GSTR 6

What is GSTR-6?

GSTR-6 is a monthly return that must be filed by Input Service Distributors (ISD) under the GST regime. An ISD is a business entity that receives invoices for services and distributes the Input Tax Credit (ITC) to its branches or units.

This return contains details of all ITC received, distributed, and any modifications made to previous claims. It ensures that tax credit is passed on to the correct branches, helping businesses reduce their tax liability efficiently.
 

Who Needs to File GSTR-6?

GSTR-6 is mandatory for all Input Service Distributors (ISD). If your business receives invoices for services but does not directly consume them, you must distribute the ITC to respective branches and file GSTR-6 accordingly.

Who Does Not Need to File GSTR-6?

• Businesses that are not registered as ISD.
• Companies or traders that do not distribute ITC.
• Regular GST taxpayers, composition dealers, and exporters.
   

Due Date for Filing GSTR-6

GSTR-6 must be filed every month by the 13th of the following month. Missing this deadline can result in penalties and loss of Input Tax Credit.

For example, the GSTR-6 for June must be filed by July 13th.

Information Required in GSTR-6

When filing GSTR-6, you need to provide:

1. Basic Business Details – GSTIN, Legal Name, and Trade Name.
2. Details of Input Tax Credit (ITC) received – Including invoices from suppliers.
3. ITC Distributed to Branches – GSTIN of the recipient and amount distributed.
4. Modifications to Previous ITC Claims – Any changes to past filings.
5. Late Fee or Interest (if applicable) – If filed after the due date.

Step-by-Step Guide to Filing GSTR-6

Step 1: Log in to the GST Portal
Go to www.gst.gov.in and log in with your credentials.

Step 2: Navigate to the GSTR-6 Form

• Click on Returns Dashboard.
• Select the relevant financial year and tax period.
• Choose ‘Return for input service distributor GSTR6’ and click on ‘PREPARE ONLINE’. 
• Scroll down to Generate GSTR 6 Summary

Step 3: Enter Details

• Fill in ITC received details as per invoices.
• Add or modify ITC distributed among branches.
• Check for any pending invoices.

Step 4: Validate and Submit

• Verify all details.
• Click "Submit" to freeze the data.
• Click "File Return" and use DSC (Digital Signature Certificate) or EVC (Electronic Verification Code) to complete the filing.
   

Prerequisites for filing GSTR-6

Before you start preparing GSTR-6, it helps to have some essential pieces in place to make the process smooth and error-free.

1. Valid ISD Registration
First and foremost, your business must be registered as an Input Service Distributor under GST. Without this specific registration, you cannot file GSTR-6. 

2. Reconciliation of ITC Data
Ensure that the input tax credit details received from your vendors (as reflected in their GSTR-1 filings) are reconciled with your records. Any discrepancies should be resolved before filing, as the auto-populated GSTR-6A data will affect your return. 

3. Accurate Inward Invoice Records
Have all your invoices for services received ready and cross-checked, because these form the backbone of the ITC available for distribution. Errors here can lead to misstatements in your return. 

4. Clear Distribution Strategy for ITC
Decide how you will distribute the eligible tax credit among your branches or units. You’ll need these planned allocations ready when you complete the relevant tables in the return. 

5. Supporting Documents and Adjustments
If you need to correct data from previous periods or reclaim ITC due to mismatches, have those supporting figures and documents at hand. This will help you use the amendment and mismatch sections correctly. 

By organising these prerequisites before you begin, you can reduce the time spent on GSTR-6 preparation and ensure the information you submit is complete, accurate and compliant with GST regulations.
 

