Negative Liability Issue In Gstr 4 Filing

Composition taxpayers liable to file Form GST CMP-08 for the quarter April-June 2021 cannot submit before its due date of 18th July 2021. They are facing issues due to negative liability appearing in their GSTR-4 on the GST portal. Considering this, the Goods and Services Tax Network (GSTN) has issued an advisory for filing of annual returns by composition taxpayers in the case of negative liability in GSTR-4 and the current article briefs the same.

Note on Form GST CMP-08 and Form GSTR-4

Since FY 2019-2020, composition taxpayers have to pay the liability through Form GST CMP-08 on a quarterly basis while GSTR-4 Return is required to be filed on annual basis after the end of a financial year.

Form GST CMP-08

As mentioned above, form GST CMP-08 is a quarterly challan-cum-statement to be submitted by the composition taxpayer and it is known as the “statement of self-assessed tax”. The statement will consolidate the turnover and tax payable details for the particular quarter and allow the taxpayer to make tax payments. The due date to file Form GST CMP-08 is the 18th of the month following the relevant quarter, and any delay will attract interest for the period of delay at 18% per annum. GST CMP-08 contains four tables as follows:

GSTIN
Legal, trade names, application reference number, and date of filing upon its submission
Summary of self-assessed liability – Contains sales, purchases under reverse charge, tax liability, interest due, and tax payment
Verification

Form GSTR-4

As described above, Form GSTR-4 is the annual return filed by all the composition taxable persons on or before 30th April following a particular financial year. This form provides details of a yearly consolidated summary of turnover of the financial year, tax liability, and tax paid details. The form GSTR-4 contains nine tables, listed down as follows:

GSTIN
Legal and trade name
Aggregate turnover in the last financial year, Application reference number, and date of filing upon its filing
Purchases on which tax is to be paid on a reverse charge basis by the taxpayer
Summary of self-assessed liability, as auto-populated from CMP-08
GST-rate wise summary of sales or purchases attracting reverse charge during that financial year
TDS or TCS credit received
Tax, interest, and late fee liable and paid
GST refund from electronic cash ledger

Note: The due date for filing Form GSTR-4 for FY 2020-2021 was extended up to 31st July 2021.

Note on Negative Liability Statement

Negative Liability Statement refers to a report available on the GST portal that shows any negative summary in Form CMP-08 for the present quarter that will be carried forward to the next quarter for adjustment against the next quarter’s liability. Balance in the Negative Liability Statement can be known at the closure of the financial year upon submission of GSTR-4 of previous years.

Steps to view the Negative Liability Statement

The Negative Liability Statement can be accessed on the GST portal after logging into the GST portal. The tax payer needs to access the GST portal and navigate to the “Services” and Select the “Ledgers” option. Click on the “Negative Liability Statement” button to view the Negative Liability Statement.

Reason of Negative Liability in GSTR-4

The liability of the complete year is required to be declared in GSTR-4 under applicable tax rates. Taxpayers need to provide details in table 6 of Form GSTR-4 mandatorily. In case, there is no liability, table 6 of Form GSTR-4 may be filled up with a ‘0’ value. If no liability is declared in table 6, it is presumed that no liability is required to be paid, even though; the taxpayer may have paid the liability through Form GST CMP-08.

Reason for composition dealers facing negative liability the GSTR-4

Liability paid through Form GST CMP-08 is auto-populated in table 5 of the GSTR-4 for the convenience of the taxpayers. Taxpayers who do not fill up table 6 of GSTR-4 i.e. no liability is declared, even though, the taxpayer may have paid the liability through Form GST CMP-08; since the ‘Tax payable’ in GSTR-4 is computed after reducing the liability declared in GST CMP-08 and then auto-populated in table 5. Thus, if nothing is declared in table 6, then the negative liability entry appears in GSTR-4.

Procedure to Rectify and Steps to Nullify Negative Liability Adjustment

Although the government is yet to provide relief or remedy for this issue, an aggrieved taxpayer may write to the jurisdictional GST officer or raise a ticket on the grievance portal as soon this issue comes to his notice as a first step Apart from the above action, the taxpayer may also consider the immediate solutions mentioned below. The solution varies with the scenario on hand as follows:

If table 6 of GSTR-4 has not been filled due to oversight, a ticket may be raised to nullify the amount available in the negative liability statement.
If there is no liability to be paid during the year, the liability paid through Form GST CMP-08 shall move to a negative liability statement and the same excess amount can be utilized to pay the liability of future tax periods.

Click here to know more about the official advisory issued by the GSTN.

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Frequently Asked Questions

Common questions about Negative Liability Issue in GSTR-4 Filing for 2021.

A Negative Liability Statement refers to a report available on the GST portal that shows any negative summary in Form CMP-08 for the present quarter, which will be carried forward to the next quarter for adjustment against the next quarter's liability. This statement helps taxpayers track any excess tax paid or negative balance that can be adjusted in future tax periods.

Composition taxpayers are facing negative liability in GSTR-4 because the liability paid through Form GST CMP-08 is auto-populated in table 5 of GSTR-4. However, if the taxpayer does not declare any liability in table 6 of GSTR-4, the system assumes no liability needs to be paid, even though the taxpayer may have paid the liability through Form GST CMP-08. This mismatch results in a negative liability appearing in GSTR-4.

Taxpayers can view the Negative Liability Statement on the GST portal by logging in, navigating to the "Services" section, selecting the "Ledgers" option, and clicking on the "Negative Liability Statement" button. This statement will show any negative balance or excess tax paid that needs to be adjusted in subsequent tax periods.

Form GST CMP-08 is a quarterly challan-cum-statement for composition taxpayers to declare their turnover, tax liability, and make tax payments. On the other hand, Form GSTR-4 is an annual return that consolidates the yearly summary of turnover, tax liability, and tax paid details for composition taxpayers.

If taxpayers encounter a negative liability issue in GSTR-4, they can take the following steps: (1) Raise a ticket on the grievance portal or write to the jurisdictional GST officer, (2) If table 6 of GSTR-4 was not filled due to oversight, request to nullify the negative liability amount, (3) If there is no liability for the year, the excess amount paid can be utilized to pay future tax liabilities.

The due date for filing Form GST CMP-08 is the 18th of the month following the relevant quarter, and any delay will attract interest at 18% per annum. The due date for filing Form GSTR-4 for the financial year 2020-2021 was extended up to 31st July 2021.

If Form GST CMP-08 is not filed on time, i.e., by the 18th of the month following the relevant quarter, the taxpayer will be liable to pay interest at the rate of 18% per annum for the period of delay.

Form GST CMP-08 contains details such as the taxpayer's GSTIN, legal and trade names, summary of self-assessed liability, tax payable, and verification. Form GSTR-4 contains information like the taxpayer's GSTIN, annual turnover, purchases under reverse charge, tax liability, tax paid, and GST refund details.

Yes, if there is no liability to be paid during the year, the liability paid through Form GST CMP-08 shall move to the Negative Liability Statement, and the same excess amount can be utilized to pay the liability of future tax periods.

Yes, considering the negative liability issue faced by composition taxpayers in filing GSTR-4, the Goods and Services Tax Network (GSTN) has issued an official advisory providing guidance on filing annual returns by composition taxpayers in case of negative liability in GSTR-4.