GSTR-4 is the annual return filed by small businesses registered under the GST Composition Scheme. Since FY 2019-20, GSTR-4 has been filed annually instead of quarterly, simplifying compliance for small taxpayers. The return captures all outward supplies, inward supplies attracting reverse charge, Input Tax Credit on reverse charge supplies, and the tax paid at the applicable composition rate. The due date for GSTR-4 is April 30 of the following financial year.
What Is the Composition Scheme Under GST?
The Composition Scheme is a simplified compliance option available to small taxpayers under Section 10 of the CGST Act. It allows eligible businesses to pay GST at a fixed percentage of their turnover, rather than the regular tax rates, with significantly reduced return filing requirements.
Composition Scheme Eligibility and Rates
| Category | Turnover Limit | Composition Rate | Can Charge GST to Customers |
| Manufacturers | Up to Rs. 1.5 crore | 1% (0.5% CGST + 0.5% SGST) | No |
| Traders (goods only) | Up to Rs. 1.5 crore | 1% (0.5% CGST + 0.5% SGST) | No |
| Restaurants (not serving alcohol) | Up to Rs. 1.5 crore | 5% (2.5% CGST + 2.5% SGST) | No |
| Service providers (Section 10(2A)) | Up to Rs. 50 lakh | 6% (3% CGST + 3% SGST) | No |
Composition dealers cannot make inter-state outward supplies, cannot supply through e-commerce operators, cannot issue tax invoices (they issue bills of supply instead), and cannot claim ITC on their regular purchases. However, they must pay GST on reverse charge supplies and can claim ITC on such reverse charge payments.
GSTR-4 Annual Return: Structure
The annual GSTR-4 return captures the following information:
| Table | Content | Source |
| Table 1-2 | GSTIN and taxpayer name | Auto-populated from registration |
| Table 3 | Tax liability for the year (composition rate on turnover) | Manual entry based on books |
| Table 4 | Inward supplies attracting reverse charge | Invoice details of reverse charge purchases |
| Table 5 | TDS/TCS credit received | Auto-populated from GSTR-7 and GSTR-8 |
| Table 6 | Tax, interest, and late fee are payable and paid | Auto-calculated summary |
| Table 7 | Refund claimed | Excess tax paid claimed as a refund |
| Table 8 | HSN-wise summary | HSN code, description, quantity, and value of outward supplies |
Step-by-Step Filing Process
Online Filing
Step 1. Log in to the GST portal using your GSTIN and password.
Step 2. Navigate to Services, then Returns, then Returns Dashboard. Select the financial year for which you are filing the annual GSTR-4.
Step 3. On the GSTR-4 tile, click Prepare Online. The system displays the return form with auto-populated fields.
Step 4. Enter the inward supply details in Table 4 for all purchases that attract the reverse charge. Provide the supplier’s GSTIN (if registered), invoice number, date, taxable value, and GST amount paid under reverse charge.
Step 5. Review Table 5 for any TDS or TCS credit received during the year. This data is auto-populated from GSTR-7 (TDS) and GSTR-8 (TCS by e-commerce operators) filed by deductors and operators.
Step 6. Verify the tax computation in Table 6. The system calculates the total tax payable at the composition rate on your aggregate turnover for the year. Interest on delayed payments and late fees (if any) are also computed.
Step 7. Complete the HSN summary in Table 8, providing HSN codes, descriptions, quantities, and values for all outward supplies made during the year.
Step 8. Preview the complete return. Submit using DSC or EVC. Generate the challan for any remaining tax payment and complete the filing.
Offline Filing
Step 1. Download the GSTR-4 Offline Utility from the GST portal (available without login under Downloads, then Offline Tools).
Step 2. Open the Excel-based utility and enter all required data, including inward supplies, outward supplies, and HSN summary.
Step 3. Click Validate to check for errors. The utility flags missing or incorrect entries.
Step 4. Click Generate File to create the JSON file.
Step 5. Log in to the GST portal and navigate to the GSTR-4 section. Select Prepare Offline, then Upload, and choose the generated JSON file.
Step 6. After upload, review the auto-populated data on the portal, make any corrections, and submit.
