Arjuna (Fictional Character): Krishna, government has made changes in GSTR-4. But which taxpayer needs to file GSTR-4?

Krishna (Fictional Character): Arjuna, GSTR-4 is a quarterly return. Every registered dealer who have opted for composition scheme have to file quarterly return before 18th of the next quarter. Composition scheme is applicable for those taxpayers whose turnover is below Rs 1 Cr and ITC cannot be availed by by them. Now changes have been made in the GSTR-4.

Arjuna: Krishna, What are the changes in case of sale transactions?

Krishna: Arjuna,

The above changes are applicable from 01st January 2018.

1. Earlier the manufacturers, other suppliers (retailers) and the restaurants who have opted in the composition scheme were required to make payment of tax on the turnover which was total of outward supply of Taxable, Exempt and Nil rated goods, but now from 1/1/18 the other suppliers (retailers) only are required to pay tax on the Taxable outward supplies of goods only.

2. W.e.f 01st January 2018- Rate of tax in case of Manufacturers has been changed to 1%, earlier it was 2%.

3. As per new GSTR-4 return Sales turnover of July to Dec can be amended in the return of Jan to March quarter this will help for earlier correction of earlier mistake/ omissions.

4. There is no change in details required of tax on outward supplies made in sales in GSTR-4.

5) The invoice wise details of only purchases which attracted reverse charge is required to be given. The details of purchases from registered dealer have been postponed and are not required to be given as per the press release issued on 17.04.18

6. In new format of GSTR-4 amendments to details provided earlier would be allowed, in the earlier utility this option to amend was not provided. This is a welcome change, thus July to Dec 2018 figures can be revised.

7. If any details in case of imports have been mentioned incorrect in earlier return then the amendment of the same can be made in the new GSTR-4 utility.

8. Now changes in debit /credit note for July to Dec are also allowed in the new utility.

9. Earlier the reason for issuing a debit note or credit note was required to be given like correction in invoice, sales return, post-sale discount etc. But now no reasons for issuing debit/credit note need to be mentioned in new utility of GSTR-4.

10. Purchase Accounting: Taxpayer opting for composition scheme are not allowed to claim ITC of the taxes paid on the inward supplies due to which many taxpayer do not maintain the detailed records like tax rate, tax amount etc . However, in GSTR 4 they are required to provide  details of purchases bill-wise and tax rates wise .Many taxpayers feel this an additional burden on them

Arjuna: Krishna, What lesson must a composition dealer should take from this?

Krishna: Arjuna, There have been many significant changes made in GSTR-4 for composition dealers. In case of other GST taxpayer bill wise details of sales are required to be given in GSTR-1 but it’s reverse in case of composition taxpayer, they have to give in GSTR-4 now bill wise details of purchases. Hence this will increase transparency in the system. This will also create difficulty for small taxpayer.

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  1. Sandeep Rathi says:

    Composition Dealer is allowed to provide service up to Rs. 5 lacs
    What rate of tax willbe leived thereon
    0 % , 1 % or normal 18 %
    Please guide

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January 2021