GSTN Publishes Advisory for GST Composite Taxpayers on Negative Liability

An advisory with respect to the composition taxpayers under the GST system has been issued on April 30, 2022, by the Goods and Services Tax Network (GSTN).

From FY 2019-20 onwards, composition taxpayers are required to pay the liability using form GST CMP-08 on a quarterly basis, whereas they are required to file returns in Form GSTR-4 on an annual basis after the end of an FY.

It has been said in the issued advisory that it is necessary to declare the liability for the whole year in GSTR-4 under the relevant tax rates.

Taxpayers should mandatorily fill in Table 6 of GSTR-4. If there is no obligation, the said table can be filled with the value ‘0’. If no obligation is reported in Table 6, it is assumed that there is no need to pay any liability even if the taxpayer has paid the liability with Form GST CMP-08.

If this happens then the liability which has been paid via Form GST CMP-08 will be considered as an additional tax payment and gets transferred to the negative liability statement so it can be utilized for the following tax period liability.

The advisory also underlined that the paid liability using Form GST CMP-08 will be automatically fetched in table 5 of the form GSTR-4 to make things easier for the taxpayers. Taxpayers

Taxpayers who do not fill Table 6 of GSTR-4 mean no liability has been stated, even though the taxpayer has made payment for the liability in GST CMP-08; As ‘tax payable’ in GSTR-4 is calculated after deducting the liability mentioned in GST CMP-08, which is automatically fetched in Table 5. Thus, if a taxpayer has not declared anything in Table 6 then an entry of negative liability will appear in Form GSTR- 4.

The advisory further says that “In the past, a lot of tickets were received on the Helpdesk for reducing the negative liability from the Negative Liability Statement and the same was being done. For the convenience of the taxpayers, the amount available in the negative liability statement has been debited for all taxpayers. It has been noticed that some taxpayers had utilized the amount available in the negative liability statement for paying the liability to file a statement in the form GST CMP-08 or GSTR-4 of the subsequent financial year.”

“In such cases, the amount utilized out of the negative liability statement has been debited in the cash ledger. Though such liability should have been paid by depositing the amount through challan in some cases, the amount had not been deposited by the taxpayers. For the taxpayer who has deposited the amount in the cash ledger, the debited amount has been adjusted whereas in case the amount of liability has not been deposited through challan, the balance in the cash ledger becomes negative. In such cases, the taxpayers are advised to deposit the past liability through challan of equal amount urgently,”

Information about made debits has been sent to such taxpayers through the email provided on the portal. If the liability has been paid by adding it to the next year’s liability, It can be claimed as a refund with an application in form GST RFD-01.