How to File GSTR-4 Annual Return for Composition Dealers

To file GSTR-4, the annual return for composition dealers, log in to the GST portal, reconcile the tax already paid through your four quarterly Form GST CMP-08 statements against your actual annual turnover, complete the inward and outward supply tables, settle any balance tax or interest, and file using a Digital Signature Certificate or Electronic Verification Code before the 30 June due date. GSTR-4 applies to every taxpayer registered under the composition scheme at any point in the financial year, carries no government filing fee of its own, cannot be revised once submitted, and most dealers complete the online steps in a single sitting once their CMP-08 records are reconciled. Missing the due date triggers a late fee capped at ₹2,000 for a normal return or ₹500 for a NIL return, plus 18% per annum interest on any unpaid tax.

This guide covers eligibility, the annual filing process, the exact late fee and interest exposure, live portal navigation, and the edge cases that most often trip up composition dealers, such as mid-year scheme switches and multi-state registrations. It does not cover the mechanics of registering for GST itself or the composition scheme opt-in process, which are addressed in the linked registration guide below.

What Is GSTR-4 and Who Must File It?

GSTR-4 is the annual return that every GST-registered composition dealer must file under Section 39(2) of the CGST Act, 2017, read with Rule 62 of the CGST Rules. It consolidates a full financial year's outward turnover, inward supplies, and the tax already self-assessed and paid through four quarterly Form GST CMP-08 statements into one annual filing submitted on the GST portal.

The obligation attaches to the registration, not to actual trading activity. Any business holding an active composition registration under Section 10 of the CGST Act for even part of a financial year must file GSTR-4 for that year, whether the business traded actively, made only a handful of sales, or recorded no supplies at all. A composition dealer who switched to the regular scheme partway through the year still files GSTR-4 for the months the composition option applied, in addition to whatever regular returns follow from the date of the switch.

GSTR-4 vs the Earlier Quarterly GSTR-4

Before FY 2019-20, composition dealers filed a quarterly GSTR-4 alongside their tax payment, which combined the return and the challan into one quarterly step. From FY 2019-20 onward, the government split this into the current two-part structure: a quarterly Form GST CMP-08 for the tax payment, and an annual GSTR-4 for the actual return. A dealer researching older content online should treat any reference to a quarterly GSTR-4 as describing the pre-2019 process, not the current one.

The distinction matters because the two-part structure changes what "on time" actually means for a composition dealer. Under the pre-2019 quarterly system, a single missed quarter meant a single missed filing. Under the current system, a dealer can file every CMP-08 on time all year and still miss the separate GSTR-4 deadline months later, simply by treating the annual return as an afterthought once the quarterly payments are done. Building both deadlines into the same compliance calendar, rather than tracking them as unrelated events, is the single most effective way to avoid an avoidable late fee.

GSTR-4 for a Newly Registered Composition Dealer

A business that obtains GST registration partway through a financial year and opts for the composition scheme from the date of registration files GSTR-4 for the part-year period it was registered, not for the full twelve months. Turnover, tax paid through CMP-08, and any late fee exposure are all computed only for the months the GSTIN was active, and the ₹1.5 crore or ₹50 lakh eligibility threshold is applied on a proportionate basis to the part of the year the registration existed. A dealer in this position should still file GSTR-4 by the standard 30 June due date; the part-year registration shortens the reporting period, not the filing deadline itself.

Composition Scheme Eligibility: Turnover Limits and Conditions

Eligibility for the composition scheme, and therefore the GSTR-4 obligation that follows from it, depends on turnover thresholds set out under Section 10 of the CGST Act. These limits differ by the type of supply and, for goods suppliers, by the state of registration.

Composition Scheme for Service Providers

Service providers were originally excluded from the composition scheme, since Section 10 in its early form covered only goods suppliers and restaurants. Section 10(2A) of the CGST Act, introduced by the CGST (Amendment) Act, 2018, and operationalised through Notification No. 2/2019-Central Tax (Rate) dated 7 March 2019, extended a parallel composition option to service providers and mixed suppliers with turnover up to ₹50 lakh in the preceding financial year, effective from FY 2019-20. A goods-focused composition dealer can also supply services up to 10% of turnover or ₹5 lakh, whichever is higher, without losing eligibility under the standard Section 10(1) scheme.

