GSTR-4: The Composition Dealer's Annual Return

GSTR 4 is the annual return filed by taxpayers registered under the GST composition scheme. It is not where you pay your tax — that happens quarterly in form CMP-08 — it is where you declare the full year's turnover rate-wise and reconcile it against what those four quarterly payments actually covered. Getting that reconciliation wrong is the single most common failure in composition compliance, and it usually shows up months later as a negative liability balance that silently eats your next quarter's payment.

Who has to file GSTR-4

GSTR-4 is filed by anyone registered under the composition scheme for any part of a financial year. That is a narrower group than most people assume, and it splits into two populations that file the same form:

• Section 10 composition taxpayers — traders, manufacturers and restaurants not serving alcohol, within the goods turnover ceiling. They pay a flat percentage of turnover rather than invoice-level GST.
• Small service providers under the separate services composition route, which carries its own lower turnover limit. The eligibility numbers for both are set out in our guide to the GST composition scheme limit.

Two edge cases matter more than the base rule. First, if you were in the scheme for even part of the year, you file GSTR-4 for that part — withdrawal does not erase the obligation for the months before it. Second, a composition dealer with zero turnover for the whole year still files. Registrations that are dormant but not surrendered are exactly where unpaid late fee accumulates unnoticed, because nobody is looking at the ledger.

Worth being clear on what you do not file. A composition dealer has no monthly GSTR-1 and no GSTR-3B. That trade — lighter filing in exchange for no input tax credit and no GST charged on the invoice — is the whole economic logic of the scheme.

CMP-08 quarterly payment vs the annual return

The most useful mental model is that CMP-08 is a payment instrument and GSTR-4 is a declaration. They are not two versions of the same thing, and confusing them is what produces most of the downstream mess.

	CMP-08	GSTR-4
Nature	Statement-cum-challan — you self-assess and pay	Annual return — you declare and reconcile
Frequency	Quarterly, four times a year	Once, after the financial year ends
Due date	18th of the month following the quarter	After year end — see the section below
Detail level	Summary totals of outward supplies and reverse-charge inward supplies	Rate-wise turnover, inward supplies, and tax paid for the full year
Cash impact	This is where tax actually leaves your bank account	Settles any shortfall or excess against what CMP-08 already paid

The link between them runs one way inside the return. Your four CMP-08 filings auto-populate into GSTR-4 as the tax already paid for the year. What the portal cannot auto-populate is the turnover those payments were supposed to relate to — you have to declare that yourself. When the declared turnover is missing and the payments are present, the arithmetic goes wrong in a very specific direction, which is the subject of the negative liability section below.

The due date, and why it has moved

GSTR-4 is due after the close of the financial year it covers. The rule as originally framed set 30 April following the year end, and Rule 62 was subsequently amended to move the annual GSTR-4 deadline to 30 June. On top of that, the deadline has been extended by one-off notification in several years, and a separate amnesty scheme once waived accumulated late fee for older composition returns.

One deadline is not negotiable and has no extension mechanism: returns cannot be filed at all once more than three years have passed from their original due date. That bar covers GSTR-4 along with the other main returns, and it is enforced by the portal itself rather than by an officer's discretion. A composition dealer sitting on several unfiled years should treat the oldest one as a hard clock, not a backlog item.

What actually goes into the return

GSTR-4 is short by the standards of GST returns, but each table has a distinct job and one of them does far more damage than the rest when skipped.

• Inward supplies — purchases for the year, split between ordinary supplies received and those on which you owe tax under reverse charge. A composition dealer pays reverse charge at the normal rate applicable to that supply, not at the composition rate.
• Summary of self-assessed liability — auto-populated from the four CMP-08 filings. You do not type this; you check it against your own record of what you paid.
• Rate-wise outward supplies and reverse-charge liability — the table you fill in manually, showing turnover broken down by the applicable composition rate. This is the one that determines your declared annual liability.
• Tax payable and paid — the closing reconciliation, comparing declared liability against the CMP-08 payments and producing either a balance to pay or an excess.

Note the asymmetry. The payments come in automatically; the turnover does not. That design is exactly why the next problem exists.

The negative liability trap carried from CMP-08

This is the defining GSTR-4 problem, and it has caught a large number of composition dealers since the annual format was introduced. The mechanism is worth understanding step by step, because the symptom shows up long after the cause.

1. You pay composition tax correctly through four quarterly CMP-08 filings during the year.
2. At year end you file GSTR-4 but leave the rate-wise outward supply table blank — perhaps because the CMP-08 figures already appear elsewhere in the return and it looks like the turnover is accounted for.
3. The portal computes your declared annual liability from that blank table and reads it as zero.
4. It then compares zero liability against the tax you genuinely paid via CMP-08, concludes you have overpaid by the full amount, and pushes that balance into the negative liability statement.
5. That negative balance automatically offsets your CMP-08 payments in following quarters. Your quarterly liability appears to be nil or reduced, so you pay nothing, and you are now underpaying tax without any warning on screen.
6. When the balance runs out or the discrepancy is picked up, you face a demand for the tax that was never actually paid, plus interest running from the original quarterly due dates.

The fix on the way in is simple: never file GSTR-4 with the rate-wise outward supply table empty. Declare the year's turnover at the applicable composition rate even when the resulting tax exactly equals what CMP-08 already collected. The two figures matching is the correct outcome — a zero balance to pay, not a zero liability.

Late fee, including on nil returns

Late fee for GSTR-4 accrues per day of delay under Section 47 of the CGST Act, charged in equal parts under CGST and SGST, and capped at a maximum amount fixed by notification. Two features of that structure trip people up.

