GSTR-4: Return for Composition Scheme Taxpayers (2025 Updated Guide)
What is GSTR-4?
GSTR-4 is a GST return that Composition Scheme taxpayers
must file annually. It contains details of:
v
Total sales (outward supplies).
v
Tax paid
at a fixed rate (under the Composition Scheme)
v
Summary of purchases from registered suppliers.
v
Late fees and penalties (if applicable).
Unlike regular taxpayers who file monthly returns,
Composition Scheme taxpayers pay tax at a fixed percentage of their turnover
and file GSTR-4 once a year.
Who Needs to File GSTR-4?
Businesses registered under the GST
Composition Scheme must file GSTR-4.
Eligibility for the Composition Scheme
- Turnover
up to ₹1.5 crore (for most states).
- Turnover
up to ₹75 lakh (for North-Eastern states & Himachal Pradesh).
- Taxpayers
who sell goods or provide restaurant services (manufacturers,
traders, and small restaurant owners).
Service providers (except restaurants) are generally NOT
eligible, except under special conditions (up to ₹50 lakh turnover under
Notification 2/2019-Central Tax).
Who is NOT Eligible for the Composition Scheme?
❌ Businesses engaged in interstate
supply of goods.
❌
Businesses that sell through e-commerce platforms like Amazon/Flipkart.
❌
Service providers (except restaurants and specified cases).
❌
Businesses dealing in tobacco, pan masala, ice cream, or alcoholic liquor.
GSTR-4 Due Date (2025 Updated)
📅 GSTR-4 must be filed
annually by 30th April of the following financial year.
📌 Example:
- GSTR-4
for FY 2024-25 must be filed by 30th April 2025.
What Information is Reported in GSTR-4?
GSTR-4 contains summarized business details for the
entire financial year.
🔹 Total Turnover in
the Financial Year
- Report
the total value of sales (outward supplies).
🔹 Tax Paid Under the
Composition Scheme
- Businesses
under the Composition Scheme pay tax at a fixed rate instead of
standard GST rates.
GST Rates for Composition Scheme (2025)
|
Category |
GST Rate |
|
Manufacturers & Traders |
1% (0.5% CGST + 0.5% SGST) |
|
Restaurants (Not Serving Alcohol) |
5% (2.5% CGST + 2.5% SGST) |
|
Service Providers (under ₹50 lakh turnover) |
6% (3% CGST + 3% SGST) |
📌 Example: If a
trader has ₹50 lakh turnover in FY 2024-25, they will pay ₹50,000 GST (1% of
₹50 lakh).
🔹 Taxpayer's Purchases
from Registered Suppliers
- Report
purchases made from GST-registered suppliers (used for government
records but ITC cannot be claimed).
🔹 Tax Liability, Late
Fees, and Penalties (if any)
- Late
fee of ₹50 per day (₹25 CGST + ₹25 SGST) for delayed filing.
- Maximum
late fee: ₹2,000 (₹1,000 CGST + ₹1,000 SGST).
How to File GSTR-4? (Step-by-Step Guide)
Step 1: Login to GST Portal
🔹 Visit www.gst.gov.in and log in
with your credentials.
Step 2: Select GSTR-4 Annual Return
🔹 Go to the Returns
Dashboard and select GSTR-4 Annual Return for the relevant financial
year.
Step 3: Enter Business Turnover Details
🔹 Enter total turnover
for the financial year.
Step 4: Enter Tax Liability
🔹 Based on your turnover,
the system will auto-calculate tax payable.
Step 5: Make Tax Payment (if due)
🔹 Pay the required tax
amount using electronic cash ledger.
Step 6: Verify and Submit
🔹 Click "Submit",
verify the return, and file using Digital Signature (DSC) or OTP (EVC).
✅ GSTR-4 is now filed
successfully!
Example of GSTR-4 Filing
Example Business Details
🛒 Business Name:
XYZ Traders
📍
Location: Maharashtra
📊
Annual Turnover: ₹1 crore
📦
Business Type: Retail Trader (Composition Scheme)
Tax Calculation (Under 1% GST Rate for Traders)
💰 Total Sales (FY
2024-25): ₹1 crore
💰
GST Payable (1% of ₹1 crore): ₹1,00,000
- CGST
(0.5%): ₹50,000
- SGST
(0.5%): ₹50,000
✅ XYZ Traders will pay ₹1,00,000
as GST for the entire financial year while filing GSTR-4.
Importance of GSTR-4
✔ Simple tax compliance
for small businesses.
✔ Reduced tax rates compared to regular GST
taxpayers.
✔ One return per year instead of monthly
filings.
✔ No need to maintain detailed invoices like
regular taxpayers.
✔ Fixed tax liability, reducing tax calculation
complexity.
Penalties for Late Filing of GSTR-4
🚨 Late Fee:
- ₹50
per day (₹25 CGST + ₹25 SGST).
- Maximum
penalty: ₹2,000 per return.
🚨 Tax Cannot Be
Carried Forward
- If
GSTR-4 is not filed, the next year's GST return cannot be filed.
🚨 Penalty for
Non-Filing
- If
GSTR-4 is not filed for three consecutive years, the GST
registration may be canceled.
Difference Between GSTR-4 and Other GST Returns
|
Feature |
GSTR-4 |
GSTR-1 |
GSTR-3B |
|
Who Files? |
Composition Scheme
taxpayers |
Regular taxpayers |
Regular taxpayers |
|
Filing Frequency |
Annually |
Monthly/Quarterly |
Monthly/Quarterly |
|
Invoice-Wise
Reporting? |
❌ No |
✅ Yes |
❌ No |
|
ITC Available? |
❌
No |
✅
Yes |
✅
Yes |
|
Tax Calculation |
Fixed % of Turnover |
Normal GST rates |
ITC Adjusted |
📌 GSTR-4 is easier and
simpler than GSTR-1 and GSTR-3B!
Conclusion
GSTR-4 is a simple annual return for businesses under
the Composition Scheme.
✔ Filed once a year (by April
30th).
✔ Fixed tax rate based on turnover.
✔ No need for invoice-wise reporting.
✔ Ensures small businesses stay compliant with
GST.
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