Are you an Input Service Distributor (ISD) struggling to navigate the complexities of filing GSTR-6? Don't worry; we've got you covered. In this comprehensive guide, we'll break down the GSTR-6 return process and share expert tips to help you claim the maximum Input Tax Credit your business deserves.

What is GSTR 6?

Form GSTR6 is a monthly return that ISDs must file to distribute the ITC among their units or branches. This return allows you to claim the credit on input services received from various suppliers and distribute it proportionately across your offices or locations. Failing to file GSTR-6 correctly can lead to missed opportunities for ITC claims, resulting in financial losses for your business.

Importance of Accurate GSTR-6 Filing

The GSTR-6 return plays a crucial role in ensuring that your business can claim the appropriate ITC. By accurately reporting the input services received, you can maximize the credit available for distribution among your units. This, in turn, reduces the overall tax burden on your business and improves your bottom line.

Step-by-Step Guide to Filing GSTR-6

GSTR-6 filing steps
  1. Gather Necessary Information: Collect all the relevant documents, such as invoices, debit notes and credit notes, for the input services received during the tax period.

  2. Identify Eligible Input Services: Carefully review the input services to determine their eligibility for ITC distribution. Services used exclusively for exempt supplies or personal consumption are typically ineligible for ITC claims. To learn more about ineligible ITC, click on the link provided.
  3. Calculate the ITC Amount: Based on the eligible input services, calculate the total ITC amount that can be distributed among your units or branches.
  4. Allocate ITC to Recipients: Determine the appropriate allocation of ITC to each recipient unit or branch based on a fair and reasonable method, such as turnover, number of employees, or any other suitable criteria.
  5. Prepare GSTR-6: Using the compiled information, fill out the GSTR-6 return accurately, ensuring that all the necessary details are provided, including the ITC amount, recipient units, and applicable tax rates.
  6. Review and Submit: Thoroughly review the GSTR-6 return for any errors or inconsistencies before submitting it to the GST portal within the prescribed due date.

Key components of GSTR-6 filing

GSTR-6 filing components

Recipient Details :
Begin by accurately furnishing details of the recipient entities to whom input tax credit is being distributed. This includes their GSTIN, legal name, and other relevant particulars.

Invoice Details :
Provide comprehensive information regarding the invoices pertaining to input services received. Ensure that all invoices are correctly accounted for, including the invoice number, date, supplier details, and the amount of ITC claimed.

Reconcile the input tax credit claimed in GSTR-6 with the ITC available for distribution as per the invoices uploaded by the suppliers in their respective GSTR-1 or GSTR-5 returns.

How to file GSTR-6?

Before the GSTR 6 filing, an Input Service Distributor (ISD) must review and update the details in GSTR-6A, which includes adding, correcting, or deleting relevant information. The GSTR-6 return is then auto-populated with the approved details from GSTR-6A, streamlining the filing process. To understand how to file GSTR-6 on the GST portal, let's explore the various sections that require information :

Enter the GSTIN (Goods and Services Tax Identification Number) of the ISD for whom the return is being filed.

GSTIN table

Registered Person's Name :
The name of the taxpayer (ISD) will be auto-populated based on the GSTIN provided.

Input Tax Credit Received for Distribution :
This section will be auto-populated with invoice-wise details of all the input services received by the ISD, which are eligible for Input Tax Credit (ITC) distribution.

Input Tax Credit Received for Distribution

Total ITC/Eligible ITC/Ineligible ITC :
This part will display the total ITC amount of the ISD, segregated into total ITC, eligible ITC, and ineligible ITC for the tax period.

Total ITC

Distribution of Input Tax Credit :
In this table, the ISD reports the distribution of ITC among the recipient units or branches. The recipients can then claim the distributed ITC based on the information provided here.

ITC reported table 4

Amendments to Previous Returns :
If any mistakes were made in the invoice details for inward supplies reported in previous GSTR-6 returns, corrections can be made in this section.

Amendments to Previous Returns

ITC Mismatches and Reclaims :
Changes to the total ITC due to mismatches or reclaimed ITC after rectification of mismatches can be reported in this table.

ITC Mismatches table

Distribution of ITC from Tables 6 and 7 :
Any changes to the amount of ITC distributed to recipient units or branches, based on the details entered in Tables 6 or 7, can be recorded here.

Table 6 and 7

Redistribution of Incorrectly Distributed ITC :
If ITC was incorrectly distributed to a recipient in previous returns, the necessary adjustments can be made in this table.

Redistribution of ITC

Late Fees :
If applicable, any late fees paid by the ISD should be entered in this section.

Late Fees table

Refund claimed from electronic cash ledger

Refund claimed from electronic cash ledger

FAQs on GSTR-6

Who is eligible to file GSTR 6?

Eligibility : Every Input Service Distributor (ISD) is required to file GSTR 6. It is a mandatory return to be filed on a monthly basis.

What is the turnover limit for GSTR 6?

Turnover Limit : There is no specific turnover limit mentioned for filing GSTR 6. Every ISD, regardless of turnover, must file GSTR 6.

How to distribute ITC in GSTR 6?

There are two possible cases of Credit distribution in ISD’s scenario :

What is GSTR 6 due date?

Due Date : The due date for filing GSTR 6 is the 13th of the following month.

Are there any late fees for delayed GSTR-6 filing?

If a taxpayer fails to file their GST return within the prescribed due dates, they will be liable to pay a late fee. The amount of late fee is calculated based on the presence or absence of tax liability for the respective period. 

In cases where there is a tax liability, the late fee is Rs. 50 per day, divided equally between the Central GST (CGST) and State GST (SGST) components. Specifically, it amounts to Rs. 25 per day for CGST and Rs. 25 per day for SGST.

However, if there is no tax liability (i.e., a Nil tax liability), the late fee is lower at Rs. 20 per day, again divided equally between CGST and SGST components, amounting to Rs. 10 per day for CGST and Rs. 10 per day for SGST.

It's important to note that the late fee is capped at a maximum of Rs. 5,000, regardless of the number of days the return remains unfiled beyond the due date.

In a nutshell….

Accurately filing GSTR-6 is not just a compliance requirement but a strategic opportunity for businesses to optimize their input tax credit and minimize tax liabilities. By following the guidelines outlined in this guide and leveraging technology-driven solutions like GSTHero, businesses can streamline their GST compliance process and claim the maximum ITC they are entitled to.

Start your journey towards GST compliance excellence today with GSTHero's automated GST return filing software.

Stay updated, stay ahead with GSTHero!

Until the next time…


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