
It has been one year since GST rollout. In the coming year, changes in the GST return filing process can be expected which aim to simplify the existing process. Though it is a welcome change, till the time these changes get implemented, the taxpayers still have to file their respective returns based on their type of registration and the turnover in the previous financial year. One such return is GSTR 6 which has to be filed monthly by the businesses who have taken registrations as Input service Distributors. Return filing due date for GSTR 6 for a particular month as per CGST Act is 13th of the next month. However, currently, the filing due date for GSTR 6 has been further extended to 31st July 2018 and the return for the period from July 2017 to June 2018 can be filed by July 31. This article focuses on the provisions of CGST Act and files GSTR6 applicable to Input Service Distributors and how to comply with the same. Input Service Distributor means an office of the supplier of goods or services or both which receives tax invoices issued under section 31 towards the receipt of input services and issues a prescribed document for the purposes of distributing the credit of central tax, State tax, integrated tax or Union territory tax paid on the said services to a supplier of taxable goods or services or both having the same Permanent Account Number as that of the said office; The concept of Input Service Distributor (henceforth referred to as ISD) was introduced for those businesses which have common expenditure across its business locations across the country, but the invoicing/billing is done usually to a centralized location. As the name suggests ISD registration can be used for credit distribution on the supply of services only and not goods. There are two important roles of an Input Service Distributor: Few major differences between a normal taxpayer and an ISD taxpayer are: Let’s understand this with an example: Entity A has two registrations in Maharashtra; one as Normal Taxpayer and another as an Input Service Distributor. So normal supplies of goods/services by A from Maharashtra will have to be reported by A in GSTR 1 of the normal taxpayer GSTIN and not in ISD registration. Suppose B is a vendor who provides services to A at all three locations. Now B has two options for billing A. He can prepare three separate bills for all three locations on their normal GSTINs or another option for him is to bill A on his ISD registration. ISD registration of A will then distribute the tax credit between the other three GSTINs by issuing separate documents. How to identify the registration type of a Taxpayer? Check the GSTIN in IRIS Peridot, a handy and easy-to-use mobile application, which provides details of a GSTIN when scanned. You can know the type of registration and ensure that you are billing to the right party. Some important points to be noted while distributing input tax credit through GSTR-6 are as follows: An ISD has to file GSTR-6 which is divided majorly into two sections To know more about the interrelationship between GSTR1 & GSTR6 and also to know how the vendor who files GSTR-1 has to deal with such invoices added or rejected in GSTR-6 you can check our blog here. In this section, the ISDs are required to upload the invoices and credit notes issued by them to the service recipients for input tax credit distribution. These invoices and credit notes will form part of GSTR 2A of the service recipients. The manner of distribution of credit by ISD is laid down under section 20 of CGST Act and additionally Rule 39 of CGST Rules provides for the procedure and calculation for distribution subject to certain conditions explained above. Apart from these in case of any amendments are present in the B2B and CDN section due to which the amount distributed as credit is reduced then the procedure for reducing the credit will be the same as followed for a reduction in case of a credit note. The filing of GSTR-6 is much simpler from a compliance point of view as partially the return is auto-populated. However, in order to take corrective actions on the auto-populated invoices, it is equally important to reconcile the data with the purchase register of ISD. As there are various common services involved in each business, it is obvious that a lot of invoices do get auto-populated in GSTR 6. An auto-reconciliation process that can automatically classify invoices into match and mismatch categories and even provide details of missing invoices either in GSTR 6A or your purchase register, will make your return filing process efficient. Check out our GSTR 6 return filing and process and auto reconciliation feature which works for GSTR2 as well as GSTR6. To know more about how this auto-reconciliation works through IRIS Sapphire or for any other queries on GST return filing process, please write to support@irisgst.com.Role of an Input Service Distributor
Regular Taxpayer vs. Input Service Distributor
Rules for ITC distribution
where,
“C” is the amount of credit to be distributed,
“t1” is the turnover, as referred to in section 20, of person R1 during the relevant period, and
“T” is the aggregate of the turnover, during the relevant period, of all recipients to whom the input service is attributable in accordance with the provisions of section 20;
Details to be filed in GSTR 6
B2B and CDN Section (Actionable Auto-drafted details)
ISD Section(ITC distribution details)
GST Return filling Software
for your GST Compliance