Goods and Services Tax is an indirect form of taxation that greatly simplifies Indian tax law. GSTR4 serves as the GST return for compound dealers, a scheme offered under the GST scheme for certain categories of taxpayers. GST declarations for construction plans should now be submitted annually, but prior to 2018, they were submitted quarterly. In this article, we will take a look at compound dealer GST annual revenue, composition plan, and why it matters.
1. What is GSTR4?
2. Things to Know About the GST Return for the Composition Scheme
3. Eligibility Criteria for the Composition Scheme under the GST regime
4. Composition Scheme under the GST Regime
5. GST returns for composition dealers
What Is GSTR4?
GSTR4 serves as a GST return for train dealers. Unlike regular taxpayers, who file up to three returns per month, parts dealers only need to file one return per year on the GSTR4 form only. Under normal circumstances, the last date to file a GST Competition Declaration is April 30 following the evaluation year. For example, taxpayers are required to submit their GST returns for the 2019-2020 composition plan by 30 April 2020. This year, however, the deadline has been extended due to the unexpected coronavirus pandemic. Under the GST scheme, all taxpayers who choose a layout plan must submit a GSTR4.
Things to Know About the GST Return for the Composition Scheme
1. The GST Portal now offers an offline Excel-based tool to help taxpayers file their GSTR4 annual reports on time. The ability to submit GST editorial declarations was added to the GST portal last August.
2. The GST filing deadline for construction plans has been extended from July 15, 2020, to August 31, 2020. This will be the new filing date for the GSTR4 report for the 2019-2020 tax year.
3. The deadline for submitting Form CMP02 to select how 2020-21 will be structured has been extended until June 30, 2020. This applies to registered taxpayers. Subject to both Section 10 of the CGST Act and anyone who has consented to the CGST Notice posted on March 7, 2019.
4. The ITC03 submission deadline has been extended to July 31, 2020, due to restrictions imposed due to the COVID-19 pandemic.
5. Taxpayers can file challans and CMP08 reports for Q1 2020 by July 7, 2020.
6. Taxpayers should be very careful when filing their annual GST reports for compound dealers. This is because they cannot be changed once submitted through the portal. Therefore, it is recommended that these dealers seek legal advice before filing a GSTR4.
7. Late submission of GST reports for compound dealers will incur a late fee of INR 200 per day prior to submission. However, the maximum fine that can be imposed is INR 5,000
Eligibility Criteria for the Composition Scheme under the GST Regime
Companies with an annual income of INR 1.5 million or more are eligible to apply for the constituent scheme. The threshold was originally set at INR 1 million per year, but CBIC later changed it to INR 1.5 million in 2019. Businesses should consider the revenues of all businesses using the same PAN card when calculating their total annual revenue. The government will consider gross sales when considering whether a business is suitable for a layout plan. In addition, only the following types of businesses can choose the configuration scheme in GST mode;
3. Restaurants that do not serve alcohol
The following individuals cannot opt for the Composition Scheme under the GST regime;
Composition Scheme under the GST Regime
Now let’s briefly review a few things to remember about Composition schemes
1. Complex dealers are required to pay taxes according to the reverse billing mechanism, where applicable. The shipping rate is the rate at which the dealer must pay tax on goods and services. Therefore, the tax rate under this scheme cannot be used to pay taxes under the reverse charge mechanism.
2. Composition dealers cannot avail of any input tax credit. Better known as ITC for the tax they paid under the reverse charge mechanism.
3. Such dealers do not have to pay the IGST since they have to pay only the CGST and SGST for the import of services or goods from an unregistered dealer under the reverse charge mechanism.
4. Complex dealers are required to pay a percentage of their total sales tax. And certain purchases are subject to tax according to the reverse charge mechanism. So total goods and services tax = supply tax + tax on B2B transactions (reverse charge) + tax on B2B purchases from unregistered dealers + tax on import services.
5. Unlike regular taxpayers, composition dealers do not have to keep detailed records of all financial transactions. Because the dealer pays the tax out of their pocket, you need to issue an invoice, not a tax invoice. These dealers cannot recover the GST paid to the customer.
GST Returns for Composition Dealers
Complex dealers are required to file the following declarations under the GST scheme:
1. Taxable individuals must pay tier taxes via a challan-cum-statement from 2019 onwards in the form of CMP-08.
2. From the assessment year 2019-2020, the frequency of filing GSTR4 has been changed from a quarterly to an annual basis.
3. GSTR-9A submissions continue to apply with some exceptions for the 2017-2018 and 2018-2019 evaluation years.