In the case of taxpayers who have opted for a composition scheme, they report the tax liability net of credit /debit notes. In some cases, the value of credit notes exceeds the value of outward supplies. In such cases, the liability becomes negative. In such a scenario, where the taxpayers have negative liability in Form GST CMP-08 or Form GSTR-4 (Annual), the same is posted to the Negative Liability Statement.
In case there is any negative liability in a tax period and no amount is payable during that tax period by the taxpayer, then such negative liability is maintained by the GST Portal in Negative Liability Statement. The Balance, if any, lying in the Negative Liability Statement, will automatically be adjusted against the liability of subsequent tax period(s). The Negative Liability Statement is only for view purposes by the taxpayers and cannot be edited.
For E.g.: If Tax Amount of Outward Supplies (CGST+SGST/IGST) = Rs 2,00,000 and Tax Amount of credit notes (CGST+SGST/IGST) issued = Rs 2,50,000, then negative liability = -50000
Description | IGST | CGST | SGST | Total |
---|---|---|---|---|
Tax component on Outward supplies during a tax period say Q1 | 1,00,000 | 50,000 | 50,000 | 2,00,000 |
Tax component of credit notes issued during the tax period Q1 | 1,00,000 | 70,000 | 70,000 | 2,50,000 |
Negative Liability (available for utilization towards supplies in future tax periods) | -10,000 | -20,000 | -20,000 | -50,000 |
Tax component on Outward supplies made during next tax period say Q2 | 10,000 | 15,000 | 15,000 | 40,000 |
Tax amount adjusted against the Negative Liability | 10,000 | 15,000 | 15,000 | 40,000 |
Negative Liability (available for utilization in future tax periods) say Q3 | 0 | -5,000 | -5,000 | -10,000 |
In the above example, Rs 50000 will be posted as a credit entry in the Negative Liability Statement.
In the next tax period if the total liability is Rs 40,000, then out of Rs 50,000, Rs 40,000 will be utilized. Then, there will be a debit entry posted in the Negative Liability Statement for Rs 40,000 and so on.
The meaning of Debit is that the amount is debited or utilised and the meaning of Credit is that the amount is credited or posted.
Yes, the Negative Liability Statement is maintained for both reverse charge and other than reverse charge liability separately via different columns for each.
In conclusion, the Negative Liability Statement for composition taxpayers under GST provides a mechanism to address situations where the value of credit notes exceeds the value of outward supplies, resulting in negative liability. This statement helps taxpayers track and manage their liabilities, with any negative balance automatically adjusted against subsequent tax periods. It offers transparency and accountability in tax reporting, ensuring compliance with GST regulations.
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