Filing of Annual returns by composition taxpayers. – Negative Liability in GSTR-4

Filing of Annual returns by composition taxpayers. – Negative Liability in GSTR-4

Filing of Annual returns by composition taxpayers. – Negative Liability in GSTR-4 Instances have come to notice where taxpayers are reporting negative liability appearing in their GSTR-4
Background: Since FY 2019-20, composition taxpayers has to pay the liability through Form GST CMP-08 on quarterly basis while GSTR-4 Return is required to be filed on annual basis after end of a financial year.

Reason of Negative Liability in GSTR4: The liability of the complete year is required to be declared in GSTR-4 under applicable tax rates. Taxpayers should fill up table 6 of GSTR-4 mandatorily. In case, there is no liability, the said table may be filled up with ‘0’ value. If no liability is declared in table 6, it is presumed that no liability is required to be paid, even though, taxpayer may have paid the liability through Form GST CMP-08. In such cases, liability paid through GST CMP-08 becomes excess tax paid and moves to Negative Liability Statement for utilization of same for subsequent tax period’s liability.

What the taxpayer did wrongly: Liability paid through Form GST CMP-08 is auto-populated in table 5 of the GSTR-4 for convenience of the taxpayers. Taxpayers who do not fill up table 6 of GSTR-4 i.e. no liability is declared, even though, taxpayer may have paid the liability through Form GST CMP-08; since the ‘Tax payable’ in GSTR-4 is computed after reducing the liability declared in GST CMP-08 and then auto-populated in table 5. Thus, if nothing is declared in table 6, then the negative liability entry appears in GSTR-4.

How to proceed in case of negative liability: If table 6 of GSTR-4 has not been filled due to oversight, a ticket may be raised to nullify the amount available in negative liability statement. If there is no liability to be paid during the year, the liability paid through Form GST CMP-08 shall move to negative liability statement and the same excess amount can be utilised to pay the liability of future tax periods.


It is a welcome move that the GSTN has provided the inputs on a pro active manner. The composition scheme is opted by small taxpayers and for them cash flows are really a challenge especially in time of pandemic. It would have been really great if the law has a provision if excess cash is paid by composition taxpayers and laying in the Liability Register un utilized, the same can be claimed as refund. Similar provision is seen in Malaysian GST where the taxpayer can take refund of the ITC laying in their. though we cannot compare the provisions of other countries, we can take a cue from there and bring necessary amendments in near future. This will really help in improve in the ease of doing business.

Clarification regarding applicability of GST on supply of food in Anganwadis and Schools

Circular Number 149/05/2021-GST dated 17th June 2021

  1. Representations have been received seeking clarification regarding
    applicability of GST on the issues as to whether serving of food in schools under
    Mid-Day Meals Scheme would be exempt if such supplies are funded by
    government grants and/or corporate donations. The issue was examined by GST
    Council in its 43rd meeting held on 28th May, 2021.
  2. Entry 66 clause (b)(ii) of notification No. 12/2017-Central Tax (Rate) dated
    28th June, 2017, exempts Services provided to an educational institution, by way of
    catering, including any mid-day meals scheme sponsored by the Central Government, State
    Government or Union territory. This entry applies to pre-school and schools.
  3. Accordingly, as per said entry 66, any catering service provided to an
    educational institution is exempt from GST. The entry further mention that such
    exempt service includes mid- day meal service as specified in the entry. The scope of
    this entry is thus wide enough to cover any serving of any food to a school,
    including pre-school. Further, an Anganwadi interalia provides pre-school non formal education. Hence, aganwadi is covered by the definition of educational.
    institution (as pre-school_.
  4. Accordingly, as per recommendation of the GST Council, it is clarified that
    services provided to an educational institution by way of serving of food ( catering
    including mid- day meals) is exempt from levy of GST irrespective of its funding
    from government grants or corporate donations [under said entry 66 (b)(ii)].
    Educational institutions as defined in the notification include aganwadi. Hence,
    serving of food to anganwadi shall also be covered by said exemption, whether
    sponsored by government or through donation from corporates


Advance Ruling means a written opinion or decision given by the competent authority with respect to transactions proposed to be undertaken or being carried out on the taxability of the transactions under GST by a person registered under the GST Act or willing to register under the GST Act. As per the Revised Kyoto Convention in 1999 and it is obligatory for all the members of the World Trade Organization to have a mechanism on Advance Ruling as per the provisions of Article 3 of the Agreement on the Trade Facilitation. The following are the differences between the Advance Ruling in the GST compared to the Advance Ruling under the Central Excise, Customs and Service Tax. For more details click here