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Negative Liability Issue in GSTR-4 Filing

 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:

  • 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:

  • 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.