Q.1. What is Input Service Distributor?
Ans : Input Service Distributor means an office of the supplier of goods or service or both which receives tax invoice issued towards the receipt of input service and issues a prescribed document for the purpose of distributing the credit of central/state/union/integrated tax to a supplier of taxable goods or services or both having the same PAN as that of the said office.
Q.2 What is the role of an Input Service Distributor (ISD) ?
Ans: Companies may have their Head office at one place and units at other places which may be registered separately. The Head office would be procuring certain services for common utilization of all units across the country. The bills for such expenses would be raised on the head office but the head office would not be providing any output supply. So as to utilize the credit which gets accumulated on the account of such input services the role of ISD comes in the picture. Since the common expenditure is meant for the business of all units, it is but natural that the credit of input services in respect of such common invoices should be apportioned between all consuming units.
14 Blocked Input Tax Credit (ITC) under GST
Q.3 What is the Manner of Distribution of credit by Input Service Distributor ?
Ans :
- Input tax credit available for distribution in a month shall be distributed in the same month and details shall be furnished in GSTR-6 (detailed discussed further).
- The input tax on the account of CGST/SGST/UTGST and IGST shall be distributed separately.
- The input tax credit on the account of IGST shall be distributed as Input tax credit of IGST to every recipient.
- Input tax credit of CGST and SGST/UTGST to be distributed as CGST and SGST/UTGST respectively if recipient is in same state and ITC of CGST and SGST/UTGST to be distributed as IGST if recipient is in different state.
- Distribution of above Input tax credit is done on the basis of turnover.
Q.4 Whether ISD is required to registered separately ?
Ans : Yes, Input Service Distributor has to compulsorily register as “ISD” apart from its registration as a normal taxpayer under the Act, wherein he has to specify under serial number 14 of the REG-01 form as an ISD. Only then he shall be able to distribute the credit to the recipients.
Case Study : Say Yes to ITC on default by seller
Q.5 Suppose BabaTax is a registered supplier of goods having Head Office at Pune and also registered as ISD, receive auditing services for two units, one in Pune and another in Ahemdabad amounting Rs 2,30,000 and GST@ 12% on this Rs 27600 (CGST 13800 and SGST 13800). Turnover of unit one is 30,00,000 and unit two is 20,00,000.
Ans : BabaTax is registered in Pune and also one of his branch is located in Pune therefore he can distribute the ITC of Pune as CGST and SGST , whereas his unit two is located in ahemdabad therefore he can distribute the ITC as IGST to that unit.
Calculation : ITC of Rs.27,600 will be apportioned on the basis of turnover in 30:20 which is 16560 (27600*30/50) and 11040 (27600*20/50).
Hence Pune branch gets Rs. 16560 (CGST 8280 and SGST 8280) and Ahemdabad branch gets Rs. 11040 as IGST.
E-Invoice Soon to Launch under GST
Q.6 What is GSTR-6 ?
Ans : The GSTR-6 form is a monthly return form required to be furnished by an input service distributor at the GST Portal. It contains the details of ITC received by an ISD and also contains all the documents issued for distribution of ITC and the manner of distribution of such credit against all the relevant tax invoices. GSTR 6 has to be filed by every ISD, even if it is a nil return.
Q.7 What is GSTR-6A ?
Ans: GSTR-6A is an automatically generated form based on the details provided by the suppliers of an ISD, in their Form GSTR-1. However, it is to be noted that Form GSTR-6A is a read only form, and any changes to be made in it, have to be done while filing GSTR-6 form. One can view the Form GSTR-6A by going to the return dashboard on the GST portal.
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Q.8 What is the due date of filing GSTR-6 ?
Ans : Form GSTR-6 – By the 13th of the succeeding month – Furnish the details of ITC distributed.
Q.9 What type of details are required to file GSTR 6 ?
Ans :
Table 1&2 :-
It requires the details of taxpayer like GSTIN, Name of the taxpayer, and period for which GSTR 6 is being filed.
Table 3 :-
In this, ISD fills out the details of supplies received and input credit amount from a registered taxpayer.
Table 4 :-
The information is auto-populated by table-3 and we have to bifurcate the information regarding input tax credit whether it’s eligible or ineligible.
Table 5 :-
This head includes the information regarding the available credit under CGST, SGST, and IGST.
Table 6 :-
It includes the charges like interest on late payment of GST which is payable.
Table 7 :-
If there is any change or mismatch or reclaim to be done in input tax credit under CGST, SGST, and IGST, it should be recovered in this head.
Table 8 :-
The amount distribution for table 6 & 7 under CGST, IGST, and SGST is covered in this head.
Table 9 :-
If above mentioned tables are wrongly filled by distributing credit to the wrong person in any previous tax period, the changes and redistribution is possible under this head.
Table 10 :-
In case of late fee payable or paid, this head is separately mentioned for it. The taxpayer fills the details in it regarding the late fee if applicable
Table 11 :-
It covers the refund amount and information of the electronic cash ledger
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Q10. What if input services are not used by all the units?
Case 1: Service billed is used entirely by one recipient unit :
ITC of such kind of bills which are specifically attributable to one unit must be allocated to that unit entirely.
Case 2: Service billed is used by more than one recipient unit but not all :
Credit has to be distributed to those units that were operational and generated revenue during the relevant month. Formula
C1=C*(T1/T), where
C1 =ITC to be distributed to the recipient
C =Total ITC available for distribution
T1 =Turnover of the specific recipient
T =Total Turnover of all recipients to which ITC relates
Case 3: Service billed is used by all the recipient units:
Credit has to be distributed to all units on the basis of turnover. Formula
C1=C*(T1/T)
C1 =ITC to be distributed to the recipient
C =Total ITC available for distribution
T1 =Turnover of the specific recipient
T =Total Turnover of all recipients.
The Author of the above article is Tarun Mulani, ICAI.
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