If you are on the GST composition scheme, you will be able to take advantage of lower tax rates and simpler compliance requirements. However, each year, there are several businesses that have been caught unaware by the requirement to file GSTR-4. If you miss a piece of information, get a wrong number, or file your return late, then you may face fines and/or notices. The following article provides details about what GSTR-4 is, which businesses need to file it, what is included in it, and how to file it properly.
What Is GSTR-4?
GSTR-4 is the annual GST return for composition dealers. As opposed to filling monthly returns as regular dealers do, composition dealers pay tax on a quarterly basis and then summarize all four quarters into one annual return. This will give the GST Department a complete view of your business by summarizing both inward and outward supplies, tax liabilities and taxes paid.
Who Must File GSTR-4?
Composition Scheme Taxpayers
All those taxpayers who have opted for the composition scheme are required to file GSTR-4. These include small manufacturers, traders, non-alcohol serving restaurants and eligible service providers. Generally, even when there were no sales made by the taxpayer in the current year, he/she would be required to file a Nil Return.
Turnover Limits and Tax Rates
The composition scheme is available to both goods suppliers and restaurants up to a turnover of Rs. 1.5 crores per annum; however, the eligible service provider can use the composition scheme up to a turnover of Rs. 50 lakhs per annum. Additionally, some of the North Eastern and Hill States have a lower turnover limit of Rs. 75 lakhs per annum for the goods business. Composition dealers are not permitted to engage in inter-state outward supply. In general, manufacturers and traders are taxed at 1% of their annual turnover, whereas, restaurants which do not serve alcoholic beverages are taxed at 5% of their annual turnover. Eligible service providers are taxed at 6% of their annual turnover. In exchange for having such low tax rates, composition tax payers are prohibited from claiming input tax credits or separate charging of GST. Composition tax payers must also provide their customers with a bill of supply. Turnover limits and tax rates may be modified by the government; therefore, it is advisable to check on the most recent status.
GSTR-4 vs CMP-08: What Is the Difference?
Many business owners use these two terms interchangeably. CMP-08 is the quarterly statement and challan for paying composition tax. Usually, it must be submitted on or before the 18th day of the month following the end of each quarter. GSTR-4 is the annual return that provides an overview of all transactions. Both documents should be consistent with one another. If there are discrepancies between your CMP-08 payment and GSTR-4 figures, you could receive notifications; therefore, reconciliation prior to submitting is critical.
Documents and Details Required for GSTR-4
Before submitting your return, make sure that you have collected all of your sales and purchase information; the previous quarters’ CMP-08 statements; evidence of the tax paid; details on the supplies received (inward supplies), such as purchases made by unregistered vendors, and purchases subject to reverse charges; as well as all other accounting and GST records. GSTR-4 reports on your outward supplies, inward supplies, tax liability, TDS and TCS credits if applicable, refunds and taxes paid in the current fiscal year. You should ensure that each of these sections contain accurate information as they will be compared against similar information that is being submitted to the authorities.
GSTR-4 Due Date and Late Fees
The GSTR-4 (annual return) is filed at the close of every financial year. In recent years, the deadline for filing this return has changed; therefore, you should check the current notification posted on the GST Portal each year rather than relied upon your own knowledge. A late filed GSTR-4 will incur a late fee per day with a maximum amount, and if you file a late nil return, the maximum amount is reduced. In addition, if you pay taxes after the due date, you may be charged interest. Generally speaking, filing on-time is less expensive than fixing errors after filing.
Common GSTR-4 Filing Mistakes to Avoid
Many business owners do not reconcile CMP-08 payment information with the annual return. Some report turnover in a manner which does not agree with what is reported in the business books, fail to report purchases from unregistered suppliers or incorrectly believe that filing a nil return isn’t required if the amount of sales was small. Additionally, many businesses are unaware of when they exceed the turnover threshold and continue to operate under the scheme. Professional review prior to filing can identify most of these types of errors.
How GSTR-4 Is Filed Online
You file through the official GST website with the use of your user name and password. After you verify the information that was pre-populated for you, reconcile your quarterly payments, and file the return, you will have completed the filing process. At this point you can either sign electronically or provide an EVC (electronic verification code). Although it appears easy, the accuracy of filing depends upon the preparation of your records prior to filing.
Why Take Professional Help for GSTR-4 Filing in Delhi
Many composition taxpayers believe that they do not need professional help because of how little compliance they have. However, even if you make a mistake with a single number, this could result in getting notices and/or paying fines which would ultimately be much more expensive than using a professional’s services. A qualified Chartered Accountant can review your sales data to make sure it matches your records; check the accuracy of the CMP-08 statements you submitted; identify any missing information; submit everything correctly and timely. Additionally, if you are located in Delhi, having a team of CAs nearby will provide fast answers and ongoing assistance.
GSTR-4 Filing Support from Grover S & Company
At Grover S & Company, our CA professional’s will prepare GSTR-4 return, verify your turnover, reconcile CMP-08 and check your GST records. This begins with a consultation and then our team takes care of preparing all documentation and submitting it. After we complete the work, we provide continuous support. No matter if this is your first time to file or you need to resolve any past compliance issues; we make sure that the entire process is simple and easy.
In search of reliable GSTR-4 filing services in Delhi? Get started with a free consultation from Grover S & Company today so you know your compliance under the composition scheme is being taken care of.
The link “GSTR-4 filing services in Delhi” will be included in the last paragraph. The due date has been left broad since there is some discrepancy among different sources as to when this filing is required (either April 30th or June 30th) each year. Once you have confirmed with the GST portal, then add the specific due date.
