Central TaxMedium impact for ecommerce sellers
Input Service Distributor (ISD) becomes mandatory from 1 April 2025
Reviewed by CA Apurav GargSummary reviewed
- Document
- Notification No. 16/2024–Central Tax
- Issued
- 6 Aug 2024
- Effective
- 1 Apr 2025
- Issued by
- Ministry of Finance (Department of Revenue), CBIC
Want help working out what this means for your business?
We handle GST and TDS compliance, returns and notice replies for D2C and marketplace sellers, and can walk you through how a change applies to your books.
On this page
What it means for ecommerce sellers
Notification 16/2024–Central Tax brings sections 11 and 12 of the Finance Act, 2024 into force on 1 April 2025. These sections changed the definition of Input Service Distributor in section 2(61) and the manner of distribution in section 20 of the CGST Act, so that distributing credit of common input services through an ISD is mandatory. Notification 09/2025–Central Tax brought the related CGST Rules amendments into force on the same date. A brand with GSTINs in several states (for example warehouse or APOB registrations) that receives common services billed to one GSTIN needs to check whether it must register as an ISD.
Who it affects
- Businesses with GSTINs in more than one state under the same PAN
- Brands with multi-state warehouses or APOB registrations
- Head offices receiving common services (software, marketing, audit) for all branches
Before and after
Using an ISD for common input services
- Before
- Optional
- After
- Mandatory from 1 April 2025, per the amended sections 2(61) and 20
Commencement of sections 11 and 12, Finance Act 2024
- Before
- Not in force
- After
- 1 April 2025 (Notification 16/2024–Central Tax)
Section 13, Finance Act 2024
- Before
- Not in force
- After
- 1 October 2024 (same notification)
What to do
- List the GSTINs held under your PAN and the common services billed to only one of them.
- Check whether an ISD registration is needed and how the common credit will be split between GSTINs.
- Ask service vendors to bill the right GSTIN once the ISD is in place.
Provisions referred to: Section 2(61) CGST Act; Section 20 CGST Act; Rule 39 CGST Rules; Sections 11, 12 and 13 of the Finance Act, 2024
Related tools and services
Official text
As issued by Ministry of Finance (Department of Revenue), CBIC. Where the text starts with “Extract”, only the parts that concern ecommerce sellers are reproduced; the official PDF (opens in a new tab) is the authoritative version.
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Questions sellers ask
From when is ISD mandatory under GST?
Notification 16/2024–Central Tax appoints 1 April 2025 as the date on which sections 11 and 12 of the Finance Act, 2024 come into force. These sections amend the ISD provisions in sections 2(61) and 20 of the CGST Act.
Who needs to look at ISD registration?
A business with GSTINs in more than one state under the same PAN that receives input services used by more than one of those GSTINs.
What did Notification 09/2025–Central Tax do?
It brought rules 2, 24, 27 and 32 of the CGST (Amendment) Rules, 2024 into force on 11 February 2025, and rules 8, 37 and clause (ii) of rule 38 on 1 April 2025.
Does this change the GST rate on any service?
No. It changes how credit of common input services is distributed between GSTINs of the same business, not the tax rates.
Want help working out what this means for your business?
We handle GST and TDS compliance, returns and notice replies for D2C and marketplace sellers, and can walk you through how a change applies to your books.
General information only, not professional advice. The summary is ecomca’s reading of the document; the official PDF is the authoritative version, and later amendments may change it. Check the official source before you act.