Input Service Distributor and GSTR-6

Goods and Services Tax, 2017

Input Service Distributor and GSTR-6

An Input Service Distribution is mechanism whereby a centralized office takes GST invoice for services availed by the branches. Centralized Office in such cases are called as Input Service Distributor (ISD).

The ISD distributes the Input Tax Credit availed by it on the GST invoice taken from the suppliers for the services availed by its branches. The credit is distributed on proportionate bases to branches through issue of GST ISD Invoice.

A centralized office can become an ISD only if all branches and centralized office have a common PAN.

It will be ensured that credit distributed should not exceed the credit availed by the ISD.

Following conditions are to be fulfilled by the input service distributor –

ITC should be distributed in the same month
ISD cannot accept the invoice for the services on which tax is to be paid on reverse charge basis
ITC cannot be distributed for inputs or capital goods such as raw materials and machinery etc
ITC cannot be distributed to outsourced manufacturers and service providers of the company

Registration of ISD: an Input Service Distributor has to mandatorily register himself as ISD in addition to normal GST registration. The said registration is being done by mentioning ‘ISD’ in serial no. 14 of REG-01 form.

Return: GSTR – 6 is to be filed on monthly basis by 13th of next month

GSTR-6 is to be filed by an Input Service Distributor specifying details of ITC received and distributed to its branches. This return must contain the details of inward supplies received/purchases made from other registered taxpayers (B2B) and the details of input tax credit that was distributed among the branches of the organisation

Late Fees and Penalty: Rs. 50 per day for the days of default and Rs. 20 per day in case of NIL Return, maximum upto Rs 5,000. Interest is levied @ 18% p.a. for the days of default.

Prerequisites for filing GSTR-6:

Registered tax payer under the GST with a 15 digit PAN based GSTN.
The aggregate turnover of the business should be greater than Rupees 20 lakh.
This return applies to all registered Input Service Distributors under the GST who have neither opted for the composition scheme nor have a Unique Identification Number (UIN). This return is also not applicable to non-resident tax payers.
It is required to capture the details of all taxable purchases made (ISD/Head Office) on behalf of organization’s other establishments/branches. It is also required to capture the details of how input tax credit received on purchases across all the branches was distributed (through internal transactions between the head office and its branches).

Disclaimer: The information contained in this Article is intended solely for personal non-commercial use of the user who accepts full responsibility of its use. The information in the article is general in nature and should not be considered to be legal, tax, accounting, consulting or any other professional advice. We make no representation or warranty of any kind, express or implied regarding the accuracy, adequacy, reliability or completeness of any information on our page/article.

To stay updated Subscribe to our newsletter today

Explore other Legal updates on the 1-Comply and follow us on LinkedIn to stay updated

Goods and Services Tax, 2017