Input Service Distributor and GSTR 6

GSTR 6 is a monthly GST return that an Input Service Distributor is required to file.

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 GST compliance around it also grows. Nevertheless, to facilitate the growth of businesses in India, many provisions have been brought into action under the GST regime.

Input Service Distributor – ISD

The concept of Input Service Distributor (henceforth referred to as ISD), is 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 are centralized. In addition, the application of this concept also simplifies the credit-taking process and strengthens the flow of credit under GST.

What is GSTR 6?

An Input Service Distributor is required to submit GSTR 6, a monthly return. It includes information on the distribution of Input Tax Credit and the ITC received by an input service distributor. There are 11 sections in all in this return. An ISD or Input Service Distributor is required to file a monthly return in form GSTR 6 on or before the 13^th of the succeeding month.

11 points you may want to know before filing GSTR 6

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).
An ISD has 2 crucial roles,
1. To centralize 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
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.
The ISD can distribute the ITC only to its branches registered under the same PAN (though the GSTIN can vary).
The ISD cannot distribute the ISD invoices for service utilized by outsourced manufacturers or service providers.
The ISD should not distribute tax credit exceeding the tax amount paid for the services.
ISD is not applicable upon the ITC paid on the Input goods, such as raw material and/or capital goods.
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.
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.
GSTR 6 has to be filed by every ISD even if it is a nil return.
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.

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