GST Negative Liability GSTR 4

Advisory on filing of annual returns by composition taxpayers in case of negative liability in GSTR-4

An Advisory has been issued by the Goods and Services Tax Network (GSTN) on filing of annual returns by composition taxpayers in the case of negative liability in GSTR-4. The advisory has been issued because there are Instances where taxpayers are reporting negative liability appearing in their GSTR-4.

The Composition scheme is a very simple, hassle-free compliance scheme for small taxpayers. It is a voluntary and optional scheme. A composition taxpayer has to pay an amount equal to a certain fixed percentage of his annual turnover as tax to the government.

In Composition scheme no elaborate accounts and records to be maintained and instead of two monthly statements and a return (which a normal taxpayer has to file under GST), he has to file a simple quarterly return in FORM GSTR-4.

Also Read: CBDT grants further relaxation in the electronic filing of Forms 15CA & 15CB

Since Financial Year 2019-20, composition taxpayer has to pay the liability through Form GST CMP-08 on a quarterly basis while GSTR-4 Return is required to be filed on an annual basis after the end of a financial year.

The reason of Negative Liability in GSTR4:

The liability of the complete year is required to be declared in GSTR-4 under applicable tax rates. Taxpayers should fill up table 6 of GSTR-4 mandatorily.

In case, there is no liability, the said table may be filled up with ‘0’ value. If no liability is declared in table 6, it is presumed that no liability is required to be paid, even though, taxpayer may have paid the liability through Form GST CMP-08. In such cases, liability paid through GST CMP-08 becomes excess tax paid and moves to the Negative Liability Statement for utilization of same for subsequent tax period’s liability.

What wrong did the taxpayers do?

Liability paid through Form GST CMP-08 is auto-populated in table 5 of the GSTR-4 for convenience of the taxpayers.

Taxpayers who do not fill up table 6 of GSTR-4 i.e. no liability is declared, even though, taxpayer may have paid the liability through Form GST CMP-08; since the ‘Tax payable’ in GSTR-4 is computed after reducing the liability declared in GST CMP-08 and then auto-populated in table 5. Thus, if nothing is declared in table 6, then the negative liability entry appears in GSTR-4.

How to proceed in case of negative liability: 

If table 6 of GSTR-4 has not been filled due to oversight, a ticket may be raised to nullify the amount available in negative liability statement.

If there is no liability to be paid during the year, the liability paid through Form GST CMP-08 shall move to negative liability statement and the same excess amount can be utilised to pay the liability of future tax periods.

Click here to go to the source of the advisory.


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