GSTR-4 Annual Return Filing: Eligibility, Procedure, and Due Date for Composition Taxpayers

GSTR-4

GSTR-4 Annual Return Filing: Eligibility, Procedure, and Due Date for Composition Taxpayers

GSTR-4

GSTR-4 is an annual return that must be filed by all taxpayers registered under the GST Composition Scheme. If you’re a small business paying GST at a fixed rate and looking for a simplified compliance process, this guide walks you through the entire online filing process for GSTR-4—from prerequisites and deadlines to step-by-step instructions and troubleshooting tips.

What is GSTR-4?

GSTR-4 is an annual GST return specifically designed for composition scheme taxpayers. Until FY 2018-19, it was a quarterly return. However, starting FY 2019-20, it became an annual return while tax payments continue to be made quarterly through CMP-08.

GSTR-4 includes:

  • Summary of quarterly CMP-08 filings

  • Inward supplies (purchases)

  • Outward supplies (sales, if any)

  • Taxes paid under the scheme

📌 Note: Once GSTR-4 is filed, it cannot be revised.

GSTR-4

Latest GSTR-4 Updates

🔹 53rd GST Council Meeting – June 22, 2024

 

The due date to file GSTR-4 has been extended to June 30 for all future years, effective from FY 2024-25 onwards.

🔹 Amnesty Scheme – March 31, 2023

For taxpayers who missed GSTR-4 filings for FY 2017 to 2022:

  • Late fee capped at Rs. 500 (Rs. 250 CGST + Rs. 250 SGST)

  • Nil returns: No late fee

Who Needs to File GSTR-4?

You must file GSTR-4 if:

  • You’re registered under the Composition Scheme for any part of the year

  • You opted out of the scheme mid-year

  • Your GST registration was cancelled, but you had composition status before that

  • You had no business activity (must file Nil GSTR-4)

When to File GSTR-4?

Annual Due Date: 30th June following the end of the financial year
(e.g., For FY 2024-25, the due date is 30th June 2025)

When to File GSTR-4?

  • Annual Due Date: 30th June following the end of the financial year
    (e.g., For FY 2024-25, the due date is 30th June 2025)

Late Filing Penalty

TypeLate FeeMax Penalty
Regular ReturnRs. 200/day (Rs. 100 CGST + Rs. 100 SGST)Rs. 5,000
Nil ReturnRs. 500 total (as per amnesty/notification)Rs. 500

Pre-Filing Checklist

Before filing GSTR-4:

  • Ensure you’re registered under the Composition Scheme

  • File all CMP-08 forms for the financial year

  • Keep turnover details of the previous financial year ready

Step-by-Step Process to File GSTR-4 Online

Step 1: Login to GST Portal

Go to 👉 www.gst.gov.in
Login using your credentials

Step 2: Navigate to GSTR-4

Services > Returns > Annual Return
Click on ‘File Annual Returns’

Step 3: Select Financial Year

Choose the relevant FY (e.g., 2024-25)

Step 4: Click ‘Prepare Online’

Read the on-screen instructions carefully

Step 5: Enter Turnover Details

Input aggregate turnover of the previous year. Enter “0” if there was none. Click ‘Save’

Step 6: File Nil GSTR-4 (If Applicable)

If no purchases or sales:

  • Tick ‘File Nil GSTR-4’

  • Click ‘Proceed to File’

Step 7: Fill Relevant Tables (if Not Nil)

Complete the following sections:

  • Table 4A: Inward supplies from regular dealers

  • Table 4B: Inward supplies under reverse charge

  • Table 4C: Supplies from unregistered dealers

  • Table 4D: Import of services

  • Table 5: CMP-08 summary (auto-filled)

  • Table 6: Outward supplies, if any

  • Table 7: TDS/TCS credit (auto-filled)

Step 8: Preview & Make Payments

  • Click ‘Proceed to File’