This 10% or ₹5 lakh allowance is often overlooked, and it matters directly for GSTR-4 preparation, since a goods trader who also earns incidental service income, such as installation or repair charges alongside a product sale, needs to check this ratio before assuming the composition option remains valid for the year. Crossing the allowance mid-year does not retroactively cancel the composition registration for earlier months, but it does affect eligibility going forward and should be flagged during the annual GSTR-4 reconciliation rather than left unaddressed.

Who Cannot Opt for the Composition Scheme

Manufacturers of ice cream, pan masala, and tobacco or tobacco substitutes, businesses making inter-state outward supplies, casual taxable persons, non-resident taxable persons, and suppliers of goods not taxable under GST, such as alcohol for human consumption, are barred from the composition scheme regardless of turnover. A registered person considering the switch should also review our comparison of the composition scheme against the regular scheme before opting in, since the restriction on inter-state supply in particular affects businesses selling across state lines.

CMP-08 vs GSTR-4: The Two-Part Compliance System

A recurring point of confusion is treating CMP-08 and GSTR-4 as interchangeable, when they serve entirely different functions within the same annual compliance cycle. CMP-08 is a quarterly payment mechanism; GSTR-4 is the once-a-year return that reconciles those payments against actual turnover.

Documents and Information Needed Before Filing GSTR-4

Gathering the right records before opening the GSTR-4 tile on the GST portal prevents the most common cause of filing delays: discovering a missing figure midway through the online form. Most of what is needed already exists in the year's CMP-08 filings and regular bookkeeping; the task is less about creating new records and more about pulling scattered figures into one reconciliation working paper before the portal session begins.

1. All four quarterly CMP-08 statements filed for the year, along with payment proof for each
2. Books of accounts showing total outward turnover for the year, broken down by applicable tax rate
3. Records of inward supplies liable to reverse charge, including any notified categories of goods or services
4. Import of services made during the year, computed on a self-invoice basis
5. Purchase records from unregistered suppliers, where such purchases occurred during the year
6. TDS or TCS credit details reflected in the electronic cash ledger, where a deductor or e-commerce operator withheld tax
7. Bank account or net banking access to pay any balance tax, interest, or late fee before filing

GSTR-4 Due Date and the Annual Compliance Calendar

GSTR-4 follows a fixed annual rhythm built around the four CMP-08 quarters that precede it. Composition dealers who plan around this calendar, rather than treating each filing as an isolated event, rarely face a late fee.

As of 29 July 2026, Rule 62 of the CGST Rules, as amended by Notification No. 12/2024-Central Tax dated 10 July 2024 following the 53rd GST Council meeting, sets the GSTR-4 due date at 30 June, extended from the earlier 30 April deadline. Composition dealers should check the "What's New" section of the GST portal before each filing rather than assuming a due date carries over unchanged from the previous year, since compliance calendar dates have moved more than once since the scheme's introduction.

Step-by-Step Process to File GSTR-4 on the GST Portal

The process below follows the same ten steps set out in the HowTo summary above, with the detail needed to execute each one correctly.

Step 1: Confirm GSTR-4 Applicability and Gather CMP-08 Records

Confirm your GSTIN carried a composition registration for any part of the financial year, since this alone creates the GSTR-4 obligation, independent of how much you actually traded. Pull together all four quarterly CMP-08 filings and their payment proofs before starting the annual return.

Step 2: Reconcile CMP-08 Filings Against Your Books

Total the tax reported across the four CMP-08 filings and compare it against your books of accounts and turnover records for the same period. Flag any quarter that was filed late, filed as NIL when it should not have been, or understated turnover, since these gaps surface directly in the annual reconciliation.

Step 3: Log In and Open the GSTR-4 Annual Return Tile

Log in to the GST portal and navigate to Services, then Returns, then Annual Return, then select the relevant financial year to reach the GSTR-4 tile. Choose the online preparation option for straightforward filings, or download the offline utility if you have a large number of inward supply line items to enter.

