GSTR 4: Annual Return for Composition Scheme Taxpayers

The Indian Goods and Services Tax (GST) system offers two registration options for businesses: regular GST registration and composition scheme registration. Businesses opting for the composition scheme benefit from simplified tax filing procedures. One such benefit is filing an annual return, GSTR 4, instead of regular monthly or quarterly returns required under the regular GST scheme.

What is GSTR 4?

GSTR 4 is an annual return form that composition taxpayers must file to report details of their inward and outward supplies for a financial year. Introduced in 2019, it replaced the quarterly GSTR 4 return requirement that existed until the financial year 2018-19.

Who Needs to File GSTR 4?

Businesses registered under the composition scheme with a turnover threshold of less than INR 1.5 crore (INR 75 lakhs for North-Eastern states and Himachal Pradesh) are required to file GSTR 4. This scheme simplifies the GST filing process for smaller businesses.

What Information Does GSTR 4 Capture?

• Basic Information (Tables 1-3): This section includes the taxpayer's name, GST Identification Number (GSTIN), aggregate turnover for the previous financial year, and details of the registration certificate.
• Inward Supplies (Table 4): This section is divided into four parts to report details of supplies received by the composition dealer:
• Supplies received from registered suppliers (intrastate and interstate, no reverse charge)
• Supplies received from registered suppliers attracting reverse charge (intrastate and interstate)
• Supplies received from unregistered dealers (intrastate and interstate)
• Taxable import services attracting reverse charge
• Summary of Liability (Table 5): This table automatically populates a summary of the taxpayer's GST liability based on the details filed in Form GST CMP-08 (quarterly return for composition scheme). It includes details like tax payments on outward supplies, inward supplies with reverse charge, interest paid, and total tax amount.
• Outward Supplies and Inward Supplies with Reverse Charge (Table 6): This section captures details of the taxpayer's outward supplies and inward supplies with reverse charge, along with the applicable tax rate and amount. However, the Integrated GST (IGST), Central GST (CGST), State GST (SGST), and cess amounts are auto-populated.
• Tax Deducted at Source (TDS) (Table 7): This section requires taxpayers to report details of GST deducted at source (TDS) by e-commerce operators or deductors, including their GSTIN, gross invoice value, and TDS amount deducted. Any TDS/TCS received from suppliers or e-commerce operators is automatically reflected here.
• Tax, Interest, and Late Fee (Table 8): This section provides details on tax payable, tax paid, interest, and late fee associated with GST filing and payments. It includes:
• Payable tax amount (auto-populated from table 6 of GSTR 4)
• Tax amount paid (auto-populated based on Form CMP-08 filings)
• Balance tax payable (difference between payable and paid tax)
• Interest and late fee payable and paid (interest for late return filing and late fee for delayed GST payments)
• Refund Claim (Table 9): This section allows taxpayers to claim refunds on excess taxes paid. The refundable amount can be categorized into tax, interest, penalty, fee, and other charges.

Benefits of Filing GSTR 4

Filing GSTR 4 offers:

• Simplified GST Filing: Compared to regular GST registration, the composition scheme requires minimal paperwork and filing frequency. GSTR 4, being an annual return, further reduces the filing burden.
• Reduced Compliance Costs: Composition scheme taxpayers are exempt from maintaining detailed accounts of input tax credit (ITC) and filing multiple GST returns. This translates to lower compliance costs associated with professional help for tax filing.
• Focus on Business Operations: By minimizing GST filing complexities, the composition scheme allows businesses to dedicate more resources to core operational activities.