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GSTR 4 Explained

Explaining GSTR-4 (GST Return form for Composition business entities) Return, GST Rates, advantages and dis-advantages along with FAQs

Key Components of GSTR 4 Return

Turnover

The composition scheme is meant for small businesses whose turnover of taxable goods not more than ₹1.5crores, where GST has to be borne by the seller@1% of such turnover by Traders & @2% by Manufacturers.

Tax Invoice

The Composition taxpayer cannot issue a tax invoice, because the tax has to be paid by the dealer out of pocket. A Composition Dealer is not allowed to recover the GST from the customers. Service Providers Cannot opt for Composition Scheme.

GST Rates

Business CategoriesTax RateCGSTSGST
Manufacture1% 1% 2%
Traders (G & S ) 0.5%0.5% 1%
Supplier of Food or Drinks for human consumption (Without Alcohol ) 2.5% 2.5% 5%

Additional Information

They cannot claim the Input Tax Credit on any purchases. Composition Scheme is available only for dealers doing intra-state supplies (within state). They no need to be maintained the books of accounts for GSTR.

The Composition Scheme is the very helpful to every small business, because they cannot maintained the everyday transactions ( books of accounts ). Compare to regular GST scheme, the Composition taxpayers required file the totally 5 GSTR ( i.e. Four Quarterly GSTR’s in the form of GSTR-4 & mainly one annual GSTR in a year in the form of GSTR-9A.)


Advantages of Composition Scheme :
  1. Lower Tax Payment ( Like 1%, 2%,5% etc…)
  2. Less Compliance Involved in the Composition Scheme.
  3. Less Tax & High Liquidity

A person registered under composition scheme is required to file in total only 5 returns (i.e. 4 quarterly return in form GSTR 4 and one annual return in form GSTR 9A).

Dis-Advantages of Composition Scheme :
  1. Non Availability of Input Tax Credit.
  2. Cannot collect the Tax payment..
  3. Few Taxpayers are preferred the Composition Scheme.
  4. Inter-State sales are not permitted..
Due Date for Composition Scheme :

Composition dealers are required to file a quarterly GST return using form GSTR-4 by the 18th of the month following the quarter for which the return is being filed.

Quaterly PeriodDue Dates
July - September 201724th December, 2017
October - December 201718th January, 2018
January - March 201818th April, 2018
April - June 201818th July, 2018
July - September 201818th October, 2018
October - December 201818th January, 2019

In addition, the GST Council reduced the fees for filing GSTR-4 returns after their Due Dates to :

  1. Rs. 50 per day of delay in normal cases.
  2. Rs. 20 per day of delay for taxpayers having nil tax liability for the month.
  3. Interest on delayed tax payments is charged at 18 % per annum on the amount of outstanding tax and is calculated from the day following the missed due date until the actual date of payment

Quick GSTR 4 FAQs

1.Who can opt for Composition Scheme ?

A Taxpayer whose turnover is upto Rs 1.5 crore can opt for Composition Scheme. In case of North-Eastern states and Himachal Pradesh, the limit is now Rs 75 lakh.

2.Can Composition Dealers avail Input Tax Credit ?

No, a Composition Dealer is not allowed to avail input tax credit of GST on purchases.

3.Can I opt-in for composition scheme at any time of the year ?

Before the beginning of every financial year, a registered taxpayer is required to provide a declaration on the GST Portal. This cannot be done anytime during the year.

4.How many GSTR are required to filed by a Composition Dealer ?

The Composition taxpayers required file the totally 5 GSTR ( i.e. Four Quarterly GSTR’s in the form of GSTR-4 & mainly one annual GSTR in a year in the form of GSTR-9A.)

5.What are Due dates for GSTR-4 & GSTR-9A ?

The Composition taxpayers required file the GSTR-4 ( Quarterly ) by next month 18th. Also, GSTR-9A has to be filed by 31st December of Next financial year.

6.How many times Taxpayer can change the GST regular to Composition Scheme ?

A Taxpayer can change GST regular scheme to Composition Scheme once in a financial year.

7.What will be happens if a Composition taxpayer’s turnover exceeds Rs. 1.5 crore during the year ?

In this situation, the taxpayer should withdraw from the composition scheme by filing the GSTR-4 within 7 days from the day on which the turnover exceeded. They will be liable to pay tax under the normal tax scheme starting the following day .

8.How much a Composition taxpayer’s face the penalties & Interest under the Composition Scheme ?

The GST Council reduced the fees for filing GSTR-4 returns after their due dates to:

  1. Rs. 50 per day of delay in normal cases.
  2. Rs. 20 per day of delay for taxpayers having nil tax liability for the month.
  3. Interest on delayed tax payments is charged at 18 % per annum on the amount of outstanding tax and is calculated from the day following the missed due date until the actual date of payment.
9.Who cannot opt for Composition Scheme ?
  1. Supplier of services other than restaurant related services.
  2. Manufacturer of ice cream, pan masala, or tobacco.
  3. A Non-resident taxable person or Casual taxable person.
  4. Taxpayer supplying exempt supplies.
  5. Businesses which supply goods through an e-commerce operator.

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