The Input Service Distributors (ISDs) are special category of persons who do not file basic returns in Forms GSTR 1, GSTR 2 and GSTR 3/GSTR 3B. These persons are required to file monthly returns in form GSTR 6.
So let’s first understand the concept of Input Service Distributor (ISD) and how an ISD files its GST returns.
Who is an Input Service Distributor?
An Input Service Distributor has following characteristics according to section 2(61) of the CGST act.
- An ISD is an office of the supplier of goods or services
- This office receives tax invoices towards the receipt of input services
- An ISD issues a prescribed document in order to distribute the input tax credit of the CGST, SGST/UTGST and IGST paid on the services received
- This document is issued to a supplier of goods and services having the same PAN as that of an ISD.
This means an ISD is the head office of a company having units or branches at other places. These units are registered separately. Furthermore, the head office procures certain input services for common utilization by all the branch units across the country. Thus, the bills of these common expenses are raised in the name of the head office. But the head office does not provide any outward supply. Also, it is important to note that an ISD system is put into place in order to distribute the credit towards the common invoices. And these invoices pertain to input services only and not goods.
Now, the credit of the input services commonly utilized by all the units are apportioned between units consuming such common services. This is because such services are utilized by all the branch units. Therefore, an ISD issues an invoice in order to distribute ITC to all its branch units utilizing such common services. This invoice is issued only for the purpose of distributing ITC. Furthermore, the ITC available for distribution in a particular month shall be distributed in the same month. And the details of such ITC distribution shall be furnished in GSTR 6.
What is GSTR 6?
GSTR 6 is a monthly return that an ISD files every calendar month. This return provides information of all the invoices on which credit has been received and are issued by an ISD. This means that it gives a summary of the total input tax credit available for distribution during a particular month. Thus, the details of the invoices that an ISD furnishes in form GSTR 6 are made available to every recipient of the credit. These details are visible to the recipient in part B of form GSTR 2A.
Hence, the recipients can include these details in form GSTR 2 and take credit.
Due Date for Filing GSTR 6
An ISD needs to file monthly return in GSTR 6. This return needs to be filed on the thirteenth day of the month succeeding the month for which tax is to be paid. Say for instance, Kapoor Pvt Ltd is registered as an ISD in Mumbai having branches in Mumbai, Hyderabad, Bangalore and Gurgaon. Kapoor Pvt Ltd needs to file ISD return for the month November 2018. Hence, the last date to file GSTR 6 for Kapoor Pvt Ltd is December 13, 2018.
What is Form GSTR 6A?
GSTR 6A is an auto drafted, read only form. This form is generated automatically based on the details furnished by the suppliers of an ISD in form GSTR 1. This form contains details pertaining to the supplies against which credit is received for distribution. It also includes the details pertaining to the debit notes and credit notes received during the current tax period.
Contents of Form GSTR 6
Goods and Services Tax Identification Number of an ISD
2. Business Name
- Legal Name of the registered person
- Trade Name if any
3. Input Tax Credit
ITC received for distribution. Table 3 contains the invoice wise details of the inward supplies that an ISD receives for common utilization across all units. These are the invoices on which credit is to be received by an ISD for distribution.
4. Total ITC/Eligible ITC/Ineligible ITC to be Distributed for Tax Period (From Table No. 3)
An ISD identifies the input tax credit into eligible and ineligible credit as per section 17(5) of the CGST act. Thus, an ISD distributes both the eligible and ineligible ITC to its units. These credits are distributed in the same tax period in which the inward supplies have been received. Thus table 4 contains details pertaining to:
- Amount of eligible ITC
- Total ITC available for distribution
- Amount of ineligible ITC
5. Distribution of Input Tax Credit Reported in Table 4
An ISD needs to distribute both the eligible and ineligible ITC. Thus table 5 contains two parts: 5A and 5B.
5A contains the details pertaining to the distribution of the amount of eligible ITC. Whereas 5B contains the details pertaining to the distribution of the amount of ineligible ITC. Thus, it is important to note that ITC towards central tax, state tax or UT tax is distributed as central tax, state tax or UT tax respectively. This is possible only if the recipient is located in the same state as that of the ISD.
Further, the amount of ITC to be distributed in these cases shall be equal to the total of the ITC amount of central and state/UT tax eligible for distribution to the recipients.
However, there are cases when the recipient is located in the state or UT other than that of the ISD. In these cases, ITC on account of central tax and state or UT tax shall be distributed as integrated tax. And the ITC amount on account of integrated tax shall be distributed as integrated tax only.
6. Amendments in Information Furnished in Earlier Returns in Table No. 3
Table 6 relates to the changes made to the invoice details of inward supplies furnished in the previous returns. This table contains both the original as well as the revised details of such invoices of the inward supplies. Further, this table also contains the details of the debit and credit notes and changes to such notes in part 6B and 6C respectively.
A supplier issues a credit note to an ISD in order to reduce the ITC of ISD. This is a result of either taxable value charged exceeding the taxable value of supply made. Or it is because of the goods returned by the recipient. Similarly a supplier issues a debit note to an ISD on account of any additional amount of ITC that needs to be claimed. Thus, the details of both the debit and credit notes as well as the changes to these notes are covered in this table.
7. Input Tax Credit Mis-matches and Reclaims to be Distributed in the Tax Period
Part A of Table 7 contains the details of the change in the amount of total ITC due to a mismatch of GSTR 1 and GSTR 6. Whereas, part B of table 7 contains the ITC reclaimed on rectification of such a mismatch.
8. Distribution of Input Tax Credit Reported in Table No. 6 and 7 (plus / minus)
This table reports the changes to be made in the total amount of credit that needs to be distributed to the branch units. These changes are towards details mentioned in Table 6 and 7.
9. Redistribution of ITC Distributed to a Wrong Recipient (plus / minus)
There are cases when credit is distributed to a wrong establishment. In these cases, such an error can be rectified by issuing credit notes to the recipient to which the credit is wrongly distributed. Furthermore, a new invoice of the same amount issued to the recipient which is entitled to receive the credit. Therefore, this table shows invoice wise details of both the credit note and the new invoices.
10. Late Fee
This table covers the details of the late fees paid by a unit or branch in case there is any.
11. Refund Claimed from Electronic Cash Ledger
Table 11 contains the details of the refund to be claimed from the electronic cash ledger. Thus, such a refund would lead to a debit entry in electronic cash ledger. Furthermore, this table also contains a drop-down where an ISD can select a bank account in which he wants to receive such a refund.
In the end, the return is verified by an authorized signatory. This authorized signatory must be a resident in India having a valid PAN number and who acts on behalf of the Non – Resident Taxable Person.