GSTR-4

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GSTR-4: Complete Filing Guide for FY 2025-26 and FY 2026-27

GSTR-4 is the annual GST return that every composition scheme taxpayer must file under Section 10 of the CGST Act 2017. It consolidates the full year's outward supplies, inward purchases, reverse-charge liabilities, and reconciles all tax paid through quarterly CMP-08 challan-cum-statements. The due date for FY 2025-26 was 30 April 2026 — if you have not yet filed as of today (23 May 2026), late fees are already accruing at ₹200 per day. The FY 2026-27 GSTR-4 is due by 30 April 2027. Filing correctly is not optional: a persistent default can trigger cancellation of your composition registration and expose you to regular GST liability on your entire turnover.

Who Must File GSTR-4?

Every taxpayer who has opted into the GST Composition Scheme must file GSTR-4 annually. The scheme is available to four broad categories, each with its own turnover ceiling and tax rate:

Special category states include Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, and Uttarakhand.

Who is excluded from composition — and therefore does not file GSTR-4:

• Manufacturers of ice-cream, pan masala, tobacco products, and aerated beverages
• Businesses making inter-state outward supplies (composition dealers can only supply within their state of registration)
• Non-resident taxable persons and casual taxable persons
• E-commerce operators and suppliers who supply through e-commerce platforms that are liable to collect TCS under Section 52

Two constraints that shape the entire return: A composition dealer cannot issue a GST tax invoice — you issue a Bill of Supply and do not collect GST from your customer. You also cannot claim Input Tax Credit (ITC) on any purchase. Both constraints are hard-coded into GSTR-4: there is no ITC column anywhere in the return, and the liability is always computed as a percentage of your outward turnover.

GSTR-4 Due Date for FY 2025-26 and FY 2026-27

GSTR-4 is an annual return. The statutory due date is 30 April following the close of the relevant financial year.

As of 23 May 2026, if your FY 2025-26 GSTR-4 is unfiled, you are 23 days overdue, with a late fee of ₹4,600 already accumulated (23 × ₹200). Each additional day adds ₹200. File as soon as possible — the daily charge does not stop until your return is submitted.

CMP-08 Quarterly Deadlines for FY 2026-27

Between annual filings, composition dealers pay and declare tax quarterly via Form GST CMP-08. Missing CMP-08 also triggers a separate late fee.

CMP-08 vs GSTR-4: Understanding the Relationship

The two forms are frequently confused. Here is how they interact:

Think of CMP-08 as four advance tax instalments and GSTR-4 as the final settlement return that uses your actual audited figures. If GSTR-4 reveals you under-declared in CMP-08, you pay the balance at filing — plus interest at 18% per annum from the relevant quarter's due date.

Table-by-Table Breakdown: What Goes Where in GSTR-4

Tables 1–3: Registration and Auto-Populated Data

Your GSTIN, legal name, and trade name are system-filled. Select the financial year. The portal auto-pulls your aggregate turnover for the preceding financial year (FY 2024-25, for a FY 2025-26 return) from your earlier GST filings.

Table 4: Inward Supplies Including Reverse Charge

This is the most error-prone section. You must categorise every rupee of purchases:

• 4A — From registered suppliers, not under RCM: Your purchases from GST-registered vendors where you are not liable for reverse charge. These are reported for information; no ITC is available.
• 4B — From unregistered suppliers under Section 9(4): Supplies of specified categories received from unregistered persons attract RCM.
• 4C — Import of services: Any foreign service — cloud software, consultancy, SaaS subscriptions from overseas — attracts RCM at the applicable rate under Section 5(3) of the IGST Act.
• 4D — Specified RCM services under Section 9(3): The CBIC-notified list includes Goods Transport Agency (GTA) freight (where the GTA has not opted for forward charge), advocate and legal services, director's remuneration in companies, and security services from unregistered persons.

The critical point: RCM liability must be paid from your own cash ledger. There is no offset. The composition levy paid through CMP-08 cannot be used against RCM dues.

Table 5: CMP-08 Summary

All four quarterly CMP-08 payments for the year are auto-populated. Verify each quarter's declared taxable turnover and tax paid against your own records and cash ledger entries. Any discrepancy here will cascade into Table 6.

Table 6: Tax Payable vs. Tax Paid

The portal computes annual tax payable on outward supplies at your composition rate, adds RCM liability from Table 4, and deducts total CMP-08 payments. The resulting balance payable must be deposited through the cash ledger before you can submit.

Table 7: TDS and TCS Credits

If a buyer has deducted TDS under Section 51, or if you supply through an e-commerce operator who has collected TCS under Section 52, those credits appear here and are offset against your liability.

Table 8: Tax, Interest, Late Fee, Penalty

The final outflow summary — broken down by tax, interest (18% p.a. on any shortfall), late fee, and penalty. This is the amount you must ensure is available in your cash ledger before filing.

Reverse Charge Mechanism: The Silent Liability Composition Dealers Miss

Composition registration does not exempt you from reverse charge obligations. You still owe GST on the purchase side for notified categories — and because you cannot claim ITC, every rupee of RCM is a dead cost.