Late Fee Amnesty Scheme
The CBIC has offered amnesty for composition dealers who missed GSTR-4 filing deadlines for earlier periods.
| Period Covered | Filing Window for Amnesty | Late Fee Cap | Nil Return Fee |
| July 2017 to March 2019 (quarterly GSTR-4) | April 1 to June 30, 2023 | Rs.500 per return (Rs.250 CGST + Rs.250 SGST) | Nil (no late fee) |
| FY 2017-18 to FY 2021-22 (annual GSTR-4) | April 1 to June 30, 2023 | Rs.500 per return (Rs.250 CGST + Rs.250 SGST) | Nil (no late fee) |
This amnesty provided significant relief to small businesses that had accumulated substantial late fees due to non-filing. Without amnesty, the regular late fee of Rs. 50 per day (Rs. 25 CGST + Rs. 25 SGST) could accumulate to thousands of rupees per return.
Composition Scheme vs Regular Scheme
| Aspect | Composition Scheme (GSTR-4) | Regular Scheme ([GSTR-1](https://fylflix.wfyi.ai/glossary/understanding-gstr-1-filing-requirements-deadlines-penalties) + [GSTR-3B](https://fylflix.wfyi.ai/glossary/understanding-gstr-3b-due-dates-penalties-filing-requirements)) |
| Return filing frequency | Annual (GSTR-4) + quarterly challan (CMP-08) | Monthly or quarterly |
| Tax rate | Fixed 1% to 6% on turnover | Standard GST rates (5% to 28%) |
| ITC eligibility | No ITC on regular purchases | Full ITC on eligible inputs |
| Inter-state supply | Not permitted | Permitted |
| E-commerce supply | Not permitted | Permitted |
| Invoice type | Bill of supply (no GST charged) | Tax invoice (GST charged) |
| Compliance burden | Low | Higher |
| Buyer ITC impact | Buyer cannot claim ITC on purchases from a composition dealer | Buyer can claim ITC |
Common GSTR-4 Filing Issues
Composition dealers frequently encounter challenges, including confusion between the quarterly CMP-08 payment challan and the annual GSTR-4 return, difficulty in HSN code classification for outward supplies, incorrect reporting of reverse charge inward supplies, accumulated late fees from missed filings in earlier years, and errors in computing turnover for the composition rate calculation.
The quarterly CMP-08 is a self-assessment challan for making tax payments. It is separate from GSTR-4 and must be filed by the 18th of the month following the quarter. Both CMP-08 and GSTR-4 must be filed for full compliance.
Key Terms
• Composition Scheme: A simplified GST compliance option under Section 10 of the CGST Act for small businesses, allowing payment at fixed rates on turnover
• GSTR-4: The annual return filed by composition scheme taxpayers, capturing outward supplies, reverse charge inward supplies, and tax payment details
• CMP-08: The quarterly self-assessment challan filed by composition dealers for making tax payments, due by the 18th of the month following each quarter
• Bill of Supply: The document issued by composition dealers instead of a tax invoice, as they cannot charge GST separately on their supplies
• Reverse Charge Mechanism: The provision where the recipient pays GST instead of the supplier, applicable to composition dealers for specified inward supplies
Filing GSTR-4 for Your Composition Business?
Ensure your annual return is accurate and submitted on time. Use WFYI tools to track your composition scheme compliance, manage CMP-08 payments, and file GSTR-4 without errors.
| Disclaimer: This article is for informational purposes only and does not constitute legal or tax advice. Consult a qualified tax professional for advice specific to your situation. |
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Frequently Asked Questions
Q1: What is the due date for filing GSTR-4?
GSTR-4 (annual return) must be filed by April 30 of the financial year following the year for which the return is filed. For example, GSTR-4 for FY 2024-25 is due by April 30, 2025.
Q2: Can composition dealers claim Input Tax Credit?
No. Composition dealers cannot claim ITC on regular purchases. However, they must pay GST on inward supplies subject to the reverse charge and can claim ITC on such payments by adjusting them against the reverse charge liability.
Q3: What is the difference between GSTR-4 and CMP-08?
CMP-08 is a quarterly self-assessment challan for making tax payments, due by the 18th of the month after each quarter. GSTR-4 is the annual return consolidating all information for the financial year, due by April 30 of the following year. Both must be filed.
Q4: Can a composition dealer make interstate supplies?
No. Composition scheme taxpayers are restricted to intra-state supplies only. They cannot make interstate outward supplies of goods or services. If interstate supply is required, the dealer must switch to the regular scheme.
Q5: Is there still a late fee amnesty available for GSTR-4?
The specific amnesty window (April 1 to June 30, 2023) has closed. Currently, standard late fees of Rs. 50 per day (Rs. 25 CGST + Rs. 25 SGST) apply for delayed GSTR-4 filing. Check the GST portal for any new amnesty notifications.
