GSTR-4: Return Filing, Format, Eligibility and Rules

What is GSTR-4?

What is it? GSTR-4 is an annual return filed by taxpayers who have opted for the composition scheme. This scheme allows eligible businesses to pay a fixed percentage of their turnover as GST instead of the usual detailed calculation.

Filing Frequency: Unlike regular taxpayers who file monthly/quarterly returns, composition dealers file GSTR-4 only once a year, by 30th April of the subsequent financial year.

Rule 4 of GST

Rule 4 under the Composition Scheme guidelines specifies the maximum annual turnover limit for opting into the scheme. Currently, it is ₹1 crore for manufacturers and traders, and ₹50 lakhs for service providers.

Who is Eligible for GSTR-4?

GSTR-4 is designed for taxpayers who have opted for the Composition Scheme, which is available to businesses with an annual turnover up to a specified limit. Small businesses often find this scheme advantageous due to reduced compliance requirements and a fixed tax rate.

Any taxpayer registered under the GST Act who opted for the composition scheme for even a single day during the financial year is eligible to file GSTR-4.

Is GSTR-4 Mandatory?

Filing GSTR-4 is mandatory for eligible taxpayers. Failure to do so can attract late fees and penalties.

Reasons for Mandatory Filing

Compliance with GST Regulations: Filing GSTR-4 is a legal requirement as per the GST Composition Scheme rules. Failure to do so can attract late fees and penalties, including:

Late fee of ₹50 per day for each CGST and SGST return not filed.
Maximum penalty of ₹10,000 for non-filing of returns.

Transparency and Record Keeping: GSTR-4 serves as a yearly summary of your business transactions under the composition scheme, promoting transparency and facilitating audits by tax authorities.
Benefits of Timely Filing: Timely filing of GSTR-4 ensures you stay compliant and avoids legal hassles. It also helps claim any input tax credit you might be entitled to under the composition scheme.

Difference Between GSTR-4 and GSTR-9

Feature	GSTR-4	GSTR-9
Purpose	Annual return for composition dealers	Annual return for regular taxpayers
Eligibility	Businesses opting for the composition scheme (turnover limit: ₹1 crore for manufacturers/traders, ₹50 lakhs for service providers)	All registered taxpayers under GST (except composition dealers)
Filing Frequency	Once a year (by 30th April of the subsequent financial year)	Annually (by 31st December of the subsequent financial year)
Data Reported	Summary of outward and inward supplies, imports, reverse charge liabilities, and tax payment details	Detailed transactions, tax liabilities, input tax credit claims, and reconciliation of tax payment with liability
Form Complexity	Relatively simpler	More complex and detailed
Late Filing Penalty	₹50 per day per CGST and SGST return not filed (maximum ₹10,000)	₹25 per day per CGST and SGST return not filed (maximum ₹5,000)