The ISD Return, GSTR-6

The difficult part of an Input Service Distributor’s month is not the form. It is the arithmetic before the form. A head office receives invoices for audit, software and advertising that serve branches in several States. Each invoice has to be attributed to the branches that used the service. Credit shared between branches is split in proportion to their turnover for a defined period. Eligible and ineligible credit go out separately, and central and State tax become integrated tax for branches in other States. All of that is done within the month. FORM GSTR-6 then records what was received, what was distributed and to whom. Since 1 April 2025 the distribution has been compulsory where the conditions of section 20 are met, and the rules for it have been rewritten.

Registration as an ISD is covered in Registering as an Input Service Distributor. The conditions for credit itself are in Input Tax Credit: the Conditions in Section 16(2).

Due date and who files

Section 39(4) requires an ISD to file a return “for every calendar month or part thereof … within thirteen days after the end of such month”. Rule 65 prescribes the form, GSTR-6, but adds no date of its own. The portal’s FAQ on GSTR-6 says the return for a month is filed “on or before the 13th” of the next month, or by any extended date. It also says a nil return “must be filed” where no credit is available or distributed. The Commissioner can extend the date under section 39(6). Notification No. 04/2025-Central Tax, for example, extended the December 2024 return to 15 January 2025.

There is no State-wise staggering. An ISD files GSTR-6 alone: rule 61 excludes it from GSTR-3B, and rule 80(1) excludes it from the annual return.

What to have ready

• Inward invoices and notes addressed to the ISD. These are in FORM GSTR-6A, which the portal drafts from suppliers’ GSTR-1, GSTR-1A and GSTR-5. They are checked against the purchase records.
• Transfer documents for reverse-charge services. An ISD does not pay reverse charge itself; the portal’s FAQ says reverse-charge liability “is not applicable for an ISD”. The tax is paid by a registration of the same PAN and State code. That registration then transfers the credit to the ISD by an invoice, or a credit or debit note, under rule 54(1A). The invoice must name the supplier of the common service and the original invoice number, and carry “the same” taxable value.
• An attribution of each service to the units that used it. This comes from the books and the contracts.
• The turnover of each recipient unit for the “relevant period”, taken from the units’ own returns or accounts. The definition is set out below.
• A split of eligible and ineligible credit. Credit blocked by section 17(5) is still distributed, but separately.
• The ISD invoice and credit note series for the year. Under rule 54(1) each document needs a consecutive serial number of no more than sixteen characters, unique for the financial year.

How the credit is distributed: rule 39 since 1 April 2025

Rule 39(1) was substituted by Notification No. 12/2024-Central Tax, and Notification No. 09/2025-Central Tax brought the change into force from 1 April 2025. The CBIC text of 11 October 2026 confirms that this is the current rule. Its conditions are:

• Credit available in a month “shall be distributed in the same month”, and the details are furnished in GSTR-6 (clause (a)). The amount distributed cannot exceed the amount available (clause (b)).
• Credit attributable to one recipient goes to that recipient only (clause ©). Credit attributable to some or all recipients is shared pro rata on turnover, among those “which are operational in the current year” (clauses (d) and (e)).
• The formula is C1 = (t1 ÷ T) × C (clause (f)). C is the credit to be distributed, t1 is the recipient’s turnover in the relevant period, and T is the total turnover of all recipients to whom the service is attributable. Recipients making exempt supplies, and recipients “otherwise not registered for any reason”, count in the total.
• Ineligible and eligible credit are distributed separately (clause (g)). So are central, State, Union territory and integrated tax (clause (h)).
• Integrated tax goes out as integrated tax (clause (i)). Central and State tax go out as the same heads to a recipient in the ISD’s own State, but as integrated tax to a recipient in another State (clause (j)).
• A debit note received by the ISD is distributed in the month it is included in GSTR-6, on the same formula (clause (m)). A credit note received is apportioned in the ratio in which the original invoice was distributed (clause (n)). The apportioned amount is reduced from that month’s distribution or, where it exceeds what is being distributed, “added to the output tax liability of the recipient”.

The Explanation to the rule defines the relevant period. It is the preceding financial year where all recipients had turnover in it. Otherwise it is the last quarter for which all recipients’ turnover is available, before the month of distribution. A recipient of credit is a supplier “having the same Permanent Account Number as that of the Input Service Distributor”.

