/Part B flow and an acknowledgement in REG-02.
• Forward-charge credit: the ISD may be in any State. Reverse-charge credit: the ISD must be in a State with a regular registration.
• Bank details are optional at registration but required to file returns — the same-State distinct person's account may be used.
• Multiple ISD registrations in different States are permitted.
• No ISD is needed where every branch is billed directly and there are no common services.

Read next

• Rule 39(1A) and Rule 54(1A): Moving RCM Credit to the ISD
• ISD Becomes Mandatory: "May" to "Shall" from 1 April 2025
• Section 2(61): What an ISD Is, and the Four Things It Cannot Do

Disclaimer: Positions stated as on 5 September 2026, based on sections 20, 24 and 25 of the CGST Act, 2017 and rule 39(1A) of the CGST Rules, 2017 with FORMS GST REG-01 and REG-02, as reproduced in the ICAI Handbook on Input Service Distributor under GST (2nd edition, September 2025).