Chapter V - Input tax credit
Section 20
Section 20: Credit distribution by Input Service Distributor
Section 20 requires an office receiving input-service invoices for distinct GST registrations to register as an Input Service Distributor (ISD) and distribute the related credit under the prescribed procedure.
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Need advice on Section 20?
This article is for general information. Refer to the Central Goods and Services Tax Act, 2017 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) Any office of the supplier of goods or services or both which receives tax invoices towards the receipt of input services, including invoices in respect of services liable to tax under sub-section (3) or sub-section (4) of section 9 of this Act or under sub-section (3) or sub-section (4) of section 5 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017), for or on behalf of distinct persons referred to in section 25, shall be required to be registered as Input Service Distributor under clause (viii) of section 24 and shall distribute the input tax credit in respect of such invoices.
(2) The Input Service Distributor shall distribute the credit of central tax or integrated tax charged on invoices received by him, including the credit of central or integrated tax in respect of services subject to levy of tax under sub-section (3) or sub-section (4) of section 9 of this Act or under sub-section (3) or sub-section (4) of section 5 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017), paid by a distinct person registered in the same State as the said Input Service Distributor, in such manner, within such time and subject to such restrictions and conditions as may be prescribed.
(3) The credit of central tax shall be distributed as central tax or integrated tax and integrated tax as integrated tax or central tax, by way of issue of a document containing the amount of input tax credit, in such manner as may be prescribed.
Introduction
The substituted section has applied from 1 April 2025. It expressly covers specified reverse-charge input-service invoices for distinct persons and sets the central-tax and integrated-tax distribution framework. The detailed allocation method, timing and document requirements are prescribed separately.
Key takeaways
Common input-service invoices trigger ISD review
An office receiving input-service invoices for or on behalf of distinct persons under section 25 must test the mandatory ISD registration rule.
Reverse-charge input services are addressed
The amended text includes services liable under CGST section 9(3)/(4) or IGST section 5(3)/(4), within the section's stated conditions.
Credit type can change on distribution
Subsection (3) permits central tax to be distributed as central or integrated tax, and integrated tax as integrated or central tax, using the prescribed document.
Identify the receiving office and beneficiaries
List input-service invoices received by a head or shared-service office. Determine whether each service is for or on behalf of other GST registrations that are distinct persons under section 25. Section 20(1) then requires ISD registration for a qualifying office.
Include the specified reverse-charge stream
Check input-service invoices on which reverse charge applies under the cited CGST or IGST provisions. The substituted section and its later insertion explicitly include these within the ISD framework, subject to the wording of subsections (1) and (2).
Distribute under the current Rules
The Act states the types of credit that may be distributed and requires a credit document. Use the current CGST Rules for manner, time, restrictions and allocation; section 20 by itself does not provide a complete allocation formula.
Practical checklist
Do
- Map every common input-service invoice to the distinct GST registrations it serves.
- Identify reverse-charge service invoices separately.
- Check ISD registration and current allocation/document Rules before distribution.
Avoid
- Treat a common head-office invoice as automatically claimable by one branch.
- Apply the pre-April-2025 text to a current ISD decision.
- Invent an allocation formula from section 20 alone.
Frequently asked questions
Is ISD registration optional for a qualifying office?
Section 20(1) states that an office receiving covered input-service invoices for distinct persons shall be required to register as an Input Service Distributor.
Does section 20 itself state the complete distribution calculation?
No. It requires distribution in the manner, time and conditions prescribed in the Rules.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026