In this blog, we'll discuss the key purposes of filing GSTR-6, who is eligible to file the return, the details and documents required for filing, the due date for filing, and the consequences of not filing the return on time. By the end of this blog, you'll have a clear understanding of how to file GSTR-6 accurately and on time to maintain compliance with the GST regulations.
Filing GST returns is a critical compliance requirement for businesses in India. It helps them fulfill their tax obligations and ensures that the government has accurate information about their tax liabilities. One such return is GSTR-6, which is filed by Input Service Distributors (ISD) every month. GSTR-6 contains details of the input tax credit (ITC) distributed by the ISD to its branches or units, and it helps the government keep track of the flow of credit under the GST system.
What is GSTR-6?: Purpose of Filing GSTR-6 GST Returns
GSTR-6 is a return form that is filed by Input Service Distributors (ISD) to declare the details of input tax credit received and distributed by them during a particular period. The form contains information on the invoices that an ISD has received, the credit that has been distributed to the recipient, and the balance credit that remains unutilized. The key purposes of filing GSTR-6 are as follows:
- Claim Input Tax Credit: The primary purpose of filing GSTR-6 is to claim the input tax credit for the services that have been distributed by the ISD to the recipient. The recipient can use this credit to offset their tax liability.
- Compliance with GST Rules: Another important reason for filing GSTR-6 is to comply with the GST rules and regulations. The ISD must file this form on time, failing which they may attract penalties.
- Transparency: Filing GSTR-6 ensures transparency in the distribution of input tax credit by the ISD. The form contains details of all the invoices received and distributed, making it easier for the tax authorities to track the flow of credit.
GSTR-6 Eligibility & Exemptions
GSTR-6 is a return form that must be filed by Input Service Distributors (ISD) under the GST regime. An Input Service Distributor is an office of any organization supplying goods and/ or services. It is responsible for receiving all the invoices related to the input services taken by different units of the organization, and distributing the credit of the tax paid on these services to such units.
ISDs are eligible to file GSTR-6 only if they have already distributed input tax credit to the recipients for a particular tax period. However, if there is no distribution of input tax credit in a particular tax period, the ISD does not have to file GSTR-6 for that period. However, it is important to note that even in such cases, the ISD must file a NIL return for that period. Also, if an entity is not registered as an ISD under the GST regime, it is not eligible to file GSTR-6. GST registration as an ISD can be taken online by submitting the application form GST REG-01 on the GST portal.
Details and Documents Required for GSTR-6 Filing
Documents are an essential part of filing GSTR-6 as they provide necessary information to the tax authorities about the input services received and distributed by the Input Service Distributor (ISD). The documents help the tax authorities to verify the accuracy of the details provided by the ISD and ensure compliance with the GST laws. The ISD must maintain the required documents and records to support the transactions mentioned in the return form. To file GSTR-6, an Input Service Distributor (ISD) must have the following details and documents ready:
| List of Documents | Key Purpose |
|---|---|
|
GSTIN |
The Goods and Services Tax Identification Number (GSTIN) is a unique identification number assigned to each registered taxpayer under the GST regime. The ISD must have a valid GSTIN to file GSTR-6. |
|
Invoices Received |
The ISD must have details of all the invoices received from the suppliers during the tax period for which they are filing GSTR-6. The information should include the invoice number, date, supplier's GSTIN, and the amount of input tax credit. |
|
Credit Distributed |
The ISD must also have details of all the invoices for which they have distributed the input tax credit to the recipients. The information should include the invoice number, date, recipient's GSTIN, and the amount of input tax credit distributed. |
|
Reversal of Credit |
If any credit has been reversed during the tax period, the ISD must have the details of the same, including the invoice number, date, and amount. |
|
HSN Code |
The Harmonized System of Nomenclature (HSN) code is a six-digit code used to classify goods and services under the GST regime. The ISD must have the HSN code of the input services received and distributed. |
|
Challans |
The ISD must also have the details of all the challans generated for the payment of tax. The information should include the challan number, date, and the amount paid. |
|
Other Documents |
The ISD must also have any other documents, such as debit or credit notes, which are relevant to the tax period for which they are filing GSTR-6. |
Due Date for GSTR-6 Filing
To ensure compliance with the GST Act, it is important that you know the exact due date for filing GSTR-6. So, the due date for filing GSTR-6 for a month in which the input tax credit (ITC) was distributed is on or before the 13th of the following month. For example, if GSTR-6 is being filed for January 2023, its due date would be February 13, 2023.
The ISD must file the return on time to avoid any late fees or interest charges. In case the ISD fails to file the return by the due date, they may be liable to pay a late fee and interest on the outstanding tax amount. However, if there are any genuine reasons for not filing the return on time, such as natural calamities or technical issues, the ISD may apply for an extension of the due date. In such cases, the ISD must apply along with valid reasons and supporting documents to the tax authorities.
Penalty for Late Filing of GSTR-6
Filing GSTR-6 is an essential compliance requirement for Input Service Distributors (ISD) and must be filed every month by the due date. Failure to file the return on time can lead to late fees, interest charges, loss of ITC for recipients, and even penalties and prosecution in certain cases. Here is a detailed explanation of the same.
- Late Fee: If the ISD fails to file the return by the due date, a late fee of Rs. 50 per day (Rs.20 for Nil returns) will be charged, subject to a maximum of Rs. 5,000. The late fee is calculated from the due date of filing the return until the date when the return is filed.
- Interest Charges: In addition to the late fee, the ISD will also be liable to pay interest on the outstanding tax amount. The interest rate is currently set at 18% per annum and is calculated from the due date of filing the return until the date when the tax amount is paid.
- Loss of Input Tax Credit: If the ISD fails to file GSTR-6, the recipients of the input tax credit (ITC) may not be able to claim the credit for the tax paid on the input services received from the ISD. This could result in a loss of ITC for the recipients, leading to a higher tax liability.
In conclusion, filing GSTR-6 on time is critical for Input Service Distributors (ISD) to maintain compliance with the GST regulations. The return helps the government keep track of the input tax credit (ITC) distributed by the ISD to its branches or units and ensures that the tax system remains transparent and efficient. By following the guidelines outlined in this blog, you can ensure that they file GSTR-6 accurately and within the prescribed deadline. If you have any more questions, you can comment below the post and we will address it as quickly as possible!