Step 4: Complete Table 4: Inward Supplies

Enter inward supplies from registered suppliers, supplies liable to reverse charge, purchases from unregistered persons, and any import of services made during the year. This table establishes the purchase-side position that feeds into the overall annual tax computation, even though composition dealers cannot claim credit on it.

Step 5: Verify Table 5: Auto-Populated CMP-08 Summary

Check that the portal's auto-populated summary of tax paid through your four CMP-08 filings matches your own reconciliation from Step 2. A mismatch at this stage almost always traces back to a CMP-08 filed with the wrong figures rather than a portal error, so investigate your own records first.

Step 6: Enter Table 6: Annual Outward Supply Turnover

Report total outward turnover for the year, broken down by applicable tax rate, net of advances adjusted and any credit or debit notes issued during the year. This is the figure against which the CMP-08 payments in Table 5 are ultimately reconciled to determine any balance due.

Step 7: Complete Table 7: TDS and TCS Credit Received

Where a government deductor withheld tax deducted at source, or an e-commerce operator collected tax at source against your supplies, confirm the credit reflects correctly here and in your electronic cash ledger before proceeding to the final computation.

Step 8: Compute and Pay Any Balance Tax, Interest, or Late Fee

Review the portal's computation of any shortfall between the annual liability in Table 6 and the quarterly payments already made in Table 5, along with interest at 18% per annum under Section 50 and any applicable late fee. Pay the balance through the electronic cash ledger before attempting to file.

Step 9: Preview, Verify, and File GSTR-4

Use the Preview Draft GSTR-4 option to generate a PDF of the complete return and check every table against your reconciliation working papers one final time. File using your Digital Signature Certificate or Electronic Verification Code once satisfied, since GSTR-4 cannot be revised after this point.

Step 10: Download the Acknowledgement and Note the ARN

Download the filed GSTR-4 and the acknowledgement carrying the Application Reference Number (ARN), and store both alongside your CMP-08 filings and reconciliation notes for the statutory record-retention period.

Live Portal Navigation: Exact Menus and Buttons for GSTR-4

The menu labels below reflect the current GST portal layout at gst.gov.in. Portal labels are occasionally re-worded during releases, so treat the sequence as a navigation reference rather than a permanent screenshot.

Late Fee for GSTR-4: Structure and Calculation

Late fee for a delayed GSTR-4 is not an open-ended daily charge; it is capped under a specific amending notification, which materially limits the downside of a late filing compared to the pre-2021 structure.

Notification No. 73/2017-Central Tax dated 29 December 2017, as amended by Notification No. 21/2021-Central Tax dated 1 June 2021, waives GSTR-4 late fee in excess of ₹250 CGST plus ₹250 SGST where the tax payable for the year is nil, and in excess of ₹1,000 CGST plus ₹1,000 SGST for every other case, applicable from FY 2021-22 onward. At the daily accrual rate of ₹50 combined, a NIL return reaches its ₹500 cap after 10 days of delay, and a non-NIL return reaches its ₹2,000 cap after 40 days, after which the late fee stops increasing regardless of how much longer the return remains unfiled. Estimate your own exposure with our GST late fee calculator before assuming the worst case applies.

Consider a worked scenario: a composition trader with ₹1,800 in unpaid annual tax files GSTR-4 25 days after the 30 June due date. The late fee accrues at ₹50 per day for 25 days, working out to ₹1,250, which sits below the ₹2,000 cap, so the full ₹1,250 is payable rather than the capped amount. If the same dealer had instead delayed by 45 days, the daily accrual would cross ₹2,000 before the 40-day mark, so only the capped ₹2,000 applies regardless of the extra 5 days of delay. Interest under Section 50 at 18% per annum runs separately on the ₹1,800 unpaid tax for the full delay period in both scenarios, since the late fee cap does not limit interest exposure.

Interest and Other Consequences of Late or Incorrect Filing

Late fee is only one part of the cost of a delayed GSTR-4. Unpaid tax itself continues to attract interest, and a pattern of non-filing carries consequences beyond the return itself.

