GSTR-4: Complete Guide for Composition Scheme Taxpayers

What Is the GST Composition Scheme?

The GST Composition Scheme is a simplified tax payment mechanism designed for small businesses. Instead of filing multiple monthly or quarterly returns and computing GST at regular rates on each outward supply, composition taxpayers:

• Pay GST at a fixed percentage of turnover
• File quarterly CMP-08 statements and one annual GSTR-4
• Are exempt from regular invoice-level return filing such as GSTR-1 and GSTR-3B
• Cannot collect tax from customers
• Cannot issue tax invoices
• Cannot claim Input Tax Credit

The trade-off is clear: the scheme significantly reduces compliance burden, but it restricts ITC and certain types of business operations.

Composition Scheme Tax Rates - FY 2025-26

Key Rate Rules

• Rates are applied on turnover under the composition framework and not as regular GST invoice-wise tax.
• Composition taxpayers cannot collect tax from customers - the tax is borne out of their turnover.

A person under the standard composition scheme cannot make inter-State outward supplies ; such supplies make the person ineligible for that scheme.

Turnover Limits by Category

Special Category States with ₹75 Lakh Limit

Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, and Uttarakhand.

The turnover limit is checked on the basis of aggregate turnover of the preceding financial year. If the preceding year's turnover is within the applicable threshold, the taxpayer may opt for the composition scheme subject to all other conditions.

Who Is Eligible to File GSTR-4?

GSTR-4 is to be filed by taxpayers who were under the composition scheme during the financial year, including eligible persons paying tax under the relevant composition framework.

Typical categories include:

Eligibility to file GSTR-4 follows from being under composition for the relevant period. Eligibility to opt into composition should always be checked separately under the applicable legal conditions.

Who CANNOT Opt for the Composition Scheme?

The following categories cannot opt for the standard composition scheme:

A taxpayer already registered as a regular GST taxpayer may opt for the composition scheme if eligible, but cannot simultaneously continue under both regular and composition treatment for the same registration.

In practice, if a taxpayer becomes ineligible for composition, the person must shift to the regular scheme from the date of ineligibility and start complying with the return structure applicable to regular taxpayers.

GSTR-4 Due Date - FY 2025-26 and 2026-27

The due date position must be checked carefully before publishing a fixed year-specific deadline. The 53rd GST Council recommended changing the due date of GSTR-4 from 30 April to 30 June following the end of the financial year. 

Historical Due Date Position

3-Year Filing Window

GSTR-4 cannot be furnished after 3 years from the due date. The practical last date depends on the legally effective due date applicable to that year.

CMP-08 vs GSTR-4 - Key Differences

CMP-08 and GSTR-4 are two separate compliance requirements. One does not replace the other.

A composition taxpayer generally pays tax during the year through CMP-08. GSTR-4 consolidates the annual position and may still result in tax, interest, or late fee payable if there is a mismatch or short payment.

Key rule: GSTR-4 cannot be filed unless all CMP-08 statements for the relevant financial year have been filed.

CMP-08 Quarterly Due Dates - FY 2025-26 and 2026-27

FY 2025-26 CMP-08 Due Dates

FY 2026-27 CMP-08 Due Dates

Late CMP-08 filing or delayed payment leads to interest at 18% per annum on unpaid or short paid tax from the due date to the actual date of payment.

GSTR-4 Format - Section-by-Section Breakdown

GSTR-4 is structured into the following broad sections:

Part I - Basic Details

Part II - Table 4 - Inward Supplies

Table 4 captures inward supplies received during the year.

Composition taxpayers cannot claim ITC , but they must still report inward supply information and discharge tax under reverse charge where applicable.

Part III - Table 5 - Summary of Self-Assessed Tax Paid via CMP-08

This table is auto-populated based on CMP-08 statements filed during the year.

Part IV - Table 6 - Tax Payable and Tax Paid

This table works out the tax liability based on turnover and other relevant details, including reverse charge where applicable.

Part V - Table 7 - TDS and TCS Credit

Part VI - Table 8 - Tax, Interest, Late Fee and Other Dues Payable

This is the final computation table showing tax, interest, late fee, and other dues payable or refundable.

Part VII - Verification

Return is verified through DSC or EVC, as applicable.

Prerequisites Before Filing GSTR-4

Before filing GSTR-4, the following should be ready:

The GST portal specifically links GSTR-4 filing to prior CMP-08 compliance.

How to File GSTR-4 Online - Step-by-Step

Step 1 - Log in to the GST Portal

Visit gst.gov.in and log in using your GST credentials.

