Businesses registered under the Composition Scheme need to file GSTR-4, which is an annual tax return. This return includes crucial details of sales and purchases, tax liabilities, and taxes paid during the financial year.
Although businesses have the option to submit GSTR-4 manually via the official GST website, a significant number opt for GST software for its ease, speed, and accuracy.
Who Should Submit GSTR-4?
- Small business owners using the Composition Scheme
- Manufacturers who fall under this scheme
- Retailers who are part of the program
- Restaurants that do not serve alcohol
GSTR-4 Deadline
The deadline for filing GSTR-4 is usually June 30th after the financial year ends, though this may be altered by government announcements or extensions.
Comparing GST Software to Manual Filing
Below is the comparison of manual filing and GST software:
GSTIN (Goods and Services Tax Identification Number)
- Manual: Taxpayers are required to type in their GSTIN, which can cause errors if mistakenly entered.
- Software: The software retrieves and verifies the GSTIN automatically, decreasing the possibility of errors.
Business Names
- Manual: Business names are required to get verified by users themselves; issues may occur due to mistakes.
- Software: It has automatic filing features from saved information.
Turnover and Filing Details
- Manual: Taxpayers are required to check their sales numbers and maintain a track of filing records on their own.
- Software: This information is stored in the software, and it manages the filing history for simpler tracking.
Tracking Purchases
- Manual: Businesses need to collect and input purchase invoices manually. It consumes much time and causes errors.
- Software: The software can import purchase data from accounting systems or spreadsheets. It saves time and effort.
Reverse Charge Transactions
- Manual: The taxpayer is left with the obligation to determine and report these transactions, which is difficult.
- Software: These transactions can be detected by the software, and it computes the due taxes.
Purchases from Unregistered Suppliers
- Manual: Businesses sometimes have to piece together information and furnish precise reporting.
- Software: The software can collect the same information and furnish precise reporting.
Imported Services
- Manual: Taxpayers identify and compute taxes for the imported service itself.
- Software: The software automates the same process and confirms precision in computations.
Tax Liability Summary
- Manual: Businesses themselves are left with the obligation to reconcile their tax information, which is not easy.
- Software: The software compiles and summarises this information and makes a transparent picture.
Read Also: How GST Software Manages Invoice Matching & Reconciliation
TDS/TCS Credits
- Manual: Credit information is to be confirmed and entered manually by the taxpayers.
- Software: The process will be automated under the software, which facilitates reporting.
The use of GST software eases the GSTR-4 filing procedure, which makes it efficient. It also reduces the risk of errors compared to manual submissions.
GST Software and Its Benefits for Filing GSTR-4
GST Software solution eases the mechanism of tax filing. It makes things accurate and lessens the risk of mistakes, which streamlines tax time.
The Filing Process: Manual vs. Software
On manual filing of taxes, businesses are required to compute their taxes, interest, and any late fees themselves. The same method can be intricate, and mistakes may arise from it, which can cause fines or notices from tax authorities.
The GST software automates everything.
- Computes your tax liability (how much you owe) accurately
- Keeps track of payments you’ve already made and tells you what’s left to pay
- Helps you prepare your tax returns correctly, reducing errors
GST Software Features
- Automatic Data Import: You are not required to enter data manually. The software can fetch data from spreadsheets or accounting systems.
- Tax Calculation: The software computes different taxes such as CGST, SGST, and interest on late payments.
- Error Checks: The software validates for common mistakes, like invalid tax numbers or missing information, before you submit your return.
- Easy Filing: You can generate your tax returns in the precise format in just one click.
GST Software Advantages
- More Accurate: Software decreases human error in calculations.
- Saves Time: Returns can be prepared in a few minutes instead of hours.
- Ensures Compliance: The software ensures all information fulfils GST norms.
- Better Management: It maintains all GST records organised in one place.
- Scalable: It is effective for individual businesses and professionals in handling multiple clients.
Example of Filing GSTR-4
For example, a business sells goods worth ₹18,00,000 and has some exempt supplies worth ₹2,00,000, making their total sales ₹20,00,000. If the tax rate is 1%, the total tax they need to file would be ₹20,000 (₹10,000 each for CGST and SGST).
- Manual Method: Businesses undertake such calculations themselves and then enter the information into the GST website.
- Software: The taxpayer imports their sales data, and the GST software performs all the calculations and prepares the return.
The method saves time and reduces the possibility of errors.
Practical example
A business called ABC Traders has an annual turnover of Rs 45 lakh. They manually submit their GSTR-4 and spend a lot of time on calculations, frequently making mistakes. This method restricts the precision of the process. To resolve the procedure, they started using GST software, which permitted them to:
- Import their sales data automatically
- Generate their GSTR-4 quickly
- Perform checks for any mistakes
Closure: Under the composition scheme, businesses must file GSTR-4, which is a crucial annual obligation. You can do the same manually, but with the use of GST software, the complete procedure gets easier and more reliable. GST software delivers a faster, precise, and hassle-free solution to manage tax filings for businesses with many transactions and tax professionals managing several clients.