A composition dealer whose GSTR-4 remains pending long enough to trigger e-way bill blocking under Rule 138E faces an operational disruption that reaches beyond the tax department, since suppliers and transporters cannot generate the e-way bills needed to move goods. Clearing pending CMP-08 filings restores e-way bill access faster than waiting for the annual GSTR-4 window to file everything at once.

Verifying Inward Supplies Against GSTR-2A and GSTR-2B

Although a composition dealer cannot claim input tax credit, the inward supply figures entered in Table 4 of GSTR-4, particularly purchases liable to reverse charge and any import of services, are worth cross-checking against the auto-populated GSTR-2A and GSTR-2B statements available on the GST portal. These statements are generated from the outward supply data your registered suppliers report in their own GSTR-1 filings, and while a composition dealer does not use them for credit reconciliation the way a regular taxpayer does, they remain a useful independent check on whether your own purchase records match what suppliers have actually reported against your GSTIN.

A gap between what a supplier reported against your GSTIN and what you have recorded in your own books is not, by itself, a compliance failure for a composition dealer, since no credit claim depends on the match. It is, however, a signal worth investigating before filing GSTR-4, particularly where the gap involves reverse-charge-liable purchases, since understating reverse charge liability in Table 4 can understate the annual tax computation carried through to Table 6 and Table 8. Reviewing GSTR-2B once before finalising the annual return adds a layer of verification that a manual review of physical invoices alone can miss.

Filing a NIL GSTR-4 Return

A composition dealer who made no outward supply and had no inward supply liable to reverse charge during the entire financial year can file a NIL GSTR-4. The obligation still exists purely because the GSTIN carried an active composition registration during the year, regardless of whether any transaction actually occurred. The GST portal recognises this scenario directly, offering a simplified NIL filing path once the dealer confirms no supply-related data needs to be entered in Tables 4 and 6.

Dealers Who Never Made Any Supply During the Year

A dormant composition GSTIN with zero transactions for the full year does not fall outside the filing requirement. Each quarter still needs a NIL CMP-08, and the year still needs a NIL GSTR-4 by 30 June, since the trigger for both filings is the existence of an active composition registration, not the presence of turnover. Dealers planning to keep a GSTIN dormant for an extended period should weigh the ongoing filing burden against simply applying for cancellation instead, since a dormant registration with no compliance activity offers no practical advantage over a properly surrendered one.

Edge Cases That Complicate GSTR-4 Filing

Most composition dealers follow the straightforward annual cycle described above without incident, but a handful of situations sit outside the standard single-GSTIN, full-year pattern and need their own handling.

Composition-to-Regular Scheme Switch Mid-Year

A dealer switching from composition to the regular scheme, either voluntarily through Form GST CMP-04 or because turnover crossed the threshold, still owes a GSTR-4 covering the composition months of that financial year. Regular returns, such as GSTR-1 and GSTR-3B, begin from the date the switch takes effect, and the two obligations run in parallel for that transition year rather than replacing each other. A business planning this switch should review our guide on filing GSTR-3B online to understand the regular-scheme return that follows the composition period.

Multi-State Composition Dealers: Separate GSTIN per State

A business operating in more than one state under the composition scheme holds a separate GSTIN in each state, and GSTR-4 must be filed independently for each registration. Turnover, tax paid, and late fee exposure are all computed at the individual GSTIN level, not aggregated across the business's PAN, so a delay in one state's filing has no bearing on another state's compliance status.

Dealers Who Opted Out Mid-Year Due to a Voluntary Decision

A dealer who files Form GST CMP-04 to voluntarily withdraw from the composition scheme partway through a year, rather than being forced out by a turnover breach, follows the identical GSTR-4 obligation for the composition period as a mandatory switch. The distinction between voluntary and mandatory withdrawal affects the timing of the CMP-04 filing itself, not the downstream GSTR-4 requirement.

Negative Liability and Carry-Forward Adjustment via CMP-08

A quarter can occasionally show a negative liability in CMP-08, typically where an advance was adjusted or the previous quarter's payment exceeded what was actually owed. Rather than triggering an immediate refund, this negative balance carries forward and is set off against the following quarter's CMP-08 liability, reducing the amount payable at that point.