Step 2 - Navigate to Annual Return

Go to: Services → Returns → Annual Return

Step 3 - Select Financial Year

Under the annual return section, choose the relevant financial year and continue.

Step 4 - Select GSTR-4

Open the GSTR-4 annual return tile and choose the filing mode.

Step 5 - Read the Instructions

Read the portal instructions and confirm that all applicable CMP-08 statements have already been filed.

Step 6 - Fill or Verify the Required Sections

Complete or verify:

Table 4 - inward supplies
Table 5 - auto-populated CMP-08 data
Table 6 - tax computation
Table 7 - TDS / TCS credits, where applicable

Step 7 - Compute Liability

Use the portal's compute functionality to calculate tax, interest, late fee, and related figures.

Step 8 - Pay Additional Liability, If Any

If any amount remains payable, generate the GST payment challan through the portal, deposit the amount into the Electronic Cash Ledger using the available payment modes, and then offset the liability before filing.

Step 9 - Preview the Return

Download or preview the summary and verify all figures carefully.

Step 10 - Submit and Verify

Submit the return and verify it using:

DSC for entities where required, or
EVC where permitted

Step 11 - Download ARN

After successful filing, download the ARN and keep it as filing proof.

How to File GSTR-4 Using Offline Utility

Taxpayers can also use the offline tool made available on the GST portal. The broad process is:

• Download the GSTR-4 offline utility from the GST portal
• Fill in the required details offline
• Generate the JSON file
• Upload the JSON through the GSTR-4 filing screen
• Complete liability payment, if any
• Submit and verify the return

The offline utility is useful where inward supply details are relatively larger and manual portal entry is inconvenient.

Can GSTR-4 Be Revised?

No. GSTR-4 cannot be revised after filing. That is why pre-filing review is important. If an error is noticed after filing, the taxpayer may need to make appropriate adjustments in subsequent compliance or deal with the matter through the jurisdictional process, depending on the nature of the mistake.

Best practice is to preview the return and match it with books, CMP-08 data, and tax payment records before submission.

GSTR-4 Late Fee and Penalty

The current late fee structure for annual GSTR-4 is:

This is lower than the late fee structure that used to apply under the old quarterly GSTR-4 regime.

Late Fee Calculation Example

Suppose a composition taxpayer with tax liability files GSTR-4 72 days late.

Late fee = 72 × ₹50 = ₹3,600
But the maximum cap applies, so the payable late fee becomes ₹2,000.

That breaks into:

CGST component = ₹1,000
SGST component = ₹1,000

Tip: Waiver notifications have been issued in some periods in the past, so current portal / notification position should always be checked before payment.

Interest on Late Tax Payment

Interest and late fee are separate.

The key distinction is this:

• Late fee applies to delay in filing the annual return.
• Interest applies to delayed payment of tax, including delayed or short paid CMP-08 liability.

Example

If tax of ₹50,000 relating to a CMP-08 quarter is paid 42 days late, interest would be:

₹50,000 × 18% × 42 / 365 = about ₹1,036

Benefits and Limitations of the Composition Scheme

Benefits

BUSY's GST billing and invoicing software generates composition-compliant Bills of Supply automatically, replacing tax invoices with the correct document type for composition taxpayers.

This scheme works best where compliance simplicity matters more than ITC availability.

How to Opt Into the Composition Scheme - Form CMP-02

A person already registered under GST and wanting to shift to the composition scheme must file Form CMP-02 on the GST portal, subject to eligibility.

Process

• Log in to gst.gov.in  
• Go to: Services → Registration → Application to Opt for Composition Levy
• Select the relevant financial year
• Submit Form CMP-02
• File Form ITC-03, where applicable, to reverse ITC on stock when shifting from regular to composition

Deadline

For an existing registered person, CMP-02 should be filed before the beginning of the financial year for which the option is intended, subject to the portal's current timeline / functionality. The commonly followed position is filing by 31 March for the next financial year.

Illustrative Timeline

New registrants can opt for composition at the time of registration if eligible.

Conclusion

GSTR-4 is the annual compliance return for taxpayers under the GST Composition Scheme. It works together with quarterly CMP-08 filings, not as a substitute for them. Composition taxpayers should treat CMP-08 as the periodic tax payment mechanism and GSTR-4 as the annual consolidation and reconciliation return. For actual filing, always verify the live due date, portal utility, and any notification-based extension before submission.

BUSY's GST accounting software tracks composition scheme turnover, auto-calculates tax at the applicable flat rate, and helps prepare CMP-08 and GSTR-4 data without manual spreadsheet work.