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11 Points to Know Before Filing GSTR 6

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When a business is born, the mind behind the venture begins to dream of a future where the business has grown in every corner of the nation.  However, as the business grows, the complexity of the compliances around it also grows. Nevertheless, to facilitate the growth of businesses in India, many provisions have been brought into action under the GST regime.

One such facility is the concept of Input Service Distributor (henceforth referred to as ISD), a legacy that has been carried over from the Service Tax Regime. An ISD assures that the common expenditure and billings shared between an organization’s branches/sub-units is centralized. In addition, the application of this concept also simplifies the credit taking process and strengthens the flow of credit under GST.  

An ISD or Input Service Distributor is required to file a monthly return in form GSTR 6 on or before 13th of the succeeding month.

Here are 11 points you may want to know before filing GSTR 6

  1. Input Service Distributor (ISD) is the prime office of a business/organization that receives invoices for services commonly received by its branches/sub-units (registered under the same PAN).
  2. An ISD has 2 crucial roles,
    1. to centralise billing/payment for the common expenditure procured on input tax.
    2. to distribute the credit of CGST/SGST/IGST/UTGST tax paid to the service recipients in the right
  3. To distribute the credit to the recipients, the given taxpayer/pan holder will have to register as an “ISD” under serial number 14 of the REG-01 form.
  4. The ISD can distribute the ITC only to its branches registered under the same PAN (though the GSTIN can vary).
  5. The ISD cannot distribute the ISD invoices for service utilized by outsourced manufacturers or service providers.
  6. The ISD should not distribute tax credit exceeding the tax amount paid for the services.
  7. ISD is not applicable upon the ITC paid on the Input goods, such as raw material and/or capital goods.
  8. Even though an ISD and a normal taxpayer both have inward supply invoices, an ISD cannot claim credit for the tax paid on services as the ISD itself does not utilize the service.
  9. The Normal taxpayers are required to file GSTR 3B, through which liability and input tax credits are posted to the respective ledgers and maintained by GSTN. However, the ISDs do not have to file GSTR 3B as they do not have any liability or credits of their own and thus no ledgers as well.
  10. GSTR 6 has to be filed by every ISD even if it is a nil return.
  11. GSTR 6A is a read-only form generated automatically through the invoices, debit notes and credit notes raised and filed by the vendors in their GSTR-1.

IRIS Business, a leading name amongst the GST Suvidha Providers (GSP) in India, offers end-to-end solutions for all your GST filings. IRIS Sapphire, the smart GST filing application from IRIS, assures you a hassle-free preparation of form GSTR 6.

For any queries or to sign up for our free demo, write to us at support@irisgst.com or simply contact us here.

About Vaishali Chheda

Vaishali Dedhia, a Chartered Accountant, has been working with IRIS for over 6 years and is currently the lead Functional Analyst and Subject Matter Expert for IRIS' GST offerings. She has also been assisting the clients in return filing related queries. Prior to GST, she was involved in compliance and data analysis for the US markets. In her leisure time, Vaishali likes reading novels, listening music and hanging around with friends, family.

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