When GSTR-4 is prepared at year-end, this running carry-forward is reconciled against the full year's actual turnover, and any residual negative balance still outstanding after the fourth quarter is accounted for in the annual computation rather than left as a standalone credit. Composition dealers with a recurring pattern of negative liability quarters should review whether their quarterly turnover estimates are consistently set too high, since this is the most common underlying cause, and a persistent overestimate across three or four consecutive quarters can also distort the reconciliation figures that eventually populate Table 5 of the annual return.

Illustration: a composition trader paying tax at the 1% goods rate reports Q1 turnover of ₹6,00,000, a liability of ₹6,000, but had already deposited ₹8,000 in Q1 after correcting an earlier under-payment from the prior year, leaving a negative liability of ₹2,000 to carry into Q2. Q2 turnover of ₹5,00,000 creates a fresh liability of ₹5,000; the ₹2,000 carry-forward automatically offsets part of it on the portal, so only ₹3,000 is payable in cash for Q2. Q3 turnover of ₹7,00,000 creates a liability of ₹7,000 with no carry-forward remaining, paid in full, and Q4 turnover of ₹5,50,000 creates a liability of ₹5,500, also paid in full. At year-end, the four quarters together show total turnover of ₹23,50,000 against a combined annual liability of ₹23,500, matching exactly the ₹8,000 plus ₹3,000 plus ₹7,000 plus ₹5,500 already deposited through CMP-08, so Table 8 of GSTR-4 shows no balance tax due, only the reconciliation itself needing to be recorded.

ITC Reversal and Compliance When Opting Out of Composition

Switching out of the composition scheme, whether voluntarily or because turnover crossed the eligibility threshold, changes a dealer's input tax credit position in the opposite direction from switching in. A regular taxpayer opting into composition must reverse credit already claimed on stock and capital goods; a composition dealer opting out becomes eligible to claim credit it previously could not access.

Claiming ITC on Opting Out of Composition

On ceasing to be a composition dealer, a business can claim input tax credit on inputs held in stock, inputs contained in semi-finished and finished goods, and capital goods, as they stood on the day immediately preceding the date the composition scheme ceased to apply, subject to the conditions and reductions specified under Rule 40 of the CGST Rules. This is declared through Form GST ITC-01, generally within 30 days of becoming liable to pay tax under the regular scheme, and a Chartered Engineer's certificate may be required where capital goods credit is claimed. Composition dealers preparing for this transition may also find our guide on managing inward supplies through the GST Invoice Management System useful, since IMS review becomes part of the monthly routine only after the switch to the regular scheme.

Illustration: a composition dealer opts out of the scheme on 1 October, becoming a regular taxpayer from that date and filing a GSTR-4 for only the six-month composition period running from 1 April to 30 September. Inputs held in stock as of 30 September carry a GST component of ₹20,000, fully eligible for credit under Rule 40. A capital good bought two quarters earlier, with an original tax component of ₹24,000, has that credit reduced by five percentage points for every quarter or part-quarter already elapsed since its invoice date; at two quarters elapsed, the reduction works out to 10%, leaving an eligible capital goods credit of ₹21,600. The combined claim of ₹41,600, made up of ₹20,000 on stock and ₹21,600 on capital goods, is declared through Form GST ITC-01 within 30 days of becoming liable to pay tax under the regular scheme, that is, by 30 October, entirely separate from the GSTR-4 already covering the earlier composition period.

Common Mistakes While Filing GSTR-4

Beyond the mechanical reconciliation covered in the step-by-step process, a handful of recurring habits create avoidable friction for composition dealers every filing season.

1. Treating CMP-08 as the Complete Filing Obligation

A number of dealers stop tracking compliance once all four CMP-08 statements are filed, forgetting that GSTR-4 is a distinct, mandatory return with its own due date and its own late fee exposure. Paying quarterly tax on time does not substitute for filing the annual return.

2. Filing GSTR-4 Before Reconciling All Four Quarters

Rushing to file GSTR-4 without first totalling and comparing the four CMP-08 filings against actual books often surfaces a mismatch only after the return is already submitted, at which point the fix runs through DRC-03 rather than a simple correction.

