i have iPhone 6 of 16GB, which is upgraded to 200GB, it's not showing upgrade storage capacity on the iPhone, still showing only 16GB
Your phone still has only 16GB of storage. You probably purchased a 200GB iCloud Storage Plan. While this does not give you more actual storage on your iPhone you can do things like enable "iCloud Photo Library" in your iCloud settings and enable "Optimize iPhone Storage".
That way not every photo is stored locally on your phone in full resolution and therefore saves space on your phone.