  • Download PDF/Excel preview

  • If needed, create a challan and pay via Electronic Cash Ledger

Step 9: File with DSC or EVC

  • Tick the Declaration

  • Select Authorized Signatory

  • File using DSC or EVC

  • Receive ARN confirmation via SMS/Email

Understanding GSTR-4 Tables in Detail

TableDescription
4AInward supplies from registered suppliers (regular)
4BInward supplies under reverse charge
4CSupplies from unregistered suppliers
4DImport of services
5CMP-08 summary (auto-filled)
6Outward supplies and reverse charge summary
7TDS/TCS credits (auto-filled)

How to File Nil GSTR-4

Conditions:

  • No purchases, sales, or other liabilities

  • All CMP-08 returns are Nil

Steps:

  1. Choose ‘File Nil GSTR-4’

  2. Click ‘Proceed to File’

  3. Sign and submit using DSC or EVC
    ✅ No late fee if filed before the due date

GSTR-4

Common Errors and Fixes

IssueSolution
“Records under processing”Wait and refresh page
Upload errorAvoid special characters, check internet
Saved data not visibleUse ‘Records per Page’ or Search
File not submittingEnsure all tables are filled, check DSC/OTP

Read More: GST Compliance Checklist for Financial Year 2025-26

Filing GSTR-4 is crucial for staying compliant under the Composition Scheme. Though it’s an annual return, quarterly CMP-08 payments are mandatory. If you qualify for a Nil return, the filing process is even faster.

Stay ahead of deadlines, avoid penalties, and always keep a copy of your filed return for your records.

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Mitigating ITC Double Claiming Risks in the GSTR-2B Era

GSTR-2B

Mitigating ITC Double Claiming Risks in the GSTR-2B Era

GSTR-2B

1. Understanding the Transition to GSTR-2B

The Shift from GSTR-2A to GSTR-2B

The introduction of GSTR-2B in January 2022 marked a major transformation in India’s GST compliance framework. This change made GSTR-2B the definitive source for Input Tax Credit (ITC) claims, replacing GSTR-2A. The amendment through Section 16(2)(aa) of the CGST Act linked ITC eligibility strictly to supplier-reported invoices, eliminating prior flexibility.

Why This Matters Now

With increased audit scrutiny by GST authorities, particularly for FY 2021-22, businesses must ensure compliance. The transition phase has resulted in inadvertent double claims due to overlapping systems, making it essential to review ITC claims carefully.

GSTR-2B

2. Risks and Consequences of ITC Double Claiming

How Double Claiming Happens

A common pitfall in compliance arises from the shift to GSTR-2B. Consider this case: A manufacturing company claimed ₹10,000 ITC in its December 2021 GSTR-3B based on books, following Rule 36(4), since the supplier had not yet filed GSTR-1. When the supplier finally uploaded the invoice in January 2022, it appeared in GSTR-2B, automatically updating GSTR-2A. Unaware of the prior claim, the accounts department claimed the same ₹10,000 again in the January 2022 GSTR-3B.

Financial and Compliance Risks

Double claiming ITC leads to serious repercussions, including:

  • Mandatory Reversal: Excess ITC must be reversed via DRC-03 without exceptions.

  • Interest Liability: 18% p.a. interest under Section 50 applies from the date of utilization until reversal.

  • Penalties:

    • Non-fraudulent cases (Section 73): 10% of excess ITC or ₹10,000 (whichever is higher).

    • Fraudulent cases (Section 74): Penalties up to 100% if intent is established.

  • Audit Scrutiny: GST authorities thoroughly examine ITC claims, leading to potential disputes.

3. Strategies to Prevent Double Claiming

Step 1: Review Pre-January 2022 ITC Claims

Examine GSTR-3B filings before January 2022 to track ITC claimed through books or GSTR-2A. Maintain detailed records of invoice details, including numbers, dates, GSTINs, and amounts.

Step 2: Cross-Check ITC Claims Post-January 2022

Compare ITC claimed in GSTR-3B from January 2022 onward against GSTR-2B data. Any matching entries require immediate reconciliation.

Step 3: Reconcile Books with GSTR-2B

Ensure each invoice appears only once in the purchase register. This is especially crucial for businesses with multiple branches or teams managing accounting processes.

Step 4: Utilize GST Portal Tools

The “Tax Liabilities & ITC Comparison” report provides a clear picture of discrepancies by comparing ITC claimed in GSTR-3B against available ITC in GSTR-2B.

