Thursday, April 11, 2024

GSTR-4: The Annual Return for GST Composition Scheme Taxpayers

The introduction of the Goods and Services Tax (GST) in India represented a transformative shift in how businesses assess and pay taxes. Among its numerous provisions, the GST framework includes a simplified tax payment method known as the composition scheme. This article delves into the specifics of the GSTR-4 form, an annual return required for taxpayers enrolled in this scheme, including the process of preparing and filing it using Tally software.

What is the GST Composition Scheme?

The composition scheme under GST is designed for small taxpayers to ease the burden of compliance. It allows eligible businesses to pay GST at a fixed rate of their turnover and simplifies tax filings by reducing the frequency of returns. The scheme is available to businesses with an annual turnover up to ₹1.5 crore—₹75 lakhs for the North-Eastern states and Himachal Pradesh.

Understanding GSTR-4

GSTR-4 is the annual return form that must be filed by taxpayers who opt for the GST composition scheme. Unlike regular taxpayers who file monthly returns, composition dealers are required to file only one return annually.

Due Date:
The due date for filing GSTR-4 is April 30th following the end of the financial year. For example, for the financial year 2023-2024, the GSTR-4 must be filed by April 30, 2024.

Penalties for Late Filing:
There is a late fee of ₹200 per day (₹100 under CGST and ₹100 under SGST) of delay, capped at the amount of tax due. This penalty underscores the importance of timely compliance.

Detailed Breakdown of GSTR-4 Components

1. GSTINGST Identification Number of the taxpayer.
2. Legal NameLegal name of the registered person.
3. Trade NameTrade name, if any, different from the legal name.
4. Aggregate TurnoverPrevious Financial Year’s turnover.
5. Turnover DetailsDetails of the turnover (taxable supplies, exempt supplies, exports, and advances received for which invoices have not been issued).
6. Inward SuppliesPurchases made from other registered and unregistered suppliers.
7. Tax PaidDetails of tax paid at the composition rate.
8. HSN/SAC-wise SummarySummary of goods and services supplied, as per Harmonized System Nomenclature (HSN) or Service Accounting Code (SAC).
9. AmendmentsAny corrections or amendments to details reported in the returns of earlier quarters.

Filing GSTR-4 Using Tally

Procedure to File GSTR-4 in Tally:

  1. Update Tally Version: Ensure that you are using the latest version of Tally that supports GSTR-4 filing.
  2. Prepare Data: Regularly record all transactions related to sales, purchases, and expenses in Tally throughout the year. Composition dealers need to maintain accurate records of their sales, purchases, and other financial transactions.
  3. Generate GSTR-4 Report: Navigate to 'GST' -> 'GSTR-4' in Tally. The software will compile the transactions for the entire financial year and display the draft of the GSTR-4.
  4. Verify the Auto-filled Data: Review all the auto-filled data for accuracy. Tally aggregates the data based on transactions recorded and provides a summary for verification.
  5. Correct Errors: Make any necessary adjustments or corrections within Tally to ensure that the details are accurate.
  6. Export Data: Once the data is verified and confirmed, the GSTR-4 report can be exported from Tally to the JSON format, which is required for filing on the GST portal.
  7. Upload to GST Portal: Login to the GST portal and upload the JSON file prepared by Tally. Once uploaded, review the data on the portal and submit the GSTR-4.

Importance of Filing GSTR-4

Filing the GSTR-4 is crucial for composition scheme taxpayers for several reasons:

  • Compliance: Ensures compliance with GST laws and avoids penalties.
  • Record Keeping: Serves as a formal record of the taxpayer’s business transactions over the fiscal year.
  • Tax Liability: Helps in calculating the final tax liability and ensures that the taxpayer pays the correct amount of tax.


The GSTR-4 form is a critical tool for both taxpayers under the GST composition scheme and for the tax authorities to ensure compliance and proper tax collection from small businesses. By simplifying the tax filing process and reducing the compliance burden, the scheme aims to support small businesses and integrate them into the formal economy. However, it is crucial for eligible taxpayers to understand the specifics of GSTR-4 to avoid penalties and ensure smooth financial operations. Understanding and using this simplified tax mechanism effectively can significantly benefit small businesses, fostering growth and compliance. Using tools like Tally to file returns can further simplify the process, ensuring accuracy and timeliness in submissions.