The first is that a nil return still attracts late fee. A composition dealer with no turnover for the year is not exempt from filing, and the penalty for missing it is reduced rather than removed: nil returns carry a lower daily rate and a lower maximum cap than returns with liability. Dormant registrations are where this quietly compounds, because nobody with a nil year expects to owe anything and nobody checks the ledger until they need the registration for something else.

The second is that late fee and interest are different charges answering different questions. Late fee answers "was the return filed on time". Interest under Section 50 answers "was the tax paid on time", and accrues on the tax itself from the date it was due. A composition dealer who paid CMP-08 promptly but filed GSTR-4 late owes late fee but no interest. One who under-paid because of a negative liability offset owes interest from each quarterly due date, whatever the filing dates looked like.

Because both the daily rates and the caps have been revised by notification, and because past amnesty schemes have waived accumulated fee for specific periods, verify the amount applicable to your period on cbic-gst.gov.in before you compute a figure or accept one shown to you.

Opting in and out of composition mid-year

Movement in and out of the scheme is form-driven, and each direction has a credit consequence that is easy to miss.

Opting in

You intimate the choice in form CMP-02 before the financial year for which you want the scheme to apply — composition is generally elected for a whole year rather than switched on part-way through. Because you are leaving the credit chain, any input tax credit already sitting on your stock, semi-finished goods and finished goods on the day the scheme starts has to be reversed, which is done in form ITC-03 within the window prescribed after the year begins. Skipping ITC-03 is a common omission and leaves an unreversed credit balance that will not survive scrutiny.

Opting out

Withdrawal is filed in form CMP-04. This is voluntary in one case and compulsory in the other: if you cross the composition turnover ceiling, or start making a supply the scheme does not allow such as an inter-state outward supply, you become ineligible from that date and must file CMP-04 promptly rather than waiting for the year to end. From the effective date you are a regular taxpayer, charging GST on your invoices and filing GSTR-1 and GSTR-3B like anyone else.

Coming out of the scheme reverses the credit position: you can claim input tax credit on stock held on the day before you become a regular taxpayer, by filing form ITC-01 within the prescribed window. The eligibility conditions that apply to that credit are the ordinary ones covered in our input tax credit rules guide.

In either direction, note the filing overlap. A year in which you switched produces a GSTR-4 for the composition months and regular returns for the rest, and the turnover you declare in GSTR-4 must stop at the switch date rather than covering the full financial year. Since composition eligibility is measured on aggregate turnover across every registration under the same PAN, watch that figure through the year — the basis for it is explained in our note on annual aggregate turnover.

What this means if you buy from a composition dealer

If you are on the buying side, GSTR-4 is not your return but the taxpayer type behind it changes how you treat the invoice. A composition dealer issues a bill of supply, not a tax invoice, and cannot show GST as a separate line. There is no tax component for you to claim, so nothing from that supplier will ever appear as credit in your GSTR-2B — and an accounts payable process that assumes every registered supplier passes on credit will book a credit that does not exist.

The practical control is to capture taxpayer type at onboarding rather than discovering it at reconciliation. A GSTIN lookup returns the taxpayer type field alongside legal name, registration status and jurisdiction, so a composition supplier is identifiable before their first invoice is approved. For teams running this at volume, the same check fits into a vendor verification step in accounts payable, and a one-off check can be done with the GSTIN search tool.

One caveat worth holding on to: verification tells you the registration's current status and type, not whether the dealer has filed this year's GSTR-4. Filing behaviour and taxpayer type are separate signals, and only the second is something you can act on at invoice-approval time.

Frequently asked questions

Who has to file GSTR-4?

Every taxpayer registered under the GST composition scheme files GSTR-4 as an annual return. That covers goods traders, manufacturers and restaurants paying tax under Section 10, and small service providers paying under the separate services composition notification. You file it even if you opted out part-way through the year, for the part of the year you were in the scheme.

What is the due date for GSTR-4?

GSTR-4 is an annual return due after the financial year it covers. The rule originally set 30 April following the year end, and Rule 62 was later amended to push it to 30 June. Because this date has been changed by notification and extended more than once, confirm the current deadline on the GST portal or cbic-gst.gov.in for the specific financial year you are filing.

Do I still file GSTR-4 if I had no sales all year?

Yes. A nil year does not remove the filing obligation, and the late fee for a nil GSTR-4 runs at a reduced daily rate with its own lower cap rather than being waived. Composition taxpayers who stop trading but keep the registration active are the group most often caught by this.

Why does my GSTR-4 show a negative liability?

Almost always because table 6 — the rate-wise outward supply table — was left blank. The system then reads your declared annual liability as zero while the tax you already paid through CMP-08 sits in table 5, and books the difference as excess into the negative liability statement. That balance then quietly offsets your next CMP-08 payments, so you underpay without noticing.

What is the late fee for filing GSTR-4 late?

Late fee accrues per day of delay under Section 47, at a lower daily rate for a nil return than for one with liability, and both are subject to a maximum cap set by notification. Interest under Section 50 is separate and applies to tax actually paid late, not to the return being filed late. Check the current fee and cap on cbic-gst.gov.in before computing it yourself.

Do I have to file GSTR-4 if I left the composition scheme mid-year?

Yes. Withdrawal in form CMP-04 ends your composition status from a specific date, but it does not cancel the obligation for the period before that date. You file GSTR-4 covering the composition portion of the year and regular returns such as GSTR-1 and GSTR-3B for the rest.