GSTR-4 and CMP-08: A Guide for Composition Dealers

Short answer: Form CMP-08 is a quarterly statement-cum-challan used by composition dealers to declare their summary turnover and pay their GST liability. Form GSTR-4 is the annual return filed by these taxpayers, consolidating the details of their turnover, tax paid via CMP-08, and purchases for the entire financial year. Filing both correctly and on time is mandatory for anyone registered under the GST composition scheme.

What is the GST Composition Scheme?

The composition scheme is a simplified compliance mechanism for small taxpayers under GST. Businesses with an aggregate annual turnover up to ₹1.5 crore (₹75 lakh for certain special category states) can opt for this scheme. Instead of collecting and paying GST at normal rates, they pay tax at a fixed, lower rate on their turnover. However, they cannot issue tax invoices or claim Input Tax Credit (ITC) on their purchases. It is governed by Section 10 of the Central Goods and Services Tax (CGST) Act, 2017.

Key features include:

• Lower, fixed tax rates (e.g., 1% for traders, 5% for restaurants).
• Simplified quarterly tax payments (via Form CMP-08).
• A single annual return (Form GSTR-4).
• Inability to collect tax from customers or claim ITC.

What is Form GST CMP-08?

Form CMP-08 is the primary compliance document for making quarterly tax payments under the composition scheme. It is not a return but a statement-cum-challan. Taxpayers must declare their gross turnover for the quarter and calculate the tax payable at the applicable composition rate. They also need to report any purchases that attract tax under the Reverse Charge Mechanism (RCM) and pay the tax on them.

The due date for filing Form CMP-08 and paying the tax is the 18th of the month following the end of a quarter. For example, for the July-September 2026 quarter, the due date is 18th October 2026.

What is Form GSTR-4 (Annual Return)?

Form GSTR-4 is the annual return that must be filed by all composition taxpayers for a financial year. It consolidates the information furnished in the four CMP-08 forms filed during the year. GSTR-4 requires a comprehensive summary of outward supplies, tax paid, and details of inward supplies (purchases) from registered and unregistered suppliers.

The due date for filing GSTR-4 is the 30th of April of the year following the financial year. For the financial year 2025-26, the due date is 30th April 2026. A significant portion of GSTR-4, specifically the details of inward supplies from registered vendors, is auto-populated from the GSTR-1 returns filed by your suppliers.

Feature	Form GST CMP-08	Form GST GSTR-4
Purpose	Statement for payment of quarterly tax	Annual Return
Frequency	Quarterly	Annually
Due Date	18th of the month after the quarter	30th April of the next financial year
Content	Summary turnover, tax paid, RCM liability	Consolidated turnover, purchases, tax paid
Action	Tax payment	Information filing and final tax adjustment
Filing Type	Online on the GST Portal	Online on the GST Portal

How is tax liability calculated for CMP-08?

Your tax liability in Form CMP-08 has two main components. First, the tax on your turnover at the composition rate. Second, the tax on inward supplies subject to the Reverse Charge Mechanism (RCM). You cannot use any input tax credit to offset this liability; it must be paid in cash.

The formula is straightforward:

Total Tax Payable = (Taxable Turnover × Composition Rate) + Tax on Inward Supplies under RCM

The composition rates are:

• 1% (0.5% CGST + 0.5% SGST) for manufacturers and traders of goods.
• 5% (2.5% CGST + 2.5% SGST) for restaurants not serving alcohol.
• 6% (3% CGST + 3% SGST) for service providers (under a specific scheme).

It is critical to identify and pay tax on RCM supplies, such as legal fees from an advocate or services from a Goods Transport Agency (GTA). See our detailed guide on the reverse charge mechanism for more.

What are the penalties for late filing?

Missing the deadlines for CMP-08 and GSTR-4 results in financial penalties. The government has a nil late fee for CMP-08, but you are liable for interest at 18% per annum on the late payment of tax.

For GSTR-4, the late fee under Section 47 of the CGST Act is:

• ₹50 per day of delay (₹25 CGST + ₹25 SGST).
• This is capped at a maximum of ₹2,000 (₹1,000 CGST + ₹1,000 SGST).

If you have no tax liability for the year (a nil return), the late fee is reduced to ₹500 (₹250 CGST + ₹250 SGST). Consistent non-compliance can lead to the cancellation of your GST registration. Our guide on GST late fees and interest explains this in more detail.