Common RCM triggers for composition dealers in practice:

1. GTA / freight charges — If you pay a transport company that has not opted for the GST forward-charge mechanism, you owe RCM at 5% on the freight amount. On a ₹5 lakh annual freight bill, that is ₹25,000 of RCM liability.
2. Advocate and legal fees — Any fee paid to an individual advocate or a law firm (partnership) for business-related legal services attracts 18% RCM. A ₹50,000 legal retainer costs you an additional ₹9,000 in RCM.
3. Import of services — Every foreign SaaS subscription, overseas consultant fee, or cloud computing payment to a foreign entity is liable to IGST under RCM. This catches many small traders and restaurant operators by surprise.
4. Security services from unregistered persons — Common for shops hiring security guards through unregistered agencies.

Practical step before filing: Pull your complete expense ledger for the year. Identify every freight bill, legal invoice, foreign subscription, and unregistered-vendor payment. Compute the RCM on each. If any of these were missed in CMP-08, declare them in Table 4 of GSTR-4, pay the tax, and pay interest from the relevant quarter's CMP-08 due date.

Step-by-Step: Filing GSTR-4 on the GST Portal

1. Log in to unknown node using your GSTIN and credentials (username and password).
2. Go to Services → Returns → Annual Return.
3. Select the Financial Year (e.g., 2025-26) and click Search. The GSTR-4 tile appears.
4. Click Prepare Online.
5. Verify Table 5 (CMP-08 summary) — all four quarters' data are auto-populated. Cross-check each figure against your filed CMP-08 acknowledgements and bank payment receipts.
6. Complete Table 4 — enter inward supply details: registered-supplier purchases, RCM on unregistered purchases, imports of services, and Section 9(3) RCM items.
7. Complete Table 6 — enter outward supply turnover for the year at the applicable rate head (1%, 5%, or 6%). The portal auto-calculates annual tax and shows the balance payable after CMP-08 credit.
8. Pay any balance — if tax is still payable, click Create Challan, deposit via net banking or NEFT/RTGS into the cash ledger, and confirm the credit before proceeding.
9. Preview the return — generate the PDF draft. Review every figure before proceeding.
10. File using DSC or EVC — companies must use a Digital Signature Certificate (DSC). Individuals, HUFs, partnerships, and LLPs can use EVC (a one-time password sent to your registered mobile and email).
11. Save the ARN — once submitted, the portal generates an Acknowledgement Reference Number (ARN). This is your proof of compliance. Download and archive it immediately.

Worked Example: Full-Year Computation for a Hardware Trader

Profile: Rajan Hardware Store, Karnataka — composition trader category, GSTIN active throughout FY 2025-26.

Annual outward turnover: ₹85,00,000 | Rate: 1% | Annual tax liability: ₹85,000

CMP-08 quarterly payments (FY 2025-26):

Annual composition levy = fully covered by CMP-08. Balance payable = ₹0.

Missed RCM — GTA freight in Q2: Rajan paid ₹60,000 to a transporter (not opted for forward charge). RCM @ 5% = ₹3,000 was not deposited in Q2.

At GSTR-4 stage:

• RCM tax payable: ₹3,000
• Interest @ 18% p.a. from 18 Oct 2025 (Q2 CMP-08 due date) to 30 Apr 2026 (195 days):

₹3,000 × 18% × 195 ÷ 365 = ₹289 (rounded)

GSTR-4 filed on 15 May 2026 — 15 days after the 30 April deadline:

• Late fee: ₹200/day × 15 days = ₹3,000
• Cap check: 0.25% × ₹85,00,000 = ₹21,250 per Act; total cap = ₹42,500. The ₹3,000 is well within the cap — the daily rate applies in full.

Total additional outgo from a 15-day delay and one missed RCM entry:

A single missed freight ledger check and a two-week delay cost Rajan ₹6,289 on an otherwise clean return. Had he filed on 30 April and identified the GTA RCM in time, only the ₹289 in interest would have been unavoidable — and even that would have been lower had Q2's RCM been paid in October.

Late Fee, Interest, and the Real Consequence of Non-Filing

Late Fee Structure

Under Section 47(2) of the CGST Act (which governs annual returns), the late fee for GSTR-4 is:

• ₹100 per day under CGST + ₹100 per day under SGST = ₹200 per day
• Maximum cap: 0.25% of your aggregate turnover in the state under each Act = 0.50% total

For a composition dealer with ₹30 lakh annual turnover in one state, the cap is ₹15,000 (reached after 75 days of delay). For a dealer at the maximum ₹1.5 crore threshold, the cap is ₹75,000 (reached after 375 days). CBIC has periodically issued amnesty notifications waiving or capping fees for specific periods — always check the latest CBIC circular before paying to ensure you are not over-remitting.

Interest on Tax Shortfall

Where your GSTR-4 reveals that total CMP-08 payments fell short of actual annual liability, interest at 18% per annum applies on the shortfall amount, calculated from the due date of the relevant quarter's CMP-08.

