It has been observed that while filing the annual returns by composition dealer they are reporting negative liability while filing their GSTR-4.
As per the GST act, composition dealers are required to pay their GST liability via GST CMP-08 on a quarterly basis and GSTR-4 on annual basis.
Composition dealers are required to report their rate-wise GST Liability in their respective GSTR-4.
Table 6 of GST R4 is mandatory in nature and in case there is no liability of the composite dealer for the respective financial year they will have to enter the amount as “zero”.
Where the composite dealer has paid tax under GST CMP-08 and the dealer has not furnished details of liability in table 6 of GSTR-4 it will be presumed that there is no tax liability required to be paid by the dealer.
In such a scenario tax paid under GST CMP-08 becomes the excess tax paid by the composite dealer and the said amount moves in the negative liability statement, which can be utilized for payment of liability in the subsequent tax.
What went wrong while filing GSTR-4?
In GSTR-4, the amount of taxes paid under GST CMP-08 get auto-populated in table 5 of the respective GSTR-4.
The amount of tax payable in GSTR-4 is determined after considering the amount of liability if any paid via a GST CMP-08 and the amount auto-populated in Table 5.
Where the composite dealer has not declared any tax liability under table 6 the excess amount of taxes paid will get reflected as negative liability in GSTR-4.
However, if there is a mistake or an error, or an omission while entering the information in table 6 of GSTR-4 a ticket can be raised to set aside the amount available in the negative liability statement.