As can be understood from social media post of many of the Chartered Accountants and tax consultants that they are facing issue of ‘Adjustment of negative GST liability of previous tax period’ while filing PMT 08 of Q-1 of FY 2021-22 for composition dealers.
Cause of Problem
At the time of filing GSTR 4 of FY 2019-20 or FY 2020-21 or both, you may have missed to put liability figure in table 6 of GSTR 4. You may find the Negative liability statement on GST portal under Services>Ledgers>Negative Liability statement.
According to me following can be the solution:
Let us take up an example that You have liability of Rs. 10000 for FY 2019-20 and Rs. 15000 for FY 2020-21. For Q-1 2021-22 liability is Rs. 3500
1. You should pay Rs. 3500 in cash ledger.
2. Pay Rs. 3500 by DRC 03 for Annual Return for FY 2019-20
3. File PMT 08 by adjusting Rs. 3500 from negative liability of previous period.
4. Keep the track of the liabilities paid by DRC-03.
5. Repeat all above steps till all the liability of FY 2019-20 and FY 2020-21 are not paid by DRC-03 for coming quarters.
The above solution is not the perfect legal solution but the only possible solution at the moment. Department at later stage may ask for interest which can be contested on the ground that we have paid all the tax by PMT 08 on or before the due date and also debited from the cash ledger and we have not claimed the refund of the tax paid at any stage from the government.
The views suggested above are strictly for the knowledge sharing purpose and not a legal opinion.