GST Composition Scheme is for small businesses, that do not have high turnover. Compliances are less under Composition Scheme when it compared with normal GST Compliance. The purpose of this scheme is to promote ease of doing business. The tax rates under Composition Scheme are very less in comparison to normal GST rates. GSTR-4 and GSTR-4A are the GST Return filing specifically for the composition dealers. Composition Scheme under GST Law is a scheme for small business holders whose annual turnover is either 1.5 Crores (Normal State) or 75 Lakhs (Special States). Basically, it is only for some special category of taxpayers. GST Return under Composition Scheme has to be filed annually. Earlier it was filed quarterly. The scheme will be applicable intrastate. It will definitely reduce the unnecessary burden of high tax on small business holders. In short, we can say that this scheme is a helping hand of the government towards small businesses.

What is GST Return under Composition Scheme?

GST Return under Composition Scheme is a government filing that needs to be done annually. Through GST Return filing government asses your business which helps the government in many different ways. Such as making future policies, collecting financial data, doing different surveys, etc. GST Return filing under Composition Scheme is a source of government that provides information about the sales of any business. It is an obligation of return filing compliance which saves the filer from heavy penalties. 

Who can file GST Return under Composition Scheme?

1. Manufacturer, Traders, and Restaurant Services providers, whose annual turnover is 1.5 Crores (Normal States) or 75 Lakhs (Special States). 

2. Other service providers, whose annual turnover is 50 lakhs. 

3. Small Business Holders whose business is intrastate and also fulfills the turnover Conditions.

Different types of GST filing

1.      GST CMP 08, which needs to be filed quarterly. Quarterly means four times in a year. Here the business holder only have to show the sales summary and amount of tax. GST CMP 08 will help the authorities in assessing the sales summary of the business holder. GST Return Filing under Composition Scheme will not disclose the purchase summary which is an advantage to the business holders under the ambit of the GST Composition Scheme.

2.      GSTR-4 is the filing that needs to be done by the business holder annually. Annually means only one time in a year. 

3.      GSTR-4A is automatically generated once the supplier furnishes all the details against the GSTIN of the Composition Dealer. 

Process of filing GST Return under Composition Scheme

1.      Visit the government GST Portal and login.

2.      Fill in all the details which will be asked after logging in. 

3.      After that you have to generate Challan.

4.      Lastly payment of the Tax. 

NIL GST Return Filing

Even if a sale is NIL, one has to file GST Return under Composition Scheme. It does not depend on one’s sale. It is a mandatory process that needs to furnish in every situation. This is basically for the assessment of your business by the government. Therefore even if sales are NIL one has to file NIL GST Return. The process is almost the same for both NIL GST Return Filing and Normal GST Return under Composition Scheme. 

Benefits of GST Return Filing

Following are the benefits of filing GST Return under the Composition Scheme –

For the Filer

1.      Obligation of return filing compliance will be fulfilled.

2.      Saves the filer from penalties of not furnishing the compliances.

3.      Will help in calculating the correct Tax liability.

For the Government

1.      Help in the assessment of the business.

2.      Helps in the collection of Financial Statics of the organization.

3.      Source of inspection.

4.      Helpful in future policymaking.

5.      Assists in the making of procedures for future Compliances.

6.      Better tracking of evasion can be done.

7.      A very good and helpful mode of obtaining information from Tax Payers.  

Penalties in case of non-filing of GST Return

As per the Central Board of Indirect Taxes and Custom (CBIC)^[1], non-filing of GST Return can result in heavy penalties. These penalties are unavoidable. Non-filing of GST Return cans even leads to-

1.      Attachment of bank account.

2.      Cancellation of GST Registration. 

As per the Goods and Services Tax Act, a late payer of the GST Return Filing has to pay the following penalties- 

1.      INR 100 for the Central Goods and Services Tax per day.

2.      INR 100 for the State Goods and Services Tax per day. 

3.      Total Rupees INR 200 for each day till the delay continues.

4.      However the maximum limit is INR 5000.

5.      Apart from the above penalties, an interest of 18% per annum in case of delay in filing of GST Return online is also levied. 

Conclusion

GST Return filing under Composition Scheme is an unavoidable process. It is not only helpful for the government but also helps the filer, only if the filing is done properly to avail input tax credit. On the first reading GST Return Filing under Composition Scheme seems very easy. But it is a complicated process. It needs to be done carefully. Once you complete the process you cannot make changes. Therefore it needs expert guidance. Also, non-filing can lead to heavy penalties which can give one’s business a noticeable loss. Even the late filing can prove fatal for one’s business. Hence expert advice is suggested while filing the GST Return.

Read our article:All You Need to Know about Eligibility Criteria for GST Registration