The Goods and Services Tax (GST) framework simplifies the entire indirect taxation system of India. It even introduced a unique composition scheme that enables small taxpayers to reduce their liability and compliance burden.
Individuals and businesses with annual turnovers of less than Rs. 1.5 crore (Rs. 75 lakh for special category states) can opt for the composition scheme and pay taxes at nominal rates instead of the regular GST rates. Additionally, they are not required to maintain detailed financial records, unlike those registered under the regular scheme.
If you are planning to register under the composition scheme of the Indian Goods and Services Tax framework, you must know everything about the Form GSTR-4 filing process. In this article, we will look into the form in detail, how it differs from Form CMP-08 and some of the common mistakes to avoid during GSTR-4 filing.
What is GSTR-4?
Form GSTR-4 is the return that individuals and business entities registered under the composition scheme of the Goods and Services Tax framework must file every financial year. The primary objective of GSTR-4 is to simplify tax compliance for composition scheme taxpayers. Unlike regular taxpayers who must file GST returns every month or quarter, composition taxpayers are only required to file GSTR-4 once every year.
The GSTR-4 annual return features consolidated details of inward supplies, outward supplies, import of services and supplies that attract reverse charge, tax paid and tax liability. Now, it is important to note that GSTR-4 filing must be done by composition scheme taxpayers even if there are no transactions during the financial year.
Who Should File GSTR-4?
The GSTR-4 filing is only applicable for individuals and businesses that have opted for the composition scheme of the Goods and Services Tax framework. Taxpayers who are not eligible for the scheme or deal with interstate supplies cannot file GSTR-4.
Key Details Required to File GSTR-4
Before we look at the GSTR-4 filing procedure, let us first explore some key details you need to gather. This will not only help you avoid errors and delays but also make the filing process more seamless.
- GSTIN (GST Identification Number) of the business.
- Legal and trade name of the taxpayer.
- Details of inward supplies received from registered suppliers (not under reverse charge).
- Details of inward supplies received from registered suppliers (under reverse charge).
- Details of inward supplies received from unregistered suppliers.
- Details of imports of services
- Details of outward supplies, including the nature and value of supplies made.
- Tax liability details, including composition tax paid through Form CMP-08 during the financial year.
- Amendments to previous year’s details (if any).
- Details of TDS or TCS credit (if applicable).
- Details of any late fees or interest payable.
Step-by-Step Guide to File GSTR-4 Online
Now that you are aware of the GSTR-4 filing requirements, let us look at how to file the annual return step by step.
- Step 1: Log in to the GST Portal
Visit the official GST portal and log in using the credentials you used to create your account on the portal.
- Step 2: Navigate to ‘Returns Dashboard’
After logging in, click on the ‘Services’ tab and then on the ‘Returns’ option. Then, click ‘Annual Return’. Once the ‘File Annual Returns’ page is displayed, select the financial year for which you want to file the GSTR-4 annual return and click ‘Search’.
- Step 3: Select GSTR-4 Annual Return
Click on ‘GSTR-4 Annual Return’ under the return filing options available. You will be redirected to a new screen with multiple sections that need to be filled out.
- Step 4: Fill in All Required Sections
Enter details of outward and inward supplies, tax paid and adjustments or amendments. If you have filed Form CMP-08 during the year, the tax paid details will auto-populate.
Alternatively, if you do not have any outward supplies during the financial year, you can file a Nil return. All you need to do in this case, click on the ‘File Nil GSTR-4’ checkbox at the bottom of the webpage.
- Step 5: Review and Submit
Click ‘Proceed to File’. You can now preview the GSTR-4 annual return before submitting it. Cross-check all the data entered for accuracy. Any mismatch or wrong entry could lead to penalties or notices from the department. Once you verify the information, click ‘Continue’.
- Step 6: File with DSC or EVC
Click on the checkbox at the bottom of the webpage, select the Authorised Signatory from the dropdown list and click on ‘File GSTR-4’. To complete the GSTR-4 filing process, you must authenticate the return using a Digital Signature Certificate (DSC) or Electronic Verification Code (EVC).
- Step 7: Download the Acknowledgement
Once you have filed the return with either DSC or EVC, you will receive a success message along with an Acknowledgement Reference Number (ARN). Download and save the acknowledgement for your records.
GSTR-4 Filing Due Date and Penalties
Now that you know the GSTR-4 filing procedure, let us look at the due date by which the annual return must be submitted and the penalties that are applicable if it is not filed within the said date.
- GSTR-4 Due Date
The GSTR-4 due date is the 30th April of the succeeding financial year. For instance, the GSTR-4 filing deadline for FY 2024–25 would be 30th April 2025. The government of India might sometimes extend this deadline. Therefore, it is advisable to keep track of changes to the due date.
- Penalties for Late Filing of GSTR-4
If you do not file the GSTR-4 for composition taxpayers by the stipulated due date, a penalty in the form of a late fee is levied. The GSTR-4 late fee penalty is Rs. 50 per day, subject to a maximum of Rs. 2,000. In the case of a nil return, the maximum GSTR-4 late fee is capped at Rs. 500. In addition to the late fee, the authorities may also levy interest on the unpaid tax amount.
Difference Between GSTR-4 and CMP-08
Individuals and businesses registered under the composition scheme of the GST framework, two forms: GSTR-4 and CMP-08. Understanding the differences between the two is essential for proper tax compliance.
| Particulars | GSTR-4 | CMP-08 |
| Filing Frequency | GSTR-4 is an annual return that must be filed within 30 days from the end of a financial year. | CMP-08 is a quarterly statement that must be filed four times a year. It must be filed within 18 days from the end of a financial quarter. |
| Filing Purpose | The purpose of GSTR-4 is to provide a consolidated summary of the composition taxpayer’s annual turnover, tax liability, and other relevant details for the financial year. | The purpose of CMP-08 is to facilitate the quarterly payment of self-assessed tax by composition taxpayers. |
| Mandatory For | Filing GSTR-4 is mandatory for individuals and businesses registered under the composition scheme at the end of the financial year. | Filing CMP-08 is also mandatory for all composition taxpayers and is required every quarter to stay compliant. |
Common Mistakes to Avoid
Many composition taxpayers make simple errors during the GSTR-4 filing process. These mistakes, although simple, can lead to penalties, notices or more severe consequences. Here are some common mistakes and how you can avoid them.
- Mismatch in CMP-08 Details
The data you enter in your GSTR-4 annual return must match the quarterly CMP-08 statements that you file during the financial year. A mismatch in the details can lead to your return being rejected and may even invite scrutiny. Therefore, always ensure that you double-check all the figures to ensure consistency across both forms.
- Ignoring Nil Return Filing
Filing a GSTR-4 return is mandatory even if you had no sales or purchases in the financial year. Ignoring the filing of nil returns can lead to late fees of up to Rs. 500. Additionally, it might also lead to your account being flagged for scrutiny or audits.
- Skipping Amendments
If you have made any errors in previous filings or discovered changes later, you must include them when filing the GSTR-4 annual return for a financial year. Failing to include these amendments in GSTR-4 can result in inaccurate records and compliance issues.
Conclusion
Filing the GSTR-4 annual return is essential for individuals and businesses registered under the composition scheme of the Goods and Services Tax framework. Filing the return within the due date ensures tax compliance, avoids penalties and keeps your GST profile in good standing. Now, keep in mind that even if you have not had any inward or outward supplies during a financial year, you must still file a nil GSTR-4 annual return.
