How To File GSTR-4?

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Published Date:  12-12-2023   Author:   sriyalini-mathivanan
how to file gstr

Filing GSTR-4 might appear as a daunting task for composite taxpayers and casual taxable persons. However, following some pivotal steps and strategies might help you simplify the process. This comprehensive guide has everything needed for hassle-free GSTR-4 filing, from documenting details to boosting benefits. Read on to learn the step-by-step process, common challenges and solutions, and expert tips for efficient GSTR-4 submissions.

Step-by-Step Guide For Filing GSTR-4:

Registering On The GST Portal:

The initial step is registering on the Goods and Services Tax (GST) portal if you are not already registered. It will involve the following process: 

  1. Visiting the GST portal and selecting the “Registration” button.
  2. Opting for the registration type “Composite Taxpayer” or “Casual Taxable Person” depends on the applicable case.
  3. Entering all required registration details accurately, including business details, authorized signatory, bank account, verification, etc.
  4. Submitting the GST REG-01 application form along with all the mandatory documents.
  5. Completing verification and approval formalities either digitally or through physical verification.

Once the registration is approved, the 15-digit GSTIN will be allocated. This GSTIN number is required for all future GST compliance.

Understanding GSTR-4 Forms:

GSTR-4 has to be filed by:

  • Composite suppliers offering exempted goods and services.
  • Casual taxable persons making taxable supplies.

It has two exclusive forms:

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  1. GSTR-4 will be for quarterly returns
  2. GSTR-4 Annual Return will be for the annual consolidated return

The quarterly GSTR-4 will be simpler, containing only six main tables capturing mandatory details. The annual return will be more detailed, with eight main tables.

Compiling Information:

Before filing, all relevant business information for the tax tenure has to be compiled, including:

  • Details of advances, inward, and outward supplies
  • Tax amounts collected at source, if any
  • Input tax credit availed if any
  • Tax payable based on the tax rate

Keeping records of proper accounts, records, bills, invoices issued or received, and bookkeeping will be vital for accurate information. 

The details can either be directly uploaded or manually entered at the time of filing. However, advanced preparation will help in eliminating errors.

How Do I File The Quarterly GSTR-4?

For filing this, the key steps involve:

  1. Accessing Form GSTR-4 on the portal and selecting the tax period.
  2. Checking for any earlier dues in the integrated cash ledger.
  3. Providing data on supplies, advances, and ineligible ITC across six tables.
  4. Previewing the final summary and tax liability.
  5. Using balance in the integrated cash ledger for depositing tax.
  6. Generating the ARN upon successful tax payment.
  7. Filing GSTR-4 using the ARN within the due timelines.
  8. Downloading the acknowledgment confirms a successful filing.

How Do I File The Annual GSTR-4?

In the annual GSTR-4, composite taxpayers can claim some ITC. The steps will be similar:

  1. Access the annual GSTR-4 and select the relevant financial year.
  2. Fill in details across eight tables on supplies, advances, ITC, distributions, tax payments, and HSN summary.
  3. Preview and verify details before submitting the form.
  4. Pay tax using an integrated cash ledger balance.
  5. File GSTR-4 using ARN within a prescribed time limit.
  6. Download the acknowledgment for records.

Common Challenges And Solutions Involved In GSTR-4 Filing:

Knowing the potential challenges upfront makes compliance easier. Here are some key hurdles that composite dealers or casual dealers may face:

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Availability Of Input Tax Credit:

While ITC credit cannot be claimed in the quarterly GSTR-4, some credit will be allowed in the annual return. However, COVID-19 relief permitted ITC to claim quarterly returns too. Clarifying eligibility will avoid issues.

Reporting Correct Turnover:

Many composite taxpayers will end up reporting higher turnover due to accounting errors. Rechecking records using GSTR-1 and books of accounts will ensure reporting accuracy.

Forgetting To File Returns:

Composite taxpayers may overlook the quarterly filing requirement. Setting calendar reminders for due dates, keeping communications open with consultants and CAs, and tracking portal updates prevent non-compliance.

Payment Reconciliation Issues:

Tax liability calculation issues or unreconciled previous liabilities often block successful tax payments. Tracking ledgers often and resolving earlier dues will fix such issues. Professional help with recons might also be needed.

System Glitches Near Deadline:

The peak return filing period tends to have intermittent portal glitches. Planning well in advance provides buffer time for error resolution, while last-minute filing will lead to non-compliance.

Most problems composite dealers face can be resolved through diligent data maintenance, calculations, and sufficient lead time for submission. Seeking expert help whenever needed will also ease the process.

Strategies For Efficient GSTR-4 Submissions:

Certain best practices will make GSTR-4 filing quicker and more foolproof every quarter. Here are some beneficial strategies that composite taxpayers can adopt:

Reduce The Frequency Of Data Entry Errors:

Entering the wrong turnover amounts or tax liability will be common without robust bookkeeping. Maintaining Tally ledgers or Excel sheets to capture real-time transaction and tax details will limit the frequency of data entry errors.

Review Before The Final Submission:

The portal offers a preview of the final tax liability before submitting. Reviewing carefully at this stage will let all the taxpayers catch accidental errors. Amendments can also be made before final filing.

Enable Portal Notifications:

Turning on SMS and email notifications for due date reminders, scrutiny notices, verification requests, etc. will ensure vital communications are not missed by composite dealers.

