The Goods and Services Tax (GST) system in India has revolutionised the way businesses operate, and the way taxes are collected. Under the GST regime, every registered taxpayer is required to file regular returns to report their business transactions and pay their taxes. One such return is GSTR-4, which is specifically designed for composition scheme taxpayers.
This article will give you a complete overview of GSTR-4 meaning and its significance. Read on for more information.
What is GSTR-4?
GSTR-4 is a quarterly return that composition scheme taxpayers need to file under the GST regime. The composition scheme is a beneficial option for small businesses with a turnover of up to Rs. 1.5 crore (Rs. 75 lakhs for special category states) as it offers a simpler compliance process and a lower tax rate. However, businesses opting for the composition scheme have certain limitations, such as restrictions on interstate sales and ineligibility to claim input tax credit.
The main objective of GSTR-4 is to facilitate the reporting of business turnover by composition scheme taxpayers and to ensure that the applicable tax liability is fulfilled. It contains consolidated information regarding sales, purchases, and tax liability during a particular quarter. By filing GSTR-4, composition scheme taxpayers comply with their GST obligations and provide the necessary details to the tax authorities.
Take a closer look at the components of GSTR-4 and the key information that needs to be furnished while filing this return:
- Business Details: The first section of GSTR-4 requires taxpayers to provide their basic business details such as the legal name, trade name, and GSTIN (Goods and Services Tax Identification Number). This information helps the tax authorities identify the taxpayer and ensure that the return is filed by the correct person.
- Turnover Details: Composition scheme taxpayers need to provide the consolidated turnover details for the quarter in this section. It includes details of outward supplies made, inward supplies received from registered and unregistered persons, and taxable and non-taxable turnover.
- Tax Calculation: In this section, taxpayers need to calculate the tax liability on their turnover. The composition scheme taxpayers pay a fixed percentage of tax based on their business category, such as manufacturers, traders, or restaurants. The tax liability is calculated automatically based on the turnover details provided earlier.
- Payment of Tax: Once the tax liability is calculated, taxpayers need to pay the due tax by generating a challan through the GST portal. The challan contains the details of the tax amount to be paid and the modes of payment available.
- Input Tax Credit Reversal: Composition scheme taxpayers are not eligible to claim input tax credit. However, if they were previously registered under the regular GST scheme and have any input tax credit pending, they need to reverse the credit amount in this section.
- Other Information: This section includes additional information such as details of advances received, amendments in previous returns, and details of goods sent to job workers, if applicable. Taxpayers need to provide accurate and up-to-date information to ensure compliance with GST regulations.
It is important to note that GSTR-4 has a limited number of fields compared to other GST returns. This simplified return format is designed to reduce the compliance burden for small businesses and make the filing process less complex.
The GSTR-4 filing date is the 18th of the month following the end of the quarter. For example, the return for the April to June quarter is due on the 18th of July. It is crucial for composition scheme taxpayers to adhere to the deadlines to avoid penalties and maintain a good compliance record.
GSTR-4 is a quarterly return specifically designed for composition scheme taxpayers under the GST regime. By filing this return, small businesses can comply with their tax obligations and report their turnover in a simplified manner. In addition to understanding GSTR-4 and its filing requirements, composition scheme taxpayers can simplify their GST filing process by utilising efficient GST filing software like CaptainBiz. CaptainBiz makes it easier for businesses to enter and validate their turnover details, calculate tax liability, and generate accurate reports. The software also provides timely reminders and notifications for filing deadlines, ensuring that businesses never miss a due date. By leveraging CaptainBiz, composition scheme taxpayers can save time, reduce errors, and maintain compliance with GST regulations effortlessly.
