Composition Scheme GST Compliance: How TaxBuddy Handles CMP-08 and GSTR-4
- PRITI SIRDESHMUKH
- Dec 26, 2025
- 8 min read
The GST Composition Scheme reduces compliance pressure for small businesses by offering simplified tax reporting and fixed-rate payments for eligible traders, manufacturers, restaurants, and service providers. Its two core filings—CMP-08 every quarter and GSTR-4 annually—form the backbone of compliance under this scheme. Each filing captures taxable outward supplies, tax payable, and yearly consolidated records without involving Input Tax Credit calculations. Missing these filings can result in penalties, notices, or even loss of eligibility under the scheme. With evolving GST rules and strict deadlines, businesses increasingly rely on structured digital support for accurate and timely submissions.
Table of Contents
Understanding the GST Composition Scheme
The GST Composition Scheme was created to reduce compliance pressure on small businesses by offering a minimal-paperwork system with fixed tax rates. Eligible taxpayers include traders, manufacturers, small restaurants, and select service providers, subject to turnover limits such as ₹1.5 crore for most states and ₹75 lakh for special category states. The scheme eliminates the need for detailed invoice-level reporting and monthly returns, replacing them with a simple quarterly payment structure and a single annual return. Since Input Tax Credit is not allowed, the focus shifts entirely to reporting outward supplies and paying tax at prescribed flat rates. This structure provides predictability for taxpayers who prefer simpler compliance without deep reconciliation work.
CMP-08 Filing Requirements for Composition Taxpayers
CMP-08 acts as the quarterly payment declaration for Composition Scheme taxpayers. It captures essential details such as outward taxable turnover, tax liability based on applicable rates, and the total amount paid during the quarter. Filing CMP-08 is mandatory even when there are no sales, ensuring that the compliance cycle remains consistent throughout the year. Late submission attracts a daily fee, and repeated delays may lead to scrutiny or loss of eligibility. Since CMP-08 filings must reflect only outward supplies made during the quarter, accuracy is crucial for maintaining the integrity of subsequent filings such as GSTR-4.
Step-by-Step CMP-08 Filing Process for FY 2024–25
CMP-08 filing begins with compiling quarterly outward supply data from sales registers or POS systems. Once the turnover figure is confirmed, taxpayers calculate liability using the prescribed flat rate: 1 percent for traders and manufacturers, 5 percent for restaurants, and 6 percent for service providers. The GST portal requires these figures to be entered directly, after which the system generates the challan needed to make payment. Verification of details before submission is essential because revisions cannot be made after filing; any corrections must be adjusted in future quarters. After payment is completed, the filing must be authenticated through OTP-based verification or a digital signature, depending on the profile.
How TaxBuddy Simplifies Quarterly CMP-08 Filing
TaxBuddy reduces the workload around CMP-08 by automating data preparation and validating quarterly turnover before filing. Its systems identify inconsistencies early, allowing businesses to avoid calculation errors that could lead to notices. The platform also assists with challan generation, payment tracking, and reconciliation of quarterly figures with annual records. Automated reminders ensure that CMP-08 is filed within deadlines, while expert review adds a safety layer for businesses wanting consistent compliance without navigating portal complexities. This combination of automation and oversight is particularly useful for taxpayers handling multiple quarters or operating across different locations.
GSTR-4 Annual Return: Scope, Structure, and Eligibility
GSTR-4 consolidates the entire year’s compliance under the Composition Scheme into a single annual return. It captures turnover declared in all CMP-08 filings, inward supplies subject to reverse charge, exempt purchases, and tax paid during the year. Only businesses registered under the Composition Scheme and not engaged in inter-state supplies, e-commerce sales, or restricted manufacturing activities are eligible to file GSTR-4. Since invoice-level reporting is not required, the emphasis lies on accurate summarisation and reconciliation. This return must be filed by April 30 of the following financial year, with late fees applicable for delays, capped to protect small taxpayers.
Key Differences Between CMP-08 and GSTR-4 Compliance
CMP-08 functions as a quarterly self-assessment and tax payment statement, whereas GSTR-4 serves as the annual return that aggregates all activity for the year. CMP-08 captures outward supplies and tax liabilities, while GSTR-4 includes inward supplies under reverse charge and consolidated yearly purchases. CMP-08 must be filed four times a year, but GSTR-4 is filed only once. Any discrepancies between the two—such as mismatched turnover figures—may trigger queries or limit eligibility under the scheme. Understanding these differences ensures that taxpayers maintain consistency and avoid issues during audits or regulatory checks.
