GSTR-6 explained: how an input service distributor shares credit

What an ISD does

A business with registrations in several states often receives services, such as audit fees, advertising or software, at its head office for the benefit of all branches. The ISD, registered separately, receives the tax invoices and distributes credit to the branches that use the services, through ISD invoices. Under the amended Section 20, this route is mandatory for such common services, and credit on services taxed under reverse charge can also be distributed through the ISD.

Distribution rules

• Credit relating to one branch goes only to that branch
• Credit relating to several or all branches is shared in the ratio of their turnover in the relevant period, under Rule 39
• Credit must be distributed in the same month it is available
• IGST, CGST and SGST are distributed according to whether the recipient branch is in the same state or another state
• An ISD cannot make outward supplies or use credit itself

GSTR-6 and GSTR-6A

GSTR-6A is a read-only auto-drafted statement built from suppliers' GSTR-1 for invoices issued to the ISD. The ISD reviews it, adds missing invoices and files GSTR-6 by the 13th under Rule 65, reporting the credit received and how it was distributed. The distributed credit appears in recipient branches' GSTR-2A and GSTR-2B.

Common mistakes

Branches taking credit directly on common service invoices instead of through the ISD, wrong turnover ratios, and distribution to a branch that had no turnover in the period are typical audit issues. Credit wrongly distributed can be recovered from the recipient with interest and penalty. A professional can set up the ISD registration and monthly distribution workings.

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This guide explains the law in general terms as of October 2026. Time limits and requirements can depend on the facts of your case and on the notice you received.