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GSTR-4 — Composition Scheme Return

GSTR-4 is the quarterly return for Composition Scheme taxpayers. Here is how it works, what flat rates apply, and how it differs from normal GST returns.

Introduction

GSTR-4 is the quarterly GST return for businesses under the Composition Scheme. The Composition Scheme was designed to reduce compliance burden for small businesses: instead of filing detailed monthly returns and managing ITC, you pay a flat GST rate on your total turnover and file one return every quarter.

The trade-off is that you cannot claim input tax credit, and you cannot make inter-state supplies. If your buyers need to claim ITC on purchases from you, they will prefer a normal-registered supplier — this is a key commercial consideration before opting for the Composition Scheme.

Key facts

Who files GSTR-4

Businesses under the Composition Scheme — with turnover up to ₹1.5 crore — file GSTR-4 quarterly. They pay a flat GST rate and cannot claim input tax credit.

Simplified compliance

Composition taxpayers do not file GSTR-1 or GSTR-3B monthly. GSTR-4 is the only return, and the GST rate is flat: 3% for traders, 5% for restaurants, 3% for manufacturers.

Cannot claim ITC

Composition taxpayers cannot claim input tax credit on purchases. The GST paid on inputs is included in the flat rate — it cannot be deducted from the composition liability.

No inter-state sales

Composition taxpayers cannot make inter-state supplies. If you sell to a buyer in another state, you must exit the Composition Scheme and register as a normal taxpayer.

Composition Scheme rates

Business type Composition rate ITC available?
Traders (goods only) 1% No
Restaurants (no AC, no alcohol) 5% No
Manufacturers 3% No

Frequently asked questions

What is the Composition Scheme?
The Composition Scheme lets small businesses pay GST at a flat reduced rate instead of the normal rate. Turnover must be below ₹1.5 crore. The rates are: 3% for traders (no ITC), 5% for restaurants (no ITC), 3% for manufacturers (no ITC). You file GSTR-4 quarterly and have simpler compliance.

How is GSTR-4 different from GSTR-3B?
GSTR-3B is filed monthly by normal taxpayers — it requires detailed ITC claims, GSTR-2B reconciliation, and cash ledger management. GSTR-4 is filed quarterly by Composition taxpayers — it is simpler, reports total sales and tax paid at the composition rate, and allows no ITC claims.

When is GSTR-4 due?
GSTR-4 is due on the 18th of the month following the quarter. For the quarter July–September, the due date is 18 October. Missing the deadline attracts a ₹50 per day late fee.

Can a Composition taxpayer buy from another state?
Yes, but only from registered taxpayers. A Composition taxpayer can claim ITC on inter-state purchases only if the supplier is GST-registered. However, the Composition taxpayer cannot sell inter-state — all sales must be within the same state.

Where do I file GSTR-4?
GSTR-4 is filed on the GST portal at gst.gov.in. Log in and navigate to Services → Returns → GSTR-4 (Composition). The form shows total sales, composition tax liability, and any interest payable.

Sources

  • CGST Act 2017, Section 10 (Composition Scheme)
  • CGST Rules 2017
  • GST portal at gst.gov.in — GSTR-4 (verified 2026-10-07)

Last reviewed by FinWiz24 Research Desk.