Know How to deal with Negative Liability in CMP 08 on GST Portal

Negative Liability - CMP 08 on GST Portal -Taxscan

Most of the taxpayers are facing problems and are unable to file CMP and generate challans due to the displaying of the Negative Liability in CMP 08 on the GST Portal.

What is Form GST CMP-08?

Form GST CMP-08 is used to declare the details or summary of self-assessed tax which is payable for a given quarter by taxpayers who are registered as composition taxable persons or taxpayers who have opted for composition levy.

Taxpayers who either have registered as composition taxable persons through Form GST REG-01 or taxpayers who have opted for composition levy through Form GST CMP-02, need to file Form GST CMP-08.

What is Negative Liability?

Negative Liability Adjustment means that any negative entry done in the present quarter will be carried forward to the next quarter.

If you have filed GSTR-4 for the Financial Year 2019-20 or 2020-21, that you have to give the details of the turnover and the tax paid in Table No.6. However, most of the taxpayers have not entered the details of the turnover and the tax paid in Table No.6.

Consequently, this adjustment will be reflected in the ‘Adjustment of negative liability of previous tax period’ column of Table 4 of the GSTR-4 next quarter GST CMP-08 filing.

Therefore, the portal is showing that you have filled the summary of the CMP-08 but since the turnover was zero so no liability to pay the tax arises.

How to Deal with this Situation?

As per law, the taxpayers who have forgotten to enter the details of the turnover and the tax paid in Table No.6 GSTR-4, will have to file a grievance, then give in writing to your jurisdictional officer requesting him to remove the Negative Liability, which may prove to be time-consuming.

However, there are several other ways that are carved out by the experts in the market which is not legally prescribed anywhere:

  1. Pay in Cash

The taxpayers are paying the tax in cash through other challan and depositing the same in the cash ledger and whenever they will be asked about it they will be writing to the jurisdictional officer about all the scenarios that the Negative Liability did not allow them to file CMP-08 so they have chosen this way.

A cash ledger contains deposits that a taxpayer has made and any GST payments made through cash. The cash ledger segregates the information head wise such as IGST, CGST, SGST/UTGST, and CESS. Each of these major heads (IGST, SGST, etc.) is further divided into 5 minor heads -Tax, Interest, Penalty, Fees, and Others. The Electronic Cash Ledger is maintained on the GST Portal.

  1. Pay Through DRC 03

DRC-03 is a form under the GST law that is required to be filed for voluntary tax payments towards demand or tax shortfall noticed later on after the time limit to file returns of a financial year expires. CGST Rule 142(2) and (3) covers this form.

  1. Increase Turnover

Some people are advising that you may increase the turnover of the previous year.

  1. Increase Tax Amount

People are also suggesting that they show the same turnover but increase the tax amount as per the amount of the negative liability so that the negative liability gets set off and the taxpayer is able to pay the actual amount of tax which he is supposed to pay.

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