The Goods and Services Tax has transformed the indirect tax system in the country by combining various taxes into one tax. In this tax regime, different categories of taxpayers have different compliance requirements. The GSTR 4 composition return filing scheme is a category meant for small, micro and medium businesses with specific turnover limits and simplified compliance procedures. To help small businesses ease of compliance and encourage the growth of business, the government introduced the new simplified procedure for composite taxpayers under GSTR-4. Here we discuss in detail the new format of filing GSTR-4 for composition taxpayers, benefits of the simplified procedure, timely compliance and the consequences of non-compliance.
Eligibility for GSTR 4 Composition Return Filing Scheme
Small businesses with an aggregate turnover of up to Rs.1.5 crores in the preceding financial year are eligible to opt for the composition scheme. Certain businesses are not eligible, like those engaged in inter-state supplies, e-commerce operators, manufacturers of certain goods like tobacco, pan-masala, ice cream etc., and service providers except restaurants.
Simplified GSTR 4 Composition Return Filing
In the new simplified GSTR 4 Composition Return Filing procedure, the following changes have been incorporated:
- Quarterly GSTR-4 has been replaced with CMP-08, a summary return which eliminates the need for multiple returns filing.
- Annual GSTR-4 is a summarized return consisting of inward, outward, import of services and supplies attracting reverse charge, must be filed once a year and the due date for submission is 30th April of the month succeeding the financial year.
- Auto-population of important tables like table 5, the summary of self-assessed liability has auto populated data from all the filed form CMP-08 of the relevant financial year.
- TDS/TCS amounts are auto-drafted from the returns filed by the TDS/TCS taxpayers. On table 7 the TDS/TCS credit received is populated based on the amount accepted and entered in the cash ledger during the financial year.
- In table 6 the details of inward supplies attracting reverse charge will be auto-populated in rows 1 to 11 from table 4B, 4C, 4D, tax rate wise. These details will be auto-populated only after the taxpayer clicks on ‘proceed to file’ button. The details of outward supplies including net of advances, credit and debit notes and any other adjustments due to amendments etc., have to be entered by the taxpayer in rows 12 to 16.
- Tax and late fee are auto-populated in table 8 and interest is user input. The net tax liability is calculated by the system by deducting the amount paid in CMP-08 from the details in table 6. The taxpayer can discharge the tax liabilities through electronic cash ledger only.
- The tax liabilities can be discharged by choosing the appropriate option in table 8. If the amount available in the electronic cash ledger is less, then the amount is shown in the additional cash required column. A challan for balance amount can be created directly from the create challan button provided.
- Any excess amount paid towards liability through CMP-08 can be offset in the negative liability statement.
- The ‘File Return’ option is enabled only when no amount is required to be paid for liabilities, the CMP-08 of all the quarters have been filed and the declaration and authorized signatories checkboxes have been selected.
- An option to preview the GSTR-4 return either in excel format or pdf format before filing is provided which gives the taxpayer the opportunity to ensure accuracy of the details contained in the return. The return can be downloaded in either excel or pdf formats.
- On successful filing of the GSTR-4 return, ARN is generated and the taxpayer gets a message both in his mobile and email and the electronic cash ledger and electronic liability ledgers get updated.
Benefits of Simplified Procedure
The new simplified procedure for GSTR 4 Composition Return Filing has brought many benefits to the composition taxpayer. Some of the main benefits are:
- Simplified Filing Process: The single annual return has eliminated multiple return filing thereby reducing the compliance burden on the composition taxpayer.
- Time and Cost Savings: The simplified process saves considerable time and cost for small businesses which allows them to focus on their core business operations
- Reduced Errors: The new summary format helps reduce errors and discrepancies which helps in maintaining accurate tax records.
- Relevant Information Filling: The form starts with a questionnaire and only those tables for which the taxpayer has selected ‘yes’ will be displayed and only the relevant information is uploaded in the return which simplifies the process.
- Auto-Populating Feature: The important tables are auto-populated which ensures transparency and accuracy.
- Seamless Transition: the transition to the new GST format is seamless for the composition taxpayers by adapting the simplified return filing process.
- Accurate Returns: As the important tables are auto-populated from the relevant sources, accuracy can be ensured.
- Negative Liability Offset: Any excess amount paid can be offset through the negative liability statement.
Frequently Asked Questions
- Can GSTR-4 be revised?
Answer: GSTR-4 once submitted, cannot be revised or modified. Rectifications if any have to be incorporated in the subsequent return under the head previous tax paid period in GSTR-4.
- Is a taxpayer who has nothing to report file the GSTR-4?
Answer: Yes, a taxpayer who does not have anything to report has to file the NIL GSTR-4 return.
Conclusion
The new GST return format has significantly benefited the composition taxpayer with its simplified compliance process, eliminating complex, multiple returns filing. This reduces the burden on the taxpayer a lot, streamlines the process and saves time and cost to the taxpayer, which he can utilize to focus on their business operations. Accuracy can be ensured as important fields are auto-populated and returns filed within the due dates. Non-filing or late filing of the return can lead to huge penalties and late fees, which can be avoided by timely compliance. The simplified GSTR 4 composition return filing has helped the composition taxpayers to enjoy the benefits of the new filing process. reduced the compliance burden on composition taxpayers to a great extent.
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GSTR-4 Meaning & Applicability
GSTR-4, the Quarterly Return for Composition Taxpayers, is a crucial component of many Countries’ Goods and Services Tax (GST) systems. It is specifically designed to simplify the tax compliance process for small businesses operating under the composition scheme.
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