What Returns Need to Be Filed in the GST Composition Scheme?

The Goods and Services Tax (GST) system was introduced to simplify indirect taxation in India. However, for small businesses, complying with every detail of GST can still feel like a task. That’s where the GST Composition Scheme comes in, a simplified tax scheme designed specifically for small taxpayers to reduce their compliance burden.

But even under this easy-going scheme, there are certain returns and formalities that a business needs to comply with. In this blog, we’ll walk you through what returns need to be filed under the GST Composition Scheme, and how tools such as GST Billing Software and Accounting Software (MargBooks) can make this process easier and error-free.

Understanding the GST Composition Scheme

Before we jump into the returns, let’s quickly recap what the GST Composition Scheme actually is.

It’s a simplified taxation method available to small businesses whose turnover is within a certain threshold, ₹1.5 crore for most states (₹75 lakh for special category states). Instead of charging GST at the standard rates, composition dealers pay tax at a fixed rate on their turnover.

Here’s a quick look at the tax rates under the scheme:

• Manufacturers – GST Composition Rate is 1% (0.5% CGST + 0.5% SGST)
• Traders – GST Composition Rate is 1% (0.5% CGST + 0.5% SGST)
• Restaurants (not serving alcohol) – GST Composition Rate is 5% (2.5% CGST + 2.5% SGST)
• Service Providers (under special composition scheme) – GST Composition Rate is 6% (3% CGST + 3% SGST)

Returns to be Filed Under the GST Composition Scheme

Unlike regular GST taxpayers who have to file multiple returns each month, composition taxpayers have a much simpler compliance structure. 

1. CMP-08 – Quarterly Return

This is a self-assessed statement of tax liability. It has to be filed quarterly, i.e., four times in a year.

Details Required in CMP-08:

• Turnover for the quarter
  
• Tax paid (based on the fixed rate)
  
• Tax payable and interest (if any)

Due Date: 18th of the month following the quarter
(Example: For the April-June quarter, CMP-08 is due by 18th July)

Pro Tip: Using a reliable GST Billing Software, MargBooks can auto-calculate this based on your invoices, saving you from last-minute panic.

2. GSTR-4 – Annual Return

This return needs to be filed once a year. It summarises all the quarterly statements submitted via CMP-08.

Key Details Included in GSTR-4:

• Consolidated turnover
  
• Inward and outward supplies
  
• Tax paid
  
• TDS/TCS credits (if applicable)

Due Date: 30th April of the following financial year

Note: GSTR-4 is a comprehensive return and should be filed with caution. Any mismatch or delay may attract penalties or cancellation of the composition registration.

Additional Compliance to Remember

Even though composition dealers don’t have to generate tax invoices, they must issue a Bill of Supply. Also, they cannot collect GST from customers, and input tax credit (ITC) is not allowed.

Important Points:

• Mention “Composition taxable person, not eligible to collect tax on supplies” on every bill.
  
• File returns on time to avoid penalties.
  
• Maintain clear records of sales and purchases.

Using Accounting Software that’s GST-compliant can ease the headache of maintaining ledgers and reconciliations. MargBooks, for instance, allows you to manage your books and generate the necessary documents for CMP-08 and GSTR-4, all in one place.

Why Use GST Billing Software like MargBooks?

Filing GST returns manually, especially under the composition scheme, might seem easy at first, but errors can cost you. And nobody wants a notice from the GST department!

Here’s how MargBooks and other good GST Billing Software make life easier:

Automation

• Auto-calculation of tax liability
  
• Auto-filling of return formats
  
• Real-time GST reports
  

Accuracy

• Reduces the risk of human errors
  
• Ensures compliance with the latest GST laws

Time-Saving

• No manual reconciliations or paperwork
  
• Easy export of return files

Convenience

• Cloud-based access (manage your accounts from anywhere)
  
• Seamless integration with your business operations

Whether you’re a shopkeeper or small-scale service provider, a smart accounting software solution using MargBooks keeps your business compliant, efficient, and stress-free.

Conclusion

The GST Composition Scheme is a boon for small businesses that want to avoid the complexity of regular GST filing. But even in this simplified route, timely and accurate return filing is a must. The two main returns, CMP-08 (quarterly) and GSTR-4 (annually), form the backbone of your compliance journey.

With our platform, MargBooks, managing GST returns under the composition scheme becomes effortless. Whether it’s generating bills of supply, calculating taxes, or filing returns, everything is streamlined, giving you more time to focus on growing your business.