GSTR-4 Annual

Description

GSTR-4

GSTR-4: A Comprehensive Guide

GSTR-4 is a Goods and Services Tax (GST) return that must be filed by taxpayers who have opted for the Composition Scheme. This scheme is designed to simplify the GST compliance process for small businesses with a turnover of up to Rs. 1.5 crore (Rs. 75 lakh for special category states).  

Eligibility for Composition Scheme

The Composition Scheme is optional and is available to taxpayers who meet the following criteria:

• Turnover Limit: The aggregate turnover in the preceding financial year should not exceed Rs. 1.5 crore (Rs. 75 lakh for special category states).
• Type of Business: The scheme is available to manufacturers, traders, and restaurants (not serving alcohol).
• Restrictions: Certain businesses are not eligible for the Composition Scheme, such as:
  • Inter-state suppliers
  • Casual taxable persons
  • Non-resident taxable persons
  • Suppliers through e-commerce operators
  • Manufacturers of certain goods

Key Features of Composition Scheme

• Lower Tax Rates: Taxpayers under the Composition Scheme pay GST at a lower rate compared to regular taxpayers. The rates vary depending on the type of business:
  • Manufacturers: 1%  
  • Traders: 1%  
  • Restaurants: 5%  

   
• Simplified Compliance: Instead of filing monthly returns, composition taxpayers are required to file only one annual return, GSTR-4.  
• No Input Tax Credit: Composition taxpayers cannot claim input tax credit on their purchases.  

GSTR-4: The Annual Return

GSTR-4 is an annual return that summarizes the sales and purchases made by a composition taxpayer during a financial year. It is due on the 30th of April following the relevant financial year.  

Contents of GSTR-4

GSTR-4 consists of the following sections:

1. GSTIN: The Goods and Services Tax Identification Number of the taxpayer.
2. Name of the Taxpayer: The legal name of the business.
3. Aggregate Turnover in the Previous Financial Year: The total turnover of the business in the preceding financial year.  
4. Inward Supplies: Details of all purchases made by the taxpayer, including:
   • Inward supplies from registered persons
   • Inward supplies from unregistered persons
   • Imports
5. Outward Supplies: Details of all sales made by the taxpayer.
6. Tax Payable: The total GST payable by the taxpayer, calculated based on the turnover and applicable tax rate.
7. Tax Paid: Details of tax already paid in CMP-08
8. Balance Tax Payable: The difference between tax payable and tax paid.

How to File GSTR-4

GSTR-4 can be filed online through the GST portal. The following steps are involved:  

1. Login to the GST Portal: Visit the GST portal and log in using your credentials.
2. Navigate to GSTR-4: Go to the ‘Returns’ section and select ‘GSTR-4’.
3. Select the Financial Year: Choose the relevant financial year for which you are filing the return.
4. Enter Details: Fill in the required details in the various sections of the form.
5. File the Return: Once you have verified the details, submit the return.

Due Date and Late Fees

The due date for filing GSTR-4 is the 30th of April following the relevant financial year. If the return is not filed by the due date, a late fee of Rs. 50 per day is applicable, up to a maximum of Rs. 2,000.  

Benefits of Composition Scheme

• Reduced Compliance Burden: The Composition Scheme significantly reduces the compliance burden for small businesses by requiring only one annual return.  
• Lower Tax Liability: The lower tax rates under the scheme result in a reduced tax liability for small businesses.
• Simplified Tax Payment: The process of paying tax is simplified under the Composition Scheme.

Drawbacks of Composition Scheme

• No Input Tax Credit: Composition taxpayers cannot claim input tax credit on their purchases, which may increase their overall tax burden.  
• Restrictions on Business: Certain businesses are not eligible for the Composition Scheme, and there are restrictions on the type of transactions that can be carried out.  

Conclusion

The Composition Scheme is a beneficial scheme for small businesses that simplifies GST compliance and reduces their tax liability. However, it is important to carefully consider the features, benefits, and drawbacks of the scheme before opting for it.  

Key Points to Remember

• GSTR-4 is an annual return for composition taxpayers.  
• The due date for filing GSTR-4 is the 30th of April following the relevant financial year.  
• Late fees are applicable for filing GSTR-4 after the due date.  
• Composition taxpayers cannot claim input tax credit.  
• The Composition Scheme is optional and is subject to certain eligibility criteria and restrictions.