GSTR-6: A Step-by-Step Guide For Input Service Distributors

1. What is GSTR-6?

GSTR-6 is a monthly return that must be filed by Input Service Distributors (ISD) under the Goods and Services Tax (GST) regime. This form facilitates the distribution of input tax credit (ITC) among the units of an ISD, ensuring that the credit is appropriately allocated based on the invoices received.

Who is Required to File GSTR-6?

This return is mandatory for entities registered as Input Service Distributors. An ISD acts as an intermediary that receives invoices on services and distributes the ITC to its branches or units. It's crucial for ISDs to file GSTR-6 to comply with GST regulations and facilitate the smooth distribution of ITC within their organization.

2. Filing Requirements and Procedures

Mandatory Filing and Due Dates

Every Input Service Distributor registered under GST is required to file GSTR-6 on a monthly basis, regardless of whether there is any ITC to distribute in that period. A 'Nil' return must be filed if there is no ITC available for distribution. The due date for filing GSTR-6 is the 13th of the month following the tax period. For instance, for the tax period of February 2024, the GSTR-6 must be filed by March 13th, 2024.

Accessing and Filing GSTR-6 on the GST Portal

To file GSTR-6, taxpayers must log in to the GST portal and navigate to the Returns Dashboard. Here's the pathway: Services > Returns > Returns Dashboard. The process is designed to be user-friendly, with step-by-step instructions guiding the taxpayer through the filing process.

Tables and Information Required in GSTR-6

GSTR-6 comprises various tables that need to be accurately filled out. Key tables include:

• Table 3: For details of input tax credit received for distribution.
• Table 6B and 6C: For details of debit or credit notes received, including amendments.
• Table 4, 5, and 8: For viewing and entering details of ITC available and distributed, including eligible and ineligible ITC.
• Table 9: For redistribution of ITC in case of any corrections.

Each table serves a specific purpose, ensuring that all aspects of ITC distribution are covered comprehensively.

3. Distribution of Input Tax Credit (ITC)

Eligibility for ITC Distribution

ITC distribution is eligible only when the Input Service Distributor has received invoices for services that are used in furtherance of business. The ITC can be distributed as CGST, SGST, IGST, or UTGST to the recipient units based on the invoices received.

Mechanism of ITC Distribution

The ITC is distributed using specific documents issued by the ISD to the recipient units. The amount of credit distributed cannot exceed the amount of credit available for distribution. The distribution mechanism is governed by rules that ensure fair and equitable distribution among recipients.

Amendments and Adjustments in ITC

Amendments to ITC distribution can be made in subsequent tax periods through GSTR-6. This includes adjustments for any excess or shortfall in the distribution of ITC in previous periods. The process is facilitated by specific tables in GSTR-6 designed for amendments.

4. Late Filing and Penalties

Late Fee for Delayed Filing

A late fee is applicable if GSTR-6 is not filed within the due date. The late fee is calculated from the day following the due date till the date of actual filing. The current late fee is Rs. 50 per day (Rs. 25 each for CGST and SGST) in case of tax liability and Rs. 20 per day (Rs. 10 each for CGST and SGST) for nil returns, subject to a maximum of Rs. 5000.

Interest on Late Payment

Interest is charged at 18% per annum on the outstanding tax amount. This is calculated from the day following the due date till the date of payment. It's crucial for taxpayers to ensure timely filing and payment to avoid these additional costs.

5. Common Queries and Issues

Offline Tool for Filing

The GST portal provides an offline tool for preparing GSTR-6 returns, allowing taxpayers to compile their return offline and upload it to the GST portal. This is particularly useful for taxpayers with large numbers of invoices to process.

Action on Auto-Populated Invoices

Invoices auto-populated in GSTR-6A (from GSTR-1/5 of the suppliers) need to be verified and actions such as accept, reject, modify, or keep pending must be taken in GSTR-6. This ensures that only accurate and verified ITC is distributed.

Dealing with Changes and Corrections

Corrections or changes to previously filed returns can be made in the subsequent month's GSTR-6. This includes adjustments for any incorrect ITC claims or distributions.

6. Miscellaneous

Delinking of Credit/Debit Note from Invoice

Recent updates have allowed for the delinking of credit/debit notes from invoices, simplifying the reporting process in GSTR-6. This means ISDs no longer need to match credit/debit notes with specific invoices, easing the distribution of ITC.

Pre-Conditions for Filing

Pre-conditions for filing GSTR-6 include being registered as an ISD, having an active GSTIN, and possessing valid login credentials. Additionally, a Digital Signature Certificate (DSC) or Electronic Verification Code (EVC) is required for filing.

After Filing: ARN Generation and Acknowledgment

Upon successful filing of GSTR-6, an Acknowledgement Reference Number (ARN) is generated, and an SMS and email are sent to the registered contact details. This serves as confirmation of the successful submission of the return.

Navigating GSTR-6 Compliance: A Guide for Input Service Distributors

Embracing Compliance with Confidence

The Goods and Services Tax (GST) regime in India has streamlined the tax structure, bringing in more transparency and efficiency in tax compliance. Among the various returns under GST, GSTR-6 emerges as a critical filing requirement for Input Service Distributors (ISDs). This monthly return is pivotal for the accurate distribution of Input Tax Credit (ITC) across units, ensuring the seamless flow of credit within the organizational structure.

Key Considerations for GSTR-6 Filing

• Timely Submission: Adhering to the due date, the 13th of the following month, is non-negotiable for ISDs. Late submissions attract penalties and interest, adding unnecessary financial burdens.
• Accurate Data Reporting: Ensuring the accuracy of the information reported in GSTR-6 is crucial. From the details of ITC received to the distribution of credit among units, every piece of data must be meticulously reviewed and validated.
• Understanding Tables and Requirements: Familiarity with the tables in GSTR-6, such as those for ITC received, distributed, and adjustments for any amendments, is essential. This knowledge facilitates a smoother filing process.
• Leveraging the Offline Tool: The GST portal's offline tool is a boon for managing large volumes of data. It allows for the preparation of the return in an offline mode, minimizing errors and ensuring a hassle-free upload process.
• Dealing with Auto-Populated Invoices: Action on auto-populated invoices is a critical step. Accepting, rejecting, modifying, or keeping invoices pending must be done judiciously to ensure that only verified ITC is distributed.
• Handling Corrections and Amendments: The provision for making corrections or amendments in subsequent filings provides flexibility. This ensures that any inadvertent errors can be rectified, maintaining the integrity of the ITC distribution process.

Best Practices for Efficient GSTR-6 Filing

• Regular Reconciliation: Regularly reconciling invoices and credit notes with your records can preempt discrepancies, ensuring a smoother filing process.
• Staying Updated: Keeping abreast of the latest GST notifications and changes in the filing process can help in compliance and leveraging any new provisions for the benefit of the organization.
• Seeking Expert Advice: Complex scenarios or uncertainties in the filing process should be addressed with the help of GST experts. This ensures compliance and minimizes the risk of penalties.

Conclusion: Streamlining Compliance for Growth

For Input Service Distributors, GSTR-6 is not just a compliance requirement but an opportunity to streamline credit distribution across units, enhancing the operational efficiency of the organization. By embracing best practices, staying updated on GST regulations, and leveraging technology, ISDs can navigate the complexities of GSTR-6 filing with confidence and precision.

As the GST landscape evolves, the role of ISDs in maintaining the flow of ITC within the business ecosystem becomes increasingly significant. By ensuring accurate and timely filing of GSTR-6, Input Service Distributors not only comply with the statutory requirements but also contribute to the financial health and growth of their organizations.