Cancellation of Composition Registration

This is the gravest risk. Under Section 29(2)(b) of the CGST Act, if a composition dealer fails to furnish returns for three consecutive tax periods (i.e., three quarters of CMP-08 non-filing), the Proper Officer may cancel the GSTIN. Once cancelled:

• You lose composition benefits retrospectively.
• You become a regular taxable person — liable for GST at full rates on all turnover from the cancellation date.
• You cannot claim ITC on stock in hand or capital goods (since you never maintained ITC records as a composition dealer).
• Demands, interest, and penalty under Section 73 or 74 follow.

The late fee on a delayed annual return is painful but finite. Cancellation of registration converts a ₹200/day exposure into a potentially crore-rupee demand. This is not a hypothetical — tax officers have initiated cancellation proceedings against composition dealers who stopped filing CMP-08 when business slowed, without formally opting out of the scheme.

Common Mistakes That Generate Notices and Demands

1. CMP-08 vs GSTR-4 turnover mismatch CMP-08 is typically filed on estimated figures; GSTR-4 uses final book figures. A material difference — say, CMP-08 total declares ₹60 lakh but GSTR-4 shows ₹85 lakh — triggers automated GSTN scrutiny. Reconcile your month-by-month sales against CMP-08 declarations before filing GSTR-4, and if a shortfall is found, pay the difference with interest proactively.

2. Missing all reverse-charge purchases The most common audit finding. Freight bills, legal retainers, and foreign software subscriptions are the three most frequently missed RCM categories. Add a pre-GSTR-4 checklist: scan GL accounts for "freight outward," "legal and professional," and "foreign subscription" line items.

3. Incorrect aggregate turnover for scheme eligibility "Aggregate turnover" under Section 2(6) CGST Act includes taxable supplies, exempt supplies, nil-rated supplies, and exports — but excludes inward supplies on which RCM is paid and the GST component itself. Dealers who include only taxable sales understate aggregate turnover, which may artificially suppress the eligibility threshold. Conversely, including GST in the turnover figure overstates it. Either error can have consequences for the next year's scheme eligibility.

4. HSN summary errors or omissions For GSTR-4, you must report HSN (Harmonised System of Nomenclature) codes for goods and SAC (Service Accounting Code) for services. As per Notification No. 78/2020-CT, a 4-digit HSN is mandatory for businesses with turnover up to ₹5 crore. Since all composition dealers fall below ₹1.5 crore, 4-digit HSN is the standard. Filing without HSN entries or lumping all goods under a single catch-all code invites deficiency notices.

5. Filing GSTR-4 as nil when there were actual supplies Some dealers treat GSTR-4 as a formality and file nil, assuming all relevant disclosure was in CMP-08. The return cross-checks against GSTR-2A (auto-populated purchase data from suppliers' GSTR-1 filings), banking analytics, and e-invoice data. A nil GSTR-4 where supplier-side data shows ₹70 lakh of purchases is an immediate red flag.

6. Not opting out formally after crossing the turnover threshold If your aggregate turnover crosses ₹1.5 crore during FY 2025-26 or FY 2026-27, you must file Form GST CMP-04 to withdraw from the composition scheme. You cannot simply stop filing CMP-08 and switch to regular returns without a formal withdrawal. Filing GSTR-4 for a period when you were legally ineligible compounds the problem.

7. Ignoring GSTR-4A The GST portal auto-populates a GSTR-4A for composition dealers — a read-only auto-drafted return compiled from your suppliers' GSTR-1 filings. While you do not file GSTR-4A, it is valuable as a cross-check: compare your own purchase records against GSTR-4A before finalising Table 4 of GSTR-4 to catch any missed invoices from registered suppliers.

Key Takeaways

• FY 2025-26 GSTR-4 was due 30 April 2026. As of 23 May 2026, 23 days of late fees (₹4,600) have already accrued. If you have not filed, do so today — the meter is running at ₹200 per day.
• CMP-08 is not a substitute for GSTR-4. Quarterly CMP-08 payments are advance deposits; GSTR-4 is the annual settlement. Every rupee underpaid in CMP-08 attracts 18% interest when you square up in GSTR-4.
• Reverse-charge liability does not disappear under the composition scheme. GTA freight (where the transporter has not opted for forward charge), legal fees, and foreign services are the three categories most frequently missed in practice. Check your expense ledger before filing.
• Late fee cap is 0.50% of annual turnover (0.25% per Act under Section 47(2) CGST Act). For most composition dealers with modest turnovers, this cap provides a finite ceiling — but registration cancellation risk is unlimited and far more damaging.
• Three consecutive quarterly non-filings (CMP-08) can trigger GST registration cancellation under Section 29(2)(b), converting your composition liability into a full regular-GST demand with no ITC relief — a disproportionately severe outcome.
• Aggregate turnover must include exempt and nil-rated supplies, not just taxable sales. Miscomputing this figure affects both scheme eligibility and the maximum late fee cap applicable to you.
• Start the GSTR-4 process two weeks before 30 April each year — not on 29 April. Reconcile CMP-08 quarter-by-quarter, audit your RCM exposure, verify your HSN summary, and confirm the cash ledger balance before generating the final preview.