Step 5: Verify Invoice Data

Cross-check invoice numbers, dates, and amounts to identify duplicates and prevent unintentional double claims.

4. Legal Implications and Remedial Actions

Audit Insights and Departmental Observations

Since January 2022, GSTR-2B has become the sole basis for ITC eligibility. Any ITC claimed in excess of GSTR-2B amounts is treated as wrongful availment. While GSTR-2A remains useful for monitoring supplier compliance, it no longer determines ITC eligibility.

Consequences of Non-Compliance

Failure to comply results in:

  • Mandatory ITC Reversal: Businesses must reverse excess ITC with interest, regardless of intent.

  • Penalties: Depending on the case, penalties under Sections 73 and 74 can significantly increase financial liabilities.

Read More: A Simple Guide to Advance Tax Calculation and Payment

5. Conclusion: Strengthening ITC Compliance

To ensure seamless GST compliance, businesses must:

  • Strengthen ITC reconciliation processes.

  • Monitor supplier GSTR-1 filings regularly.

  • Utilize GST portal tools to detect discrepancies early.

By proactively addressing ITC double claiming risks, businesses can reduce financial liabilities, avoid interest and penalties, and prevent unnecessary audits and disputes.

 

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Revised HSN Code Reporting Guidelines for GSTR-1

GSTR-1

Revised HSN Code Reporting Guidelines for GSTR-1

GSTR-1

The government has mandated the reporting of Harmonized System of Nomenclature (HSN) codes in Table-12 of GSTR-1 to improve tax compliance and enhance transparency. As per Notification No. 78/2020 – Central Tax, dated October 15, 2020, businesses must report either 4-digit or 6-digit HSN codes depending on their Aggregate Annual Turnover (AATO) from the previous financial year. This phased implementation is designed to facilitate a seamless transition for taxpayers.

Phased Implementation & Key Milestones

Initial Rollout: April & August 2022

  • For businesses with AATO up to ₹5 crore: Reporting of 2-digit HSN codes was required. Manual entry was permitted with warnings for incorrect inputs.

  • For businesses with AATO above ₹5 crore: Initially required to report 4-digit HSN codes, with manual entry permitted alongside alerts for errors.

  • Subsequent Update: Businesses with AATO exceeding ₹5 crore had to shift to reporting 6-digit HSN codes.

Enhanced Compliance Requirements from November 1, 2022

  • For businesses with AATO up to ₹5 crore: Mandatory reporting of 4-digit HSN codes, with manual entry allowed but flagged for errors.

  • For businesses with AATO above ₹5 crore: Now required to report 6-digit HSN codes, with error alerts for incorrect manual entries.

Upcoming Regulatory Modifications Effective February 2025

Key Adjustments in HSN Code Reporting

  • Manual entry of HSN codes will no longer be allowed.

  • Taxpayers must select HSN codes from a system-generated drop-down list.

  • Product descriptions will be auto-populated based on the selected HSN code.

GSTR-1

Strengthened Validation Procedures in Table-12

  • System cross-verification of B2B and B2C transactions with other sections of GSTR-1.

  • Errors will be flagged with warnings, but taxpayers will still be able to file returns.

  • If B2B transactions are reported elsewhere in GSTR-1, Table-12 cannot be left blank.

System Enhancements & Functional Upgrades

  • Distinct sections for B2B and B2C supplies in Table-12 for improved clarity.

  • A “Download HSN Codes List” feature for quick access to updated HSN & SAC codes.

  • Enhanced search function to auto-fill HSN details based on product descriptions.

Future Compliance Roadmap

Authorities will announce further compliance measures in upcoming phases to ensure greater accuracy in GST reporting and minimize errors.

Read More: Simplified Taxation for Small Businesses: A Guide to Section 44AD

Action Plan for Businesses

To maintain smooth GST filing and compliance, businesses must stay informed about these regulatory updates and adapt their reporting systems accordingly. Ensuring adherence to the latest HSN validation rules will help avoid discrepancies and facilitate seamless tax compliance.

Stay updated and prepare for a hassle-free GST reporting experience!

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