Close menu
Toggle menu
View Categories

Understanding GSTR-4: Who Should File and How

6 min read

Table of Contents

What is GSTR-4

What is GSTR-4? #

GSTR-4 is a form. Small businesses use it to file their GST return once a year. This product serves people who participate in the GST Composition Scheme.

This scheme helps small businesses pay tax at a fixed rate. That means they don’t need to deal with complicated tax calculations.

Instead of filing taxes every month like others, you just file once a year. Simple, right?

Why GSTR-4 is Good for Small Business Owners #

Operating a small store or service can be challenging. You likely prefer not to waste time deciphering tax regulations. GSTR-4 assists you by:

  • Allowing you to file just once annually, saving time.
  • Reducing your tax burden compared to standard taxpayers.
  • Eliminating lengthy forms and intricate calculations.
  • Enabling you to concentrate more on your clientele and operations.

Utilizing GSTR-4 within the Composition Scheme can aid in expanding your small enterprise.

Benefits of GSTR-4 #

Fewer Forms to Fill

No requirement exists to complete monthly or quarterly GST forms. You file just once annually — simple.

Simple Tax Rules

You pay a fixed amount based on your yearly sales. No requirement for complex computations.

Lower Tax Rates

The tax rates are small:

  • 1% for traders and makers
  • 5% for restaurants

So, you save money!

Better Planning

Knowing the amount of tax you owe makes managing your finances more straightforward. You can plan for buying stock, paying staff, or growing your shop.

Less Stress

Filing GSTR-4 becomes simpler, particularly with the use of apps. These tools help fill forms, send reminders, and save your data safely.

Important Features of GSTR-4 #

  • Submitted annually
  • Simple form requiring minimal information
  • Tax is based on your overall sales
  • Consistent and reduced tax rates
  • Applicable to businesses with annual earnings below ₹1.5 crore (₹75 lakh in certain states)
  • Permits some services provided they do not surpass 10% of total sales or ₹5 lakh, whichever amount is greater.

Additionally, you must submit a brief form (CMP-08) quarterly. This provides a concise report on your sales and taxes. No need to stress — we’ll assist you with the process as well.

Who Can File GSTR-4? #

You can file GSTR-4 if:

  • You own a shop, make goods, or run a restaurant
  • Your total yearly income is less than ₹1.5 crore (or ₹75 lakh in some places)
  • You don’t sell goods across states
  • You don’t sell through large-scale online stores.

If you meet all this, you can join the Composition Scheme and file GSTR-4.

How to Join the GST Composition Scheme #

You must be part of the Composition Scheme to file GSTR-4.

You can join in two ways:

  • When you apply for GST for the first time, choose the Composition Scheme option.
  • If you already have GST, log in to the GST website (gst.gov.in) and choose the Composition Scheme later in the year.

Once you’re in, you need to follow simple rules like filing the CMP-08 form every three months and the GSTR-4 form yearly.

How to File GSTR-4 (Step-by-Step) #

Fill CMP-08 Every Quarter

Initially, complete this brief form quarterly. You only need to give:

  • Total money your business made
  • Tax you owe

You do not need to give bill-by-bill details. It’s quick!

File GSTR-4 Once a Year

After filing CMP-08 four times a year, you send your GSTR-4 once.

Here’s how:

  • Visit the official GST portal at gst.gov.in
  • Sign in with your username and password
  • Select ‘Returns’ from the ‘Services’ menu
  • Opt for the GSTR-4 form
  • Enter your annual total sales
  • Include tax payment details (from CMP-08)
  • Review all information and submit
  • Pay any additional tax if required
  • Download the final receipt for your records

You finished!

What You Need Before Filing #

Make sure you keep these records safely:

  • Annual sales summary
  • Buying information
  • CMP-08 documentation
  • GST identification
  • Information on services provided (if applicable)

Keeping records helps if you ever need to check back or if someone audits your business.

Fixing Mistakes in GSTR-4 #

Make a mistake on your form? No need to stress!

You have the opportunity to correct it the next time you file. However, only specific types of mistakes permit modifications. Therefore, exercise caution before hitting submit.

Utilizing applications can assist in preventing minor errors. These apps review your data and highlight issues before submission.

Challenges & How to Beat Them #

While GSTR-4 is straightforward, you may encounter some challenges. Let’s look at common problems and tricks to handle them:

  • Unfamiliar with regulations: Stay informed through reliable tax updates or consult your GST advisor regularly.
  • Inaccurate tax figures: Verify all calculations and summaries thoroughly before final submission.
  • Incomplete documentation: Maintain organized records of all sales and purchases to support accurate filing.
  • Errors in return filing: Use professional software to minimize mistakes and ensure compliance.
  • Delayed submissions: Avoid late fees of ₹200 per day by setting automated reminders or using filing apps.
  • Portal accessibility issues: Complete filings well in advance of deadlines to mitigate risks from technical glitches.

Tips for Smooth GSTR-4 Filing #

  • Maintain Proper Records: Securely store all invoices and transactional data digitally or in physical files to ensure readiness during audits or return filing.
  • Set Filing Alerts: Use digital reminders or calendar notifications to stay ahead of GST deadlines and avoid late penalties.
  • Utilize Accounting Software: Use Leverage tools to automate calculations, store data securely, and receive timely filing prompts.
  • Monitor Financial Data Regularly: Periodically reconcile your sales, purchases, and tax liabilities to detect discrepancies early.
  • Seek Professional Guidance: Consult a chartered accountant or GST advisor if you’re unclear about compliance or filing processes.
  • Stay Updated: Follow trusted GST news sources or professional forums to remain informed about rule changes and procedural updates.

FAQ’s: #

Who is eligible to file GSTR-4?

Any small business registered under the GST Composition Scheme with an annual turnover of up to ₹1.5 crore (₹75 lakh in some states) can file GSTR-4.

What is the frequency of filing GSTR-4?

Taxpayers file GSTR-4 annually, but they must submit CMP-08 every quarter to report turnover and tax payments.

What does CMP-08 entail and what is its connection to GSTR-4?

CMP-08 is a quarterly return that summarizes sales and tax paid. We use its data when filing the yearly GSTR-4.

What happens if I miss the GSTR-4 deadline?

Late filing attracts a daily penalty of ₹200, capped based on your tax liability. We advise timely submission to avoid fines.

Can I revise a GSTR-4 after submitting it?

No, GSTR-4 cannot be amended. You must adjust any errors in future returns or communicate them to a tax consultant for resolution.

Conclusion #

GSTR-4 simplifies GST filing for small enterprises, allowing you to pay reduced taxes and submit annually. By using tools and staying organized, you can file on time and focus more on your business.

Be ready, stay focused, and expand your business — an intelligent and straightforward approach!

Don't just learn — Start Smarter Billing Today!
Use Vyapar App to handle billing, stock & payments all in one place.
Explore Vyapar App
Running a business? Do it smartly with Vyapar.
Make bills, track stock, and handle payments in one place.
Download Vyapar Now