Due to the presentation of the Negative Liability in CMP 08 on the GST Portal, the majority of taxpayers are having difficulties filing CMPs and generating challans.
What is the GST CMP-08 form?
Form GST CMP-08 is used to declare the details or summary of self-assessed tax payable for a given quarter by composition taxable people or taxpayers who have chosen to pay the composition levy. Form GST CMP-08 is required for taxpayers who have registered as composition taxable persons using Form GST REG-01 or who have elected to pay the composition levy using Form GST CMP-02.
Form GST CMP-08, also known as the “statement of self-assessed tax,” is a quarterly challan-cum-statement that must be submitted by the composition taxpayer. The statement will integrate the quarter’s turnover and tax payable statistics, allowing the taxpayer to make tax payments. The deadline to file Form GST CMP-08 is the 18th of the month after the relevant quarter, and any late filing will result in interest of 18 percent per annum for the duration of delay. GST CMP-08 contains the following four tables:
GSTIN Legal, trade names, application reference number, and date of filing are all required at the time of submission. Sales, purchases under reverse charge, tax liability, interest due, and tax payment are all included in the summary of self-assessed responsibility. Verification
What is Negative Liability, and how does it work?
Negative Liability Adjustment means that any negative entries made this quarter will be carried over to the next. If you submitted GSTR-4 for the fiscal years 2019-20 or 2020-21, you must provide information about your turnover and tax paid in Table No.6. The majority of taxpayers, however, have not filled in the information of their turnover and tax paid in Table No.6.
As a result, this adjustment will appear in Table 4 of the GSTR-4 next quarter GST CMP-08 filing in the ‘Adjustment of negative obligation of previous tax period’ column. As a result, the site shows that you completed the summary of the CMP-08, but since your turnover was zero, you have no tax due.
GSTR-4 Reason for Negative Liability
Under the applicable tax rates, the entire year’s liabilities must be submitted in GSTR-4. Taxpayers are required to supply information in table 6 of Form GSTR-4. Table 6 of Form GSTR-4 can be filled in with a ‘0’ value if there is no obligation.
Even if the taxpayer may have paid the liability using Form GST CMP-08, if no liability is reported in table 6, it is assumed that no liability must be paid.
The GSTR-4 is the reason why composition dealers are facing negative liability.
For the convenience of taxpayers, liability paid using Form GST CMP-08 is auto-populated in table 5 of the GSTR-4. Taxpayers who do not fill out table 6 of GSTR-4, i.e. no liability is stated, even though the liability is paid via Form GST CMP-08, because the ‘Tax payable’ in GSTR-4 is determined after decreasing the liability declared in GST CMP-08 and then auto-populated in table 5. The negative liability entry occurs in GSTR-4 if nothing is indicated in table 6.
What Should I Do in This Situation?
According to the law, taxpayers who forget to submit the data of their turnover and tax paid in Table No.6 GSTR-4 must register a grievance and then write to their jurisdictional officer requesting that the Negative Liability be removed, which can be time-consuming. However, professionals in the industry have carved out various more options that are not legally mandated anywhere:
Only cash accepted:
The taxpayers are paying the tax in cash via other challans and depositing it in the cash ledger, and if they are questioned about it, they will write to the jurisdictional officer outlining all of the scenarios in which the Negative Liability prevented them from filing CMP-08 and why they chose this route. A cash ledger records a taxpayer’s deposits as well as any GST payments made in cash. The information is separated by head in the cash ledger, such as IGST, CGST, SGST/UTGST, and CESS. Each of these major categories (IGST, SGST, and so on) is further subdivided into five minor categories: tax, interest, penalty, fees, and others. The GST Portal is where the Electronic Cash Ledger is kept.
Pay using DRC 03
DRC-03 is a form required by the GST law to be filed for voluntary tax payments towards a demand or tax deficiency discovered after the deadline for filing returns for a financial year has passed. This form is covered under CGST Rule 142(2) and (3).
Boost Your Turnover
Some taxpayes suggest that you raise your revenue from the previous year.
Increase the tax rate
People have also suggested that they show the same turnover but increase the tax amount by the amount of the negative obligation, allowing the negative liability to be set off and the taxpayer to pay the true amount of tax due.
Negative Liability Adjustment Procedures and Steps to Nullify
Although the government has yet to give relief or a remedy for this problem, an unhappy taxpayer should write to the jurisdictional GST officer or open a ticket on the grievance site as soon as the problem is brought to his attention.
Aside from the aforementioned step, the taxpayer may also consider the following quick solutions. The following is how the solution differs depending on the scenario:
- A ticket may be raised to invalidate the amount available in the negative liability statement if table 6 of GSTR-4 has not been filled due to an oversight.
- If there is no liability to be paid throughout the year, the liability paid using Form GST CMP-08 will become a negative liability statement, and the surplus money will be available to cover future tax periods’ liabilities.
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