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GSTR-4: Annual Return For Composition Taxpayers
Form GSTR-4 provides a simple compliance requirement for small businesses, allowing them to pay GST at a low rate while also forgoing the complexities of detailed transaction tracking. This article aims to explain Form GSTR-4, including eligibility, rules, format, steps to file, and other relevant aspects. Whether you are an experienced taxpayer or new to GST, understanding Form GSTR-4 is the first step towards simplified tax compliance.
GSTR-4
Form GSTR-4 is an annual return that must be filed by the taxpayers who have opted for the composition scheme. It consolidates a taxpayer’s quarterly sales, purchases, and tax paid details through CMP-08, and any other details which are to be disclosed for the financial year.
Who should File Form GSTR-4
All registered taxpayers who have chosen the composition scheme under GST for any period of the financial year must file Form GSTR-4, that is, annual return. This includes taxpayers who have opted for the composition scheme at the time of registration under GST and have never opted out, as well as those who have opted in during the start of the financial year and opted out later on during the financial year.
Eligibility and Rules for Filing Form GSTR-4
Following is a summary of the eligibility criteria and rules for filing Form GSTR-4:
Eligibility
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Composition Dealers: Form GSTR-4 is specifically designed for taxpayers who have opted for composition schemes under GST. This includes small businesses, manufacturers, and restaurant owners.
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Turnover Limit: The composition scheme is open to businesses with an annual turnover up to INR 1.5 Crore for certain States and INR 75 Lakh for special category States.
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Nature of Business: Not all businesses are eligible to avail composition schemes. Only manufacturers, traders, and restaurants that do not serve alcohol are eligible to participate in the composition scheme. For service providers, the turnover limit is set at INR 50 Lakh.
Rules for Filing Form GSTR-6
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Annual Filing: From the F.Y. 2019-2020, the Form GSTR-4 is required to be filed annually by 30th April, following the end of the financial year. Before this change, Form GSTR-4 was required to be filed on a quarterly basis.
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Quarterly Tax Payments: Though the filing requirement of Form GSTR-4 is annual, taxpayers must pay the GST on quarterly basis through CMP-08 by the 18th of the month following the end of the relevant quarter.
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No Input Tax Credit (ITC): The composition taxpayers cannot claim Input Tax Credit (ITC) on their purchases.
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Limited Taxable Supplies: Taxpayers opting for composition schemes can only make taxable supplies within the state or interstate supplies of handicraft goods (subject to certain conditions). They cannot supply non-taxable goods or engage to provide goods through an e-commerce operator who is required to collect tax at source under GST.
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Invoices and Bills: Composition dealers cannot issue tax invoices under GST. Since they are not allowed to collect GST from their customers. Instead, they are required to issue ‘Bill of Supply’ for the sales made by them.
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Restrictions on Interstate Supplies: Composition dealers are usually not allowed to make interstate sales.
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Amendments: Any amendment to the details provided in Form GSTR-4 can be made in the return of the subsequent financial year.
Sections in Form GSTR-4
Form GSTR-4 comprises multiple sections that are intended to capture all the information of the composition dealer’s transaction during the year. Following are the 13 sections or contents that are usually found in Form GSTR-4:
GSTIN
The valid GSTIN of the taxpayer should be provided.
Legal Name of the Registered Person
The legal name of the taxpayer as registered under GST should be provided in this section.
Trade Name
If the trade name is different from the legal name, the same should be entered into.
Financial Year
The financial year for which the Form GSTR-4 is being filed should be mentioned in this section.
Quarterly Summary of Sales and Purchases
Information related to outward supplies and inward supplies including supplies under reverse charge, should be provided
Taxable Turnover
Breakup of taxable turnover should be given including advances received, advances adjusted, and the changes in the turnover for the period.
Tax Paid
Details of tax paid during the year should be given in this section including CGST, SGST, IGST, and cess.
Details of Outward Supplies
Provide the summary of outward supplies based on the tax rates and nature of transactions.
Details of Inward Supplies
Provide the summary of inward supplies on which GST is payable under reverse charge.
Amendments
Any changes in the previously filed return should be provided in this section.
Late Fees and Penalty
Details of late fees and penalties should be included under this head.
Interest Payable
Details of interest payable on delay in the payment of GST should be included under this head.
Verification
The taxpayer should provide the declaration along with signing with the preference mode that the information is true and correct in Form GSTR-4.
Steps in Filing Form GSTR-4
Following are the steps involved in filing Form GSTR-4 through the GST portal:
Login to the GST Portal
Login to the GST portal: Login to the GST portal using the credentials at https://www.gst.gov.in/.
Navigate to Form GSTR-4:
Go to the ‘Services’ menu > Select ‘Returns’ and then choose ‘Annual Return’. Find GSTR-4 applicable for the composition scheme and then click on ‘Prepare Online’ option.