3. Assuming a Dormant GSTIN Has No Filing Obligation

A composition GSTIN with no transactions still requires NIL CMP-08 filings each quarter and a NIL GSTR-4 at year-end. Businesses that let a dormant registration lapse into non-filing accumulate late fees on filings they assumed were unnecessary.

4. Missing the Balance Payment Before Attempting to File

The GST portal will not accept a GSTR-4 filing while a computed balance tax, interest, or late fee remains unpaid in the electronic cash ledger. Dealers who leave this payment for the last moment often discover a banking delay costs them the filing window they had planned for.

Post-Filing Compliance Obligations

Filing GSTR-4 closes the annual return for that financial year, but a few obligations continue afterward and matter most if a departmental query arrives later.

Retain Records for the Statutory Period

Under Section 36 of the CGST Act, every registered person must retain accounts, records, and supporting documents, including CMP-08 filings, GSTR-4 acknowledgements, and turnover working papers, for 72 months (6 years) from the due date of furnishing the annual return for the relevant financial year.

Voluntary Correction Through DRC-03

Where a genuine error surfaces in an already-filed GSTR-4, such as an understated turnover figure discovered during a later review, the resulting shortfall and applicable Section 50 interest can be paid voluntarily through Form DRC-03 rather than waiting for a departmental notice. Our guide on filing a voluntary payment through Form GST DRC-03 covers this process in full. A voluntary payment made before a notice is issued is generally viewed more favourably than a correction made only after scrutiny begins.

Responding to a Late Fee or Assessment Notice

If the department issues an order for unpaid late fee, interest, or tax based on a discrepancy in a filed GSTR-4, a composition dealer disputing the demand can pursue an appeal through the process covered in our guide on filing a GST appeal in Form APL-01, provided the statutory time limits for appeal are met.

Cost of Filing GSTR-4 in 2026

Filing GSTR-4 itself carries no government fee, so the real cost of the process is almost entirely the cost of a delay or an unreconciled figure. The table below separates the direct costs of correct, on-time filing from the indirect costs of getting it wrong.

For composition dealers who prefer to outsource the annual reconciliation rather than manage CMP-08 tracking in-house, professional charges cover quarterly reconciliation, annual return preparation, and filing, quoted as a service fee separate from any government dues. IncorpX provides assistance for composition scheme return filing and quarterly reconciliation; listed professional charges cover end-to-end assistance, and any applicable government or statutory fees are charged separately at actuals.

Related Resources

• How to Register for the GST Composition Scheme: the CMP-02 opt-in process for a new financial year.
• GST Composition Scheme vs Regular Scheme: a deeper comparison to help decide which scheme fits your business.
• GST Composition Scheme Benefits and Limits: eligibility conditions and turnover thresholds explained further.
• How to File GSTR-9 Annual Return Online: the equivalent annual return for regular taxpayers, for contrast.
• How to Amend GST Registration Details in Form REG-14: updating registration details, including a scheme change.
• How to Revoke a Cancelled GST Registration: the process if non-filing has already led to cancellation.
• GST Late Fees and Penalties Rate Chart 2026: a broader reference across all GST return types.
• GST Late Fee Calculator: estimate the exact late fee for a delayed CMP-08 or GSTR-4 filing.

Summary

Filing GSTR-4 on time means reconciling all four quarterly CMP-08 statements against actual annual turnover well before the 30 June due date, rather than treating the annual return as a fresh exercise disconnected from the quarterly payments already made. The late fee structure under Notification No. 73/2017-Central Tax, as amended by Notification No. 21/2021-Central Tax, caps exposure at ₹2,000 for a normal return and ₹500 for a NIL return, but interest at 18% per annum on unpaid tax and the risk of e-way bill blocking make early filing worthwhile regardless of the capped late fee. Composition dealers switching schemes mid-year, filing across multiple states, or managing a dormant GSTIN should treat GSTR-4 as a standalone obligation tied to registration status, not to actual trading activity. Businesses that build quarterly reconciliation into their regular routine, rather than a single June scramble, are the ones this annual deadline barely inconveniences.