One can easily claim the adjustment for their negative liability. Read on to know more about Negative Liability for GST Advisory!
To understand how to adjust the amount in the negative liability statement, the taxpayers first need to understand what a negative Liability for GST Advisory is.
It is an advisory issued by GSTN, or the Goods and Services Tax Network, on April 30, 2022, to composition taxpayers on negative liability.
Composition taxpayers need to pay the liability every quarter from the Financial Year 2019–20 onward. For this, they are needed to file Form GST CMP-08, but for returns, they are needed to file Form GSTR-4 every year after the end of a fiscal or financial year.
According to the advisory, the taxpayers must declare their liability for the entire year in GSTR-4 under the applicable tax rates.
Taxpayers need to necessarily fill in Table 6 in the GSTR-4 Form. The taxpayer can fill in the table with a “0” value, only if there is no obligation to be found in Table 6. If there is no obligation reported in Table 6, then it is considered that the taxpayer doesn’t have to pay any liability, even when the taxpayer has successfully paid his liability with Form GST CMP-08.
If this occurs, then the liability that the taxpayer has paid via Form GST CMP-08 will be held to be an additional tax payment, it will get transferred statement, and it may be utilized in the next tax period.
As per the advisory, the liability that has been paid using Form GST CMP-08 would be fetched in Form GSTR-4 under Table 5, to make things simpler for the taxpayers.
If the taxpayers do not fill up Table 6 of GSTR-4, it means that there has been no liability stated in the form, even when the taxpayer has paid the liability in GST CMP-08; As in GSTR-4, ‘tax payable’ is estimated after the deduction of the liability reported in GST CMP-08 has been made, which is fetched in Table 5 automatically. Hence, if no declaration has been made by the taxpayer in Table 6, then an entry of negative liability will appear in Form GSTR-4.
How To Deal With Negative Liability?
The following is a complete guide on negative liability for GST advisory:
The Gist of the Goods and Services Tax Network, or GSTN Advisory
The following is the issued Advisory to Taxpayers on Negative Liability:
While filling up Form GSTR-4 of any fiscal year, the composition taxpayer might not fill up Table 6 of the GSTR-4 return, as a result, the amount that was paid by the taxpayer through Form CMP-08 would be credited to the negative liability statement.
- At the moment, the GSTIN system has invalidated such a kind of negative liability from the negative liability statement. If any amount from the statement has been utilized by the taxpayer, the same would be deducted from the cash ledger.
- If the balance becomes negative in the cash ledger, that taxpayer has to deposit the amount through a challan for that amount.
- If the taxpayer has made the payment of the amount that has been credited to negative liability through DRC-03, DRC-08, or GSTR-4 of the next FY, then he/she can claim a refund of the additional amount. For this, he/she needs to fill out a refund application in Form RFD-01.
- GSTIN sends an email to the taxpayer related to the debit entries.
Note on GST Advisory on Negative Liability Statement
A negative liability statement is a report that can be found on the GST apply online login website and contains a negative summary for the present quarter in Form CMP-08, which will be adjusted to the next quarter’s liability.
A negative liability statement containing a balance can be checked at the end of the fiscal year by submitting Form GSTR-4 of last year.
Guide to Checking the Negative Liability Statement
The taxpayer can have access to the negative liability statement by logging into the GST website.
- The taxpayer should access the GST website, click on the option “Services,” and choose the “Ledgers” option.
- Then he/she needs to navigate to the “Negative Liability Statement” option to check the negative liability statement.
Process for Nullifying Negative Liability Adjustment
In order to invalidate a negative liability adjustment, as the initial step, the taxpayer should raise a ticket on the grievance website or write to the jurisdictional GST (Goods and Service Tax) officer as soon as he or /she notices this issue.
The Debit of the Negative Liability
A lot of tickets were received from many taxpayers in the past by the Helpdesk of GSTIN for decreasing the negative liability from the Negative Liability Statement, and the same thing was being done. The additional amount in the negative liability statement has been deducted for all taxpayers’ convenience.
GSTN has also observed that some taxpayers have used the excess amount available in the negative liability statement to provide the liability in order to file a statement in Form GSTR-4 or GST CMP-08 of that fiscal year.
In such situations, the amount accessed out of the negative liability statement gets debited in the cash ledger. Although in a few cases, the taxpayer needs to pay this kind of liability by depositing the amount through a challan, if he or she fails to do so.
- Cash ledger balances are adjusted when the taxpayer deposits the liability through a challan, but they become negative when the liability is not deposited.
- In such situations, the taxpayers are recommended to deposit their previous liability through a challan for the same amount as soon as possible.
- The details related to the deduction would be sent to the taxpayers through emails accessible on the GST website.
- The taxpayer can claim the same as a refund even if the liability has been adjusted by including the coming year’s liability, through the submission of Form GST RFD-01,
Conclusion
The advisory issued for negative liability for the taxpayers states that the taxpayers need to declare the liability for the entire year in GSTR-4 under the applicable tax rates. If there is no liability to be found, table 6 of Form GSTR-4 needs to be filled up by the taxpayer with a “0” value.
If the taxpayer declares no liability in Table 6, it is thought that no liability is needed to be paid, even though; he/she might have already made the payment through Form GST CMP-08. In such a situation, the liability paid by the taxpayer through GST CMP-08 becomes additional tax paid and shifts to a negative liability statement.