Details to be provided in GSTR-6

When filing GSTR-6, an Input Service Distributor (ISD) needs to furnish specific information that helps reconcile and distribute Input Tax Credit (ITC) correctly among its branches or units. Most of these details are auto-populated from the read-only GSTR-6A form, which contains data received from suppliers, but the ISD must review and confirm them before submission. 
Here’s a clear breakdown of the key sections you’ll encounter:

• GSTIN and Registered Name: The taxpayer’s GSTIN and registered name appear at the top and help identify the ISD filing the return. 
• Input Tax Credit Received: This shows the total ITC received that is available for distribution, populated based on invoices from suppliers. 
• Total ITC / Eligible / Ineligible Credit: This section separates the total ITC into amounts that are eligible for distribution and those that are not.
• Distribution of ITC: A major part of the form shows how the ISD distributes credit to its branches, enabling them to claim the appropriate ITC.
• Amendments to Previous Returns: If there were errors or mismatches in earlier periods, this area allows you to adjust those details.
• Mismatch Adjustments and Reclaims: Sometimes the ITC recorded earlier may not match the final figures. This section lets you correct such mismatches for the tax period.
• Redistribution Adjustments: If credit was previously distributed to the wrong recipient, you can rectify that here. 
• Late Fees and Refund Details: Any penalty paid for late filing, or refund claims from the electronic cash ledger, are included in the latter part of the return. 

Each of these parts ensures that the input tax credit flow is accurately reported and legally compliant, which is essential for maintaining correct tax records and avoiding disputes later. 

Benefits of Filing GSTR-6

1. Ensures Proper ITC Distribution
GSTR-6 helps businesses distribute Input Tax Credit accurately among different branches, reducing tax liabilities.

2. Prevents Tax Compliance Issues
By filing GSTR-6 on time, businesses avoid penalties and interest charges, ensuring smooth tax operations.

3. Improves Cash Flow Management
Proper ITC distribution minimizes unnecessary tax payments, improving the company’s cash flow.

4. Reduces Risk of ITC Rejections
By maintaining accurate records in GSTR-6, businesses ensure that their ITC claims are not rejected by tax authorities.
 

Drawbacks of GSTR-6 Compliance

1. Strict Deadlines
Since GSTR-6 must be filed every month by the 13th, missing deadlines can lead to penalties and compliance burdens.

2. No Provision for Late ITC Adjustments
Once GSTR-6 is filed, any missed ITC distribution must be rectified in later filings, creating extra work.

3. Complex Record-Keeping
ISDs need to maintain accurate invoices and ITC distribution records, which can be time-consuming for small businesses.
 

Common Mistakes to Avoid When Filing GSTR-6

1. Not verifying invoices before filing – Ensure that all invoices match the ITC received.
2. Missing the filing deadline – Late filing attracts penalties and loss of ITC benefits.
3. Incorrect ITC distribution – Entering wrong GSTINs or amounts can lead to compliance issues.
4. Ignoring past modifications – Always check for updates or corrections from previous filings.

Example of GSTR-6 in Action

Example 1: ITC Distribution in a Retail Chain
A retail company headquartered in Mumbai receives ITC of ₹1,00,000 for services used by branches in Pune and Bangalore. The ISD files GSTR-6 and distributes ₹50,000 ITC to Pune and ₹50,000 ITC to Bangalore, ensuring compliance and tax savings.

Example 2: Consulting Firm with Multiple Offices
A Delhi-based consulting firm receives ITC for advertising services used by their offices in Noida and Hyderabad. By filing GSTR-6, the firm distributes the ITC to respective branches, reducing tax burdens.
 

Conclusion

Filing GSTR-6 is a crucial part of GST compliance for Input Service Distributors. It ensures that ITC is properly distributed among business units, reducing unnecessary tax burdens. While it comes with strict deadlines and record-keeping challenges, timely and accurate filing can improve cash flow and prevent compliance issues.

For Indian small businessmen, understanding GSTR-6 helps in efficient tax planning and avoiding penalties. Ensure that you file your returns on time, verify all ITC claims, and maintain accurate records to make the most of the GST system. By staying compliant, you can focus more on business growth rather than tax complications.