GSTR-4: Your Comprehensive Guide to Filing the Annual Return for Composition Scheme Taxpayers

Navigating the complexities of Goods and Services Tax (GST) can be challenging, especially when it comes to understanding the various return forms. For businesses that have opted for the Composition Scheme, GSTR-4 is a crucial annual return that needs to be filed. This comprehensive article will delve into everything you need to know about GSTR-4, including what it is, who should file it, the due dates, the process of filing online, and the penalties for late filing. We’ll also provide examples to make the concepts easier to grasp.

What is GSTR-4?

GSTR-4 is an annual return that must be filed by taxpayers who have chosen to be taxed under the Composition Scheme as per Section 10 of the CGST Act. Unlike regular taxpayers who need to file monthly or quarterly returns, composition scheme dealers are required to file only one return annually, summarizing their outward supplies, inward supplies, and the tax paid during the entire financial year. This simplified scheme aims to ease the burden of compliance for small businesses.

Who Should File GSTR-4?

The following individuals and businesses are required to file GSTR-4:

• Taxpayers registered under the Composition Scheme: This scheme is available to small businesses whose aggregate turnover in the preceding financial year did not exceed a certain threshold (currently ₹1.5 crore, and ₹75 lakh for special category states, although these limits are subject to change).
• Suppliers of services (other than restaurant services) and mixed suppliers whose aggregate turnover in the preceding financial year did not exceed ₹50 lakh (subject to conditions).

Example:

Mr. Sharma runs a small retail store in Delhi. His aggregate turnover in the financial year 2023-24 was ₹1.2 crore. He opted for the Composition Scheme. Therefore, Mr. Sharma is required to file GSTR-4 for the financial year 2024-25.

Due Dates for Filing GSTR-4

The due date for filing GSTR-4 is 30th April of the financial year immediately following the financial year to which the return relates.

• For the financial year 2024-25 (ending on 31st March 2025), the due date for filing GSTR-4 is April 30, 2025.

It’s crucial to file your GSTR-4 before the due date to avoid penalties.

How to File GSTR-4 Online: Step-by-Step Guide

Filing GSTR-4 is done online through the GST portal. Here’s a step-by-step guide:

1. Visit the GST Portal: Go to the official GST portal: www.gst.gov.in.
2. Login: Enter your username and password to log in to your GST account.
3. Navigate to Returns Dashboard: After logging in, navigate to Services > Returns > Returns Dashboard.
4. Select Financial Year and Return Filing Period: Choose the relevant Financial Year from the dropdown menu and select the Annual option under the Return Filing Period.
5. Click on Prepare Online: Under the GSTR-4 section, click on the Prepare Online button.
6. Fill in the Details: You will be directed to the online form where you need to fill in the required details in the following sections:
   
   • Aggregate Turnover in the Preceding Financial Year: Enter your total turnover for the previous financial year.
   • Inward Supplies including supplies on which tax is to be paid on reverse charge: Provide details of all your inward supplies, including those where you are liable to pay tax under the reverse charge mechanism.
   • Outward supplies made during the year: Furnish details of all outward supplies made during the financial year.
   • Tax Liability as per FORM CMP-08: This section will auto-populate based on the quarterly statements filed in FORM CMP-08.
   • Amount of tax payable and paid: Details of the tax payable and the tax already paid through FORM CMP-08 will be displayed here. You might need to pay any remaining balance.
7. Review the Details: Carefully review all the information entered to ensure accuracy.
8. File the Return: Once you are satisfied with the details, click on the File Return button.
9. Submit with DSC or EVC: You can file your GSTR-4 using either a Digital Signature Certificate (DSC) or by using Electronic Verification Code (EVC) generated through OTP on your registered mobile number and email ID.

Details to be Furnished in GSTR-4

The GSTR-4 form requires you to provide the following key information:

• Aggregate Turnover in the Preceding Financial Year: This helps in verifying if you were eligible for the Composition Scheme.
• Inward Supplies: Details of all purchases made during the year, including those from registered and unregistered suppliers. This includes supplies on which tax is payable under the reverse charge mechanism.
  
  • Example: Mr. Sharma purchased goods worth ₹50 lakh from registered dealers and ₹10 lakh from unregistered dealers during FY 2024-25. He also received services worth ₹5 lakh from an overseas supplier on which he is liable to pay tax under reverse charge. All these details need to be reported in this section.
• Outward Supplies: Details of all sales made during the year. This includes the total value of taxable outward supplies.
  
  • Example: Mr. Sharma’s total taxable outward supplies during FY 2024-25 amounted to ₹1.3 crore. This figure will be reported here.
• Tax Liability as per FORM CMP-08: This section reflects the total tax paid during the financial year through the quarterly statements filed in FORM CMP-08.
• Tax Payable and Paid: This section shows the total tax payable for the year and the amount already paid. If there is any remaining tax liability, it needs to be paid before filing the return.

Late Filing Penalty for GSTR-4

Failure to file GSTR-4 within the due date will attract a penalty. As per the current rules, the penalty for late filing of GSTR-4 is ₹100 per day under CGST and ₹100 per day under SGST, subject to a maximum of ₹5,000 for each. This means a total maximum penalty of ₹10,000 for late filing.

Importance of Filing GSTR-4 Correctly and on Time

Filing GSTR-4 correctly and on time is crucial for several reasons:

• Compliance with Law: It ensures that your business is compliant with the GST regulations.
• Avoid Penalties: Timely filing helps you avoid the burden of late filing penalties.
• Maintain Good Standing: Regular compliance maintains a good standing with the tax authorities, which can be beneficial for various business operations.

Key Takeaways

• GSTR-4 is an annual return for taxpayers under the Composition Scheme.
• The due date for filing GSTR-4 is 30th April of the following financial year.
• Filing is done online through the GST portal.
• Late filing attracts penalties.
• Accurate and timely filing is essential for compliance and avoiding penalties.

Understanding and complying with the requirements for filing GSTR-4 is vital for businesses operating under the Composition Scheme. By following the guidelines and ensuring timely filing, you can streamline your GST compliance and focus on growing your business. Remember to always refer to the latest notifications and updates from the GST department for any changes in the rules and regulations.