Save Submission Acknowledgement:

Downloading the JSON file after successful filing will serve as an e-acknowledgement. Saving this for future reference will be pivotal to tracking submission status or resolving queries.

Pay Taxes A Few Days In Advance:

Instead of calculating liabilities just before the deadline, determine dues at least four to five days prior. It will permit enough time for online tax payment reconciliation and resolution of any issues if needed.

Claim ITC Wisely In Annual Filing:

The annual return will permit some ITC claims, but this must be done judiciously based on eligibility. Availing ineligible ITC can get returns rejected.

Documenting Details For Accurate GSTR-4 Filing:

From a functional perspective, GSTR-4 filing heavily relies on getting two things right: calculations and documentation.

A few of the documentation best practices will include:

Invoicing:

Issuing numbered, duly signed invoices for all supplies forms the basis for turnover details to be reported in GSTR-4.

Accounting Ledgers:

Maintaining updated Tally ledgers or Excel records for all business transactions makes information readily available come filing time.

Purchase Bills:

Keeping purchase bills for exempt supplies handy helps reconcile taxes paid on the inward supply side for accuracy.

Tax Payment Receipts:

Preserving acknowledgment receipts of tax deposited will facilitate return filing and reconciliation during scrutiny.

Input Tax Documents:

Availment documents like invoices and e-way bills for claiming eligible ITC in the annual GSTR-4 must be kept for a minimum of 5 years.

HSN-wise Summary:

Classifying all goods as per applicable HSN codes and maintaining a summary helps in annual return table filling.

Having standard documentation makes data gathering easier and also aids in explaining details during assessments if required.

Maximizing Benefits In GSTR-4 Compliance:

For Small Taxpayers:

The tax burden in the composition scheme is already lower. Timely compliance will boost this benefit by avoiding penal interest or late fees.

For Occasional Suppliers:

Infrequent suppliers may not have regular billing or accounting staff. Easy quarterly compliance will help them focus on core operations.

For Tax Departments:

Simplified return filing will boost the tax department’s access to dealer details for risk evaluation and reduce overhead on assessments.

Availing ITC Perks:

The ITC allowance in annual returns will provide some working capital liquidity. Eligible taxpayers shall claim and avail of this judiciously.

Overall, diligently meeting the requirements—documentation, calculations, and deadlines—makes GSTR-4 filing easier and unlocks the multiple benefits offered by the composition scheme.

Wrapping Up:

For composite dealers and casual taxable persons, quarterly GSTR-4 filings form an integral compliance requirement under GST. By understanding the detailed process, challenges, and solutions covered in this guide, meeting GSTR-4 timelines as per GST laws becomes easier. Regularly compiling accurate data through robust documentation will also aid in hassle-free filing.

With some prudent planning, diligence around deadlines and expert assistance whenever needed, GSTR-4 compliance can be achieved seamlessly every tax period. The trade-off benefits like lower tax outgo, minimized assessments, useful ITC claims, and notifying authorities about business activities also enable composite taxpayers to expand their opportunities and contribute to nation-building. Hence, overall, some basic discipline around documentation, calculations, and procedures helps ensure hassle-free GSTR-4 compliance under GST.

Frequently Asked Questions (FAQs):

Q1: Who needs to file GSTR-4?

Answer: GSTR-4 needs to be filed by composition taxpayers—firms that have opted for a composition scheme and pay taxes at a reduced rate. It will include manufacturers, restaurant service providers, traders, etc. with turnover below specified thresholds.

Q2: Can I edit GSTR-4 after filing?

Answer: No, after the final submission, GSTR-4 details cannot be edited. Corrections via amendments can be made in the next tax period.

Q3: Can I save the draft GSTR-4 and edit it later?

Yes, the option to save as a draft will be available after entering relevant details in various tables. The draft can be edited multiple times before final submission.

Q4: Is there a penalty for late GSTR-4 filing?

Answer: Yes, Rs 200 per day in late fees plus 18% annual interest applies to late GSTR-4 submissions under GST.  The due date for filing GSTR-4 is the 18th of the subsequent month after the end of the relevant quarter. For the first quarter, the deadline will be August 18. Late filing would attract late fees.

Q5: Can I claim ITC in the quarterly GSTR-4 too?

Answer: Earlier, no ITC was allowed in quarterly GSTR-4, but due to COVID-19, fixed ITC claims have been permitted.

Q6: Is there an offline tool for GSTR-4 filing preparation?

Answer: Yes, the user can also download and use the offline version of the GSTR-4 Excel utility. Data entered can later be imported for online filing.

Q7: Can I change the GSTR-4 filing frequency?

Answer: No, the users cannot change the filing frequency, quarterly or annually, since it is pre-defined for composition taxpayers. 

Q8: Should HSN codes be provided in GSTR-4?

Answer: HSN codes will be optional in the quarterly GSTR-4, but they will be mandatory for 6-digit reporting in the annual GSTR-4.

Q9: Can I pay GSTR-4 taxes using ITC credit?

Answer: No, the cash ledger has to be used for depositing GSTR-4 liabilities, as ITC is not permitted.

Q10: Is GSTR-4 filing offline allowed?

Answer: No, GSTR-4 has to be filed online on the GST portal within the stipulated due dates. Offline GSTR-4 filing will not be permitted.

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Sriyalini Mathivanan

Sri Yalini YM is a qualified finance professional with expertise in GST compliance and financial matters, she bring comprehensive knowledge to provide expert insights.

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