The 2025 change for integrated tax on reverse charge

Section 2(61) and section 20 were rewritten by the Finance Act, 2024 from 1 April 2025. Both covered credit on services taxed under reverse charge, but only under section 9(3) and (4) of the CGST Act. That left out integrated tax paid on reverse charge, chiefly on imported services, under section 5(3) and (4) of the IGST Act. The Finance Act, 2025 added a reference to section 5(3) and (4) to both provisions. The CBIC notes record the insertion as effective from 1 April 2025. Notification No. 13/2025-Central Tax made the matching change to rule 39(1A), also “with effect from the 1st day of April, 2025”. So integrated tax paid on reverse charge by a same-State, same-PAN registration can be transferred to the ISD under rule 54(1A) and distributed like any other common credit, for periods from 1 April 2025.

The tables of GSTR-6

• Table 3: credit received for distribution, invoice by invoice, pre-filled from GSTR-6A. Under rule 65 the ISD may add to, correct or delete these details.
• Table 4: total, eligible and ineligible credit for the month, worked out by the portal from Table 3 and the notes.
• Table 5: the distribution, by ISD invoice and ISD credit note, to each recipient GSTIN. Table 5A carries eligible credit and Table 5B ineligible credit.
• Table 6: amendments to earlier Table 3 details (6A), debit and credit notes received (6B), and amendments to notes (6C).
• Table 7: mismatches and reclaims. The form’s instructions say this table is “populated by the system”.
• Table 8: the distribution of the Table 6 and 7 adjustments.
• Table 9: redistribution of credit sent to the wrong recipient. Rule 39(2) applies the clause (n) process to that reduction. Rule 39(3) then requires an ISD credit note and a fresh ISD invoice, both reported in the GSTR-6 for the month they are issued.
• Table 10 shows the late fee, and Table 11 a refund claimed from the cash ledger.

The portal’s FAQ adds that no electronic credit ledger is kept for an ISD. The form’s instructions add that “ISD will have late fee and any other liability only”.

Portal steps

The portal’s user manual for GSTR-6 describes the following:

1. The filer logs in and opens Services > Returns > Returns Dashboard, selects the period, and chooses PREPARE ONLINE in the GSTR-6 tile. An offline tool is also available.
2. The filer reviews or edits Table 3 and the note and amendment tiles.
3. In Table 4, the filer clicks CALCULATE ITC.
4. In the “5, 8” tile, the filer enters each ISD invoice and credit note with the recipient GSTIN and the eligible and ineligible amounts. Table 9 is used for any redistribution.
5. The filer clicks PROCEED TO FILE, waits for the status “Ready to File”, and reviews the consolidated summary.
6. Any late fee is paid from the cash ledger, creating a challan if the balance is short. The filer then clicks FILE RETURN and files with DSC or EVC.

The portal issues an ARN and sends an SMS and e-mail. The form’s instructions say the distributed credit flows to Part B of each recipient’s GSTR-2A on filing. The portal’s FAQ notes that a DSC is mandatory for companies and LLPs.

Late fee and interest

Late fee is levied under section 47(1): Rs 100 a day, up to Rs 5,000, under the CGST Act. Notification No. 7/2018-Central Tax waives anything above Rs 25 a day. Unlike the notifications for GSTR-5 and GSTR-5A, it has no lower rate for nil returns, and it leaves the Rs 5,000 cap in place. The portal’s FAQ says the late fee is charged for the current period only and is not carried forward. An ISD pays no tax, so it does not itself attract interest. A negative apportionment added to a recipient’s output tax under clause (n) is paid by that recipient, with interest if paid late. The detail is in Late Returns: Late Fee, Interest, the Three-Year Bar and Notices.

After filing

Distribution cannot be undone by revising a filed GSTR-6. It is adjusted forward: through Tables 6, 8 and 9 and through ISD credit notes and fresh ISD invoices, within the limit in section 39(9). That limit is 30 November following the end of the financial year. The three-year bar in section 39(11) also applies to GSTR-6. Both are covered in Correcting Mistakes in Returns.

The procedure in summary

1. Reconcile GSTR-6A with the purchase records, and collect the rule 54(1A) transfer documents for reverse-charge services, including integrated tax reverse charge from 1 April 2025.
2. Attribute each service to its users, and fix each recipient’s turnover for the relevant period.
3. Compute each recipient’s share as (t1 ÷ T) × C, separately for eligible and ineligible credit and for each tax head. Convert central and State tax to integrated tax for recipients in other States.
4. Issue ISD invoices, and ISD credit notes for reductions, under rule 54(1), in the same month.
5. Enter receipts and distribution in GSTR-6, calculate credit, pay any late fee, and file with DSC or EVC by the thirteenth, including nil months.
6. Correct errors forward through Tables 6, 8 and 9 before 30 November following the year.

The next guide covers the returns of tax deductors and e-commerce operators, GSTR-7 and GSTR-8.