How to resolve negative liability in GSTR-4

The government has initiated a comprehensive review of the GST law to clarify various issues that have arisen since the launch of the GST regime. This review will address issues related to inverted duty structure, rate issues, discounts and other benefits provided by FMCG companies and how GST rates should be applied in these cases. Also around whether diesel and petrol fuel should be included under GST. We can expect some major clarifications to come in case of long standing confusions in the law. Certain taxpayers have reported negative liability in their GSTR-4. Composition taxpayers pay their taxes through GST CMP-08 on a quarterly basis and file GSTR-4 on an annual basis. Why is there a negative tax liability? As per GST portal, the liability of the full year must be declared in GSTR-4 by filling up table 6 of GSTR-4, this is mandatory. In case, there is no tax liability, the said table may be filled up with ‘0’ value. If no liability is declared in table 6, it is presumed that no tax is required to be paid, even though, taxpayer may have paid the tax through Form GST CMP-08. In such cases, tax paid through GST CMP-08 becomes excess tax paid and moves to Negative Liability Statement for utilization of the same for subsequent tax period’s tax liability. How does this work? Liability paid through CMP-08 is auto-populated in table 5 of the GSTR-4. Some taxpayers do not fill up table 6 of GSTR-4, even though taxpayers may have paid the liability through CMP-08. Since the ‘Tax payable’ in GSTR-4 is computed after reducing the liability declared in CMP-08 and then auto-populated in table 5, therefore if nothing is declared in table 6, then negative liability will appear in GSTR-4. What should you do? If table 6 of GSTR-4 has not been filled by the taxpayer they must raise a ticket so that the amount showing in the negative liability statement is nullified. If there is no tax to be paid during the year, the tax paid through Form GST CMP-08 shall move to negative liability statement and the same can be used to pay the tax liability of future tax periods.