Demystifying GSTR-6 Filing Process: A Comprehensive Guide for Businesses

In 2017, India embarked on a transformative journey in its tax landscape with the introduction of the Goods and Services Tax (GST). A pivotal aspect of this comprehensive indirect tax system is the GSTR-6, a monthly return that plays a vital role for Input Service Distributors (ISDs). These entities facilitate the distribution of Input Tax Credit (ITC) to their registered clients, streamlining the tax credit mechanism.

Understanding GSTR-6 Filing:

The GSTR-6 filing is an indispensable requirement for specific businesses in India. Let’s delve into the key aspects of this process to gain a better grasp of its significance.

Who Needs to File GSTR-6?

GSTR-6 filing is mandatory for two categories of businesses:

1. Input Service Distributors (ISDs): These entities play a crucial role in the distribution of ITC to their registered clients. Their accurate filing of GSTR-6 is essential to ensure transparency and efficiency in the ITC distribution process.
2. Businesses with Aggregate Turnover: Entities with an aggregate turnover of ₹20 lakhs or more are also required to file GSTR-6. This provision aligns with the overarching aim of GST to bring a wide range of businesses into the tax net.

GSTR-6 Due Date and Compliance:

To maintain the rhythm of this tax ecosystem, GSTR-6 filing comes with a due date. The 13th of every month is designated as the due date for filing. Nevertheless, it’s important to note that the government retains the flexibility to extend this date as needed.

Flexibility and Adjustments

The government retains the authority to extend the GSTR-6 filing deadline under certain circumstances, providing flexibility to accommodate various challenges that businesses might face.

Importance of Timely Filing

• Avoidance of Penalties: Late filings attract a penalty of ₹50 per day for the first 30 days after the due date, which escalates to ₹100 per day thereafter. This penalty underscores the importance of adhering to the filing schedule.
• Continuous Compliance: A lapse in filing GSTR-6 for over three months can escalate penalties, with potential charges of ₹200 per day for continued non-compliance. Such penalties highlight the necessity of regular and timely filings.

Essential Details to Include:

When filing GSTR-6, businesses need to furnish specific information:

1. Inward Supplies from Registered Taxpayers (B2B): A detailed account of all inward supplies from registered taxpayers should be recorded. This data ensures transparency and accuracy in the ITC distribution.
2. Distribution of Input Tax Credit: The heart of GSTR-6 filing lies in reporting the distribution of ITC to registered customers. This step requires meticulous attention to avoid discrepancies.
3. Input Tax Credit Reversal: Any reversal of input tax credit also needs to be accurately documented in the return.

The Process of Filing GSTR-6

Filing GSTR-6 is a digital process facilitated through the GST portal. Here’s a simplified breakdown:

1. Login to the GST Portal: Access the portal using your credentials.
2. Navigate to GSTR-6: Find the option for filing GSTR-6 under the ‘Returns Dashboard‘.
3. Enter Required Details: Fill in the necessary information, including details of inward supplies and ITC distribution.
4. Submit with Digital Signature: Complete the filing process by signing the return digitally using a Digital Signature Certificate (DSC).

Adhering to Timelines: Late Filing and Penalties:

Timely compliance is of paramount importance in the realm of tax. Failure to file GSTR-6 on time attracts late filing fees. The initial 30-day period invites a fee of ₹50 per day, while subsequent days incur a fee of ₹100 per day.

Moreover, a continuous lapse of three months in GSTR-6 filing can lead to penalties. A penalty of ₹200 per day may be imposed for non-filing, underscoring the significance of consistent compliance.

The Path to Prudent Filing:

Adhering to these essential practices can elevate the quality of your GSTR-6 filing experience:

1. Thorough Preparation: Gather all required information and documents before initiating the filing process. This proactive approach minimizes errors and streamlines the process.
2. Meticulous Review: Before submitting the return, conduct a comprehensive review to ensure accuracy and completeness. This step reduces the risk of inadvertent errors.
3. Maintain Records: Preserve a copy of the filed return for your records. This serves as a safeguard in case of future reference or audits.

Seeking Assistance:

Navigating the intricacies of GSTR-6 filing might raise questions. In such instances, don’t hesitate to reach out to the GST helpline or consult your tax advisor. Their expertise can provide valuable insights and ensure smooth compliance.

Conclusion:

GSTR-6 is a vital component of the GST system, facilitating efficient ITC distribution. With careful adherence to its requirements and deadlines, businesses can avoid penalties and contribute to the success of India’s GST regime.

By optimizing these key points, businesses can navigate GSTR-6 filing process more effectively, ensuring compliance and benefiting from the GST system’s efficiency.