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. In this blog, we will discuss the GSTR-4 meaning and significance, exploring its applicability to businesses. Furthermore, we will provide a comprehensive overview of the blog content, covering the eligibility criteria, filing procedure, key components, advantages, challenges, and more. So, join us as we unravel the essentials of GSTR-4 below.
What is GSTR-4?
Goods and Services Tax (GST) is a comprehensive indirect tax levied on the supply of goods and services. Under the GST regime, businesses must file various GST returns to report their sales, purchases, and tax liabilities. These returns include GSTR-1, GSTR-3B, GSTR-9, and more, each serving a specific purpose and capturing different aspects of business transactions. GSTR-4 holds significance for small businesses operating under the composition scheme. The composition scheme is designed for taxpayers with a turnover below a specified threshold, offering simplified compliance procedures and reduced tax rates. GSTR-4 is the quarterly return filed by composition taxpayers to summarise their outward supplies, tax liability, and payment details.
Key Features of GSTR-4
These essential features of GSTR-4 will help you to understand its context better:
- Frequency: GSTR-4 is filed on a quarterly basis, providing relief to small businesses from the monthly filing requirement.
- Simplified format: GSTR-4 has a simplified format with fewer details than other GST returns, easing the compliance burden for composition taxpayers.
- Composition tax payment: GSTR-4 includes the payment of composition tax by the taxpayer, calculated based on their turnover and applicable tax rates.
- Input tax credit: Composition taxpayers are not eligible for the input tax credit, so GSTR-4 does not capture details related to the input tax credit.
- Amendment facility: GSTR-4 allows taxpayers to make amendments in subsequent quarters for any errors or omissions made in the earlier return.
Applicability of GSTR-4
Is your business eligible or not eligible to pay GSTR-4? Let’s find out below:
- Eligibility criteria for filing GSTR-4
To file GSTR-4, a business should be registered under the composition scheme and have an annual turnover below a specified threshold, which may vary from country to country. These criteria ensure that only small businesses benefit from the simplified compliance process offered by GSTR-4.
- Businesses exempted from filing GSTR-4
While GSTR-4 is mandatory for composition scheme taxpayers meeting the eligibility criteria, certain businesses are exempted from filing this return. These exemptions may include businesses supplying goods via e-commerce platforms, businesses engaged in inter-state supplies, or businesses that opt out of the composition scheme during a financial year.
- Determining turnover for GSTR-4
The turnover of a business is a crucial factor in determining the applicability of GSTR-4. Typically, turnover includes the aggregate value of all taxable supplies, exempt supplies, and exports made by the business. However, specific rules and provisions may apply to countries, defining turnover calculation methodology for GSTR-4 purposes.
How to File GSTR-4?
If you find yourself eligible to file GSTR-4, you should know the right way to file the same. Filing GSTR-4, thankfully, is a relatively straightforward process.
Here is a step-by-step guide on how to file GSTR-4:
- Log in to the GST portal: Access the official GST portal using your login credentials provided during registration. Ensure that you have a stable internet connection and a compatible web browser.
- Navigate to the GSTR-4 section: Once logged in, go to the " Returns Dashboard" and select the financial year and the relevant quarter for which you must file GSTR-4.
- Provide the necessary details: Fill in the required information in the different sections of GSTR-4. These sections typically include details about the taxpayer, outward supplies, tax liability, payment of composition tax, and any amendments to previous returns, if applicable.
- Verify and review the return: Before submitting the return, thoroughly review the information provided to ensure accuracy and completeness. Ensure all relevant fields are filled correctly and there are no errors or omissions.
- Submit the return: Once you have verified it, submit it on the GST portal. After submission, a unique acknowledgment number (ARN) will be generated for reference. This number confirms that the return has been successfully filed.
- Payment of composition tax: Along with filing GSTR-4, composition taxpayers must pay the composition tax liability for the respective quarter. Ensure timely payment of the composition tax using the designated online payment methods available on the GST portal.
- Amendments, if required: If any errors or omissions are identified in the filed return, you can make amendments in subsequent quarters by filing a revised GSTR-4. This allows you to rectify any mistakes and ensure accurate reporting.
[Note: The due date for filing GSTR-4 is typically the 18th of the month following the end of the quarter. Timely compliance with the filing and payment requirements is essential to avoid penalties and maintain good tax governance]
Filing GSTR-4 is an essential task for businesses operating under the composition scheme. Understanding the eligibility criteria, determining turnover, and following the filing procedure are key steps to ensure compliance. GSTR-4 simplifies the tax reporting process for small businesses, providing them with advantages such as reduced paperwork and a simplified format. However, navigating the complexities of GSTR-4 can be challenging. Seeking professional help, such as from tax consultants or accounting professionals, can make the process easier and ensure accurate filing. Expert guidance ensures businesses can focus on their core operations while ensuring seamless GSTR-4 filing.