Worked example

Let's consider 'Bengaluru Gadgets', a retail store in Bengaluru registered under the composition scheme. They sell electronic accessories.

Scenario for the quarter July-September 2026:

• Total sales (outward supplies): ₹15,00,000
• Purchases from a registered GST dealer: ₹8,00,000
• Legal services received from an advocate (unregistered under GST for this purpose, but services are subject to RCM): ₹20,000

Step 1: Calculate Tax for Form CMP-08 (due 18th October 2026)

1. Tax on Outward Supplies: Bengaluru Gadgets is a trader, so the rate is 1%.

   • Tax = ₹15,00,000 × 1% = ₹15,000 (₹7,500 CGST + ₹7,500 SGST)

2. Tax on Reverse Charge (RCM): Legal services attract GST at 18% under RCM.

   • RCM Tax = ₹20,000 × 18% = ₹3,600 (₹1,800 CGST + ₹1,800 SGST)

3. Total Tax Payable in CMP-08:

   • Total Tax = ₹15,000 + ₹3,600 = ₹18,600

Bengaluru Gadgets must pay ₹18,600 via the GST portal by 18th October 2026.

Step 2: Consolidate for Annual GSTR-4 (due 30th April 2027)

For the annual GSTR-4, the firm will consolidate data from all four quarters. Assuming their turnover and RCM liability are the same each quarter:

• Annual Turnover: ₹15,00,000 × 4 = ₹60,00,000
• Total Tax Paid on Turnover: ₹15,000 × 4 = ₹60,000
• Total Inward Supplies Subject to RCM: ₹20,000 × 4 = ₹80,000
• Total RCM Tax Paid: ₹3,600 × 4 = ₹14,400
• Annual Purchase Details: Details of purchases (like the ₹8,00,000 per quarter) will be auto-populated from their suppliers' GSTR-1 and must be reconciled in GSTR-4.

Common mistakes

1. Forgetting RCM: Many businesses forget to declare and pay tax on inward supplies under reverse charge, leading to interest and penalties during audits.
2. Incorrect Turnover Calculation: Failing to include exempt supplies when calculating aggregate turnover can lead to incorrect tax payments.
3. Missing CMP-08 Payment: Since there is no 'filing' fee, some taxpayers become complacent and miss the payment deadline, attracting 18% interest on the tax amount.
4. Not Reconciling GSTR-4: Failing to reconcile the auto-populated purchase data in GSTR-4 with your own books can lead to notices from the department.
5. Attempting to Claim ITC: As a fundamental rule, composition dealers cannot claim Input Tax Credit (ITC). Any attempt to do so is incorrect.

How SP & SC helps

Navigating GST compliance, even under the simplified composition scheme, requires precision. At SP & SC, our GST experts manage all aspects of your compliance end-to-end. We handle the timely calculation and payment of tax through Form CMP-08, meticulous preparation and filing of your annual GSTR-4, and reconciliation of purchase data. Our proactive approach ensures you remain compliant, avoid penalties, and can focus on your business. For seamless GST return filing, explore our GST return filing services.

Frequently asked questions

H3: Do I need to file a nil CMP-08?

Yes, even if you have no sales or tax liability in a quarter, you must file a nil Form CMP-08 by the due date to maintain your compliance record.

H3: Can I switch from the composition scheme to the regular scheme?

Yes, you can switch from the composition to the regular scheme at the beginning of any financial year. You must file Form GST CMP-04 to opt out. Once you switch, you can start claiming Input Tax Credit on your stock.

H3: What is the difference between GSTR-3B and CMP-08?

Form GSTR-3B is a monthly summary return filed by regular taxpayers to pay their GST liability. Form CMP-08 is a quarterly statement-cum-challan for composition dealers to pay their tax. Regular taxpayers claim ITC in GSTR-3B; composition dealers cannot.

H3: What happens if my turnover crosses the ₹1.5 crore limit?

Once your aggregate turnover in a financial year exceeds the ₹1.5 crore threshold, you become ineligible for the composition scheme. You must opt out and start complying as a regular taxpayer from the day your turnover crosses the limit.

Get a fixed-fee quote

Dealing with GST forms can be complex. Avoid errors, interest, and penalties by letting our experts handle it. Share your business documents with us, and we will provide a written, fixed-fee quote for managing your GST compliance end-to-end. Contact SP & SC or WhatsApp us at +91 90356 74566 to get started.