The Government of Uttar Pradesh on October 30, 2026, issued clarification on Issues pertaining to Input Service Distributor.
It has been clarified that separate ISD registrations may be obtained for different business verticals or places of business within the same State/UT, wherever separate registrations exist and input service invoices are received on behalf of distinct persons. Each ISD must distribute input tax credit only to the respective distinct persons to whom such credit is attributable.
The ISD is responsible for distributing credit in accordance with Section 20, while the recipient entities are responsible for fulfilling the eligibility conditions for availing ITC under Sections 16 and 17 of the UPGST Act, 2017. In cases of irregular distribution, the ISD may be liable to a penalty under Section 122(1)(ix), while excess credit distributed shall be recoverable from the recipient entities along with applicable interest under Section 21.
Further, the ISD must distribute input tax credit in the same month in which it is ascertained to be prima facie eligible for availment, rather than merely when invoice details appear in Form GSTR-6A. The ISD must separately distribute eligible and ineligible credit in accordance with Rule 39(1)(g) and report the details in Form GSTR-6.
[Letter No. GST/2026-27/126/State Taх]