Enter Financial Year Details:
Provide the details of the financial year for which the return is being prepared. Click on ‘Search’ and then select the ‘Prepare Online’ option to begin filing the return.
Fill in the Details of the Form
Fill out all the details as per required format.
Details of Outward and Inward Supplies
Provide the details of outward supplies and inward supplies of the financial year, including that of reverse charge.
Pay Taxes and Interest
If applicable, use the ‘Payment of Tax’ tab to calculate any taxes and interest due. Make payment using the cash and the credit ledgers.
Preview the Draft Form GSTR-4
Before submitting, preview the draft Form GSTR-4 to ensure correctness and accuracy.
Submit the GSTR-4
After reviewing the details, file Form GSTR-4. Depending on the type of business, the taxpayer will be required to authenticate the submission with a Digital Signature Certificate (DSC) or an Electronic Verification Code (EVC).
Acknowledgement
After a successful submission of GSTR-4, an acknowledgement message will be received.
Difference between Form GSTR-4 and Form GSTR-4A
The table provides the distinction between Form GSTR-4 and Form GSTR-4A:
Difference between Form GSTR-4 and CMP-08
Understanding the composition scheme’s compliance requirement under GST requires an understanding of the relationship between Form GSTR-4 and CMP-08. The following table explains the relationship between Form GSTR-4 and CMP-08:
Frequently asked questions
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Explain Form GSTR-4 in short.
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Form GSTR-4 is a GST return that must be filed by taxpayers who have opted for the composition scheme under GST. It is a simplified quarterly return for small taxpayers that reduces the compliance burden.
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Who is required to file Form GSTR-4?
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All registered taxpayers who have chosen the composition scheme under GST for any period of the financial year must file Form GSTR-4 (Annual Return). This includes taxpayers:
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who have opted for the composition scheme since registration and have never opted out; and
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who opted in the composition scheme before the start of the financial year; and
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who have opted in for composition scheme but later opted out during the year.
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What is the filing frequency of Form GSTR-4?
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Form GSTR-4 is an annual form. It is to be filed annually by the composition taxpayers. The due date for filing Form GSTR is April 30th, following the end of the financial year for which the return is being filed.
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If the turnover of the composition dealer exceeds the basic exemption limit, can he still file Form GSTR-4 and make use of the composition scheme?
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No. Once the annual turnover exceeds the prescribed limit, the composition dealer must opt out of the composition scheme and submit regular returns under GST. Thus, the benefit of the composition scheme will no longer be available.
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What are the prerequisites for filing Form GSTR-4?
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Following are the pre-conditions for filing Form GSTR-4:
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The taxpayer must have been registered under GST during the financial year and have chosen the composition scheme for at least one day during that financial year.
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The taxpayer must have submitted all Form CMP-08 quarterly statements for the applicable period during the relevant financial year.
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Can a composition dealer file Nil Form GSTR-4?
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A composition dealer can file Nil Form GSTR-4 for the financial year if:
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There was no outward supply, and no goods and services were received.
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There are no other tax liabilities to report.
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Forms CMP-08 have been filed as Nil.
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What information is required for filing Form GSTR-4?
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Information related to turnover, summary of outward supplies, inward supplies attracting reverse charge, and tax payable should be provided in Form GSTR-4.
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Is it possible to revise Form GSTR-4 after filing the same?
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No. Once submitted Form GSTR-4 cannot be revised. Also, it is important to check for errors and omissions before filing the return.
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What are the consequences of non-filing of Form GSTR-4 on time?
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In case of the delay in filing Form GSTR-4, late fee and interest would be levied. Late fees of INR 200 per day (INR 100 CGST + INR 100 SGST). Maximum late fee is calculated as a fixed percentage of turnover.
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Can a taxpayer switch between a regular scheme to the composition scheme and vice versa?
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Yes. A taxpayer can switch between the regular and composition scheme at the beginning of the financial year, provided they comply with the eligibility requirements and intimate the GST authorities on time.
Q
Explain the effect of Form GSTR-4 on the eligibility of Input Tax Credit (ITC).
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The composition dealers filing Form GSTR-4 are ineligible to claim Input Tax Credit (ITC) for the purchases made by them.
Prachi Jain
Chartered Accountant
Prachi Jain is a Chartered Accountant with a passion for simplifying finance and tax-related matters through her insightful and informative blogs. With a background in finance and a deep understanding of tax regulations, Prachi has established herself as a trusted source of financial wisdom. Prachi is committed to empowering her readers with the knowledge they need to make informed financial decisions. Her expertise and dedication shine through in every blog post, helping her audience navigate the intricacies of finance and taxes with confidence. Follow Prachi Jain's blog for practical insights and guidance on managing your finances effectively.
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