Everything You Need to Know About GSTR 4

As the Goods and Services Tax (GST) system evolves, compliance remains a paramount concern for businesses. One critical element of this compliance is GSTR 4, a return required to be filed by taxpayers who have opted for the Composition Scheme. This article dives into everything you need to know about GSTR 4, ensuring you understand its intricacies and importance.

What is GSTR 4?

GSTR 4 is a GST return applicable to Composition Scheme taxpayers. Under the Composition Scheme, small taxpayers benefit from reduced GST rates and simplified compliance measures. However, these taxpayers must file GSTR 4 annually, consolidating quarterly returns to ensure the right amount of tax is paid.

The Composition Scheme is an attractive option for small businesses because it offers a flat rate of tax with lesser administrative burden. However, opting for this scheme mandates compliance with GSTR 4 requirements. Therefore, understanding GSTR 4 is crucial for businesses looking to benefit from the Composition Scheme.

Who Should File GSTR 4?

GSTR 4 must be filed by taxpayers who have opted for the GST Composition Scheme. Typically, this includes small businesses, manufacturers, and service providers whose annual turnover does not exceed ₹1.5 crore (₹75 lakh for special category states).

It is important to note that the following persons are not eligible for the Composition Scheme:

  • Manufacturers of ice cream, pan masala, or tobacco
  • Non-GST registered individuals
  • Casual taxable persons or non-resident taxable persons
  • Service providers other than restaurants

Key Components of GSTR 4

The GSTR 4 return comprises several sections that require detailed information. Here’s a breakdown of its key components:

  1. Basic Details: This section covers fundamental information like GSTIN, legal name, trade name, and the financial year for which the return is being filed.
  2. Inward Supplies: Details of all inward supplies, including inward supplies from registered suppliers, unregistered suppliers, and those subject to reverse charge mechanism.
  3. Tax on Outward Supplies: This includes the aggregate value of supplies, the taxable amount, and the tax payable under different tax rates.
  4. Taxpayer’s Information: Information about the nature of the business and any changes in business circumstances.
  5.  Tax Payment and ITC Utilization: A summary of how the integrated tax (IGST), central tax (CGST), state tax (SGST), and cess were utilized for tax payments.
  6. TDS and TCS Credits: Includes details about any tax deducted at source (TDS) and tax collected at source (TCS) credits available.

Filing Process for GSTR 4

Here is a step-by-step process to file your GSTR 4:

  1. Login to GST Portal: Use your credentials to log in.
  2. Select Financial Year: Choose the appropriate financial year for which the return is being filed.
  3. Fill in Required Details: Enter details in all the requisite sections and double-check for accuracy.
  4. Save and Preview: Save your work at regular intervals to avoid data loss. Review the form in its entirety before proceeding to submission.
  5. Interest and Late Fee: Calculate and enter any interest or late fees if the return is delayed.
  6. Submit Form: Upon thorough review, submit the form. You will be required to either use an electronic verification code (EVC) or digital signature certificate (DSC) for authentication.
  7. Make Payment: If applicable, make the necessary tax payment.

Due Dates and Penalties

Initially, GSTR 4 was a quarterly return, but from FY 2019-20 onwards, it is an annual return, due by April 30th following the end of the financial year. Failure to file GSTR 4 on time attracts a late fee of ₹200 per day (₹100 each for CGST and SGST), with a maximum cap of ₹5,000.

Conclusion

Navigating the complexities of GSTR 4 might seem daunting, but understanding its components, eligibility, and filing process is essential for businesses under the Composition Scheme. Timely and accurate filing not only ensures compliance but also helps avoid penalties and optimize tax benefits. By keeping abreast of GST filing due dates and requirements, small businesses can leverage the Composition Scheme to their advantage while staying compliant with the law.

 

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