Common Errors in CMP-08 & GSTR-4 and How TaxBuddy Prevents Them
Frequent errors include under-reporting quarterly turnover, miscalculating tax liability, ignoring purchases under reverse charge, and mismatching annual figures with quarterly statements. Technical issues such as incorrect challan payments or duplicate entries also occur. TaxBuddy prevents these mistakes by running multi-layered validations on data before filing. Its automated reconciliation tools compare CMP-08 figures with annual data to flag mismatches early. Expert review ensures that entries reflect accurate tax positions, reducing the risk of notices or penalties. This workflow provides greater clarity and accuracy for Composition Scheme taxpayers.
Penalties, Late Fees, and Non-Compliance Risks Under the Composition Scheme
Late filing of CMP-08 attracts a daily late fee, while delayed GSTR-4 submissions draw penalties capped at ₹200 per day (₹100 CGST + ₹100 SGST). Beyond monetary penalties, repeated delays may result in compliance notices, blocking of e-way bills, or forced exit from the Composition Scheme. Non-compliance may also disqualify taxpayers from availing the benefits of simplified taxation in subsequent years. These risks highlight the importance of maintaining timely and accurate filings, especially for smaller businesses dependent on simplified compliance.
Documents Needed for CMP-08 and GSTR-4 Filing
CMP-08 requires quarterly sales summaries, outward supply ledgers, and challan payment details. GSTR-4 demands all CMP-08 copies, purchase summaries, reverse charge invoices, and inward supply details for the full year. Supporting bank statements help verify payments and reconcile data. Maintaining organised documentation ensures more accurate filing and makes annual reconciliation smoother, particularly when businesses handle multiple branches or seasonal sales patterns.
Automation, Reconciliation, and Challan Management Through TaxBuddy
Automation, reconciliation, and challan management sit at the core of TaxBuddy’s support system for Composition Scheme taxpayers, bringing structure to an otherwise time-sensitive compliance cycle. The platform automates reconciliation by comparing quarterly CMP-08 figures with annual data prepared for GSTR-4, identifying mismatches long before the annual return is due. This prevents common issues such as under-reported turnover, misaligned tax payments, or missing reverse charge entries. TaxBuddy’s system reviews purchase records, sales summaries, and challan details to ensure that all numbers match across the financial year, reducing the chances of receiving notices or filing corrections later.
The challan management module tracks every payment made for each quarter by linking CPIN and GRN details directly with the GST portal. This eliminates the need for manual verification or repeated portal checks, especially when challans remain pending or fail during payment. Users can view payment status, track whether challans have been successfully credited, and access a historical log for audit or record-keeping. Automated challan mapping also ensures that each CMP-08 submission is paired with the correct payment, preventing delays caused by incorrect references or duplicate entries.
TaxBuddy’s automation extends to reminders and compliance alerts. The system notifies taxpayers of approaching quarterly and annual deadlines, pending reconciliations, incomplete challan payments, or missing documents. These alerts are designed to reduce last-minute rushes and minimise errors caused by oversight or manual workload. The platform also connects CMP-08 data with annual GSTR-4 preparations to create a seamless transition between quarterly compliance and yearly reporting.
By synchronising all elements—from turnover records to challan tracking and annual summaries—TaxBuddy offers a low-effort, reliable compliance process. This integrated approach is particularly valuable for small businesses managing limited accounting resources, ensuring that GST obligations are met consistently and without unnecessary complexity.
Final Thoughts on Staying Compliant Under the GST Composition Scheme
Staying compliant under the Composition Scheme requires clear visibility of quarterly performance, accurate tax calculations, and timely submissions of both CMP-08 and GSTR-4. Businesses benefit from simplified reporting under this scheme, but accuracy remains crucial to avoid penalties or disqualification. Digital platforms and expert-backed systems offer meaningful support, particularly for small enterprises wanting structured, low-risk compliance throughout the financial year.
Conclusion
The GST Composition Scheme offers a simplified route for small businesses, but its compliance obligations must be handled with precision. CMP-08 and GSTR-4 remain central to this framework, and timely filing ensures the continuity of scheme benefits and safeguards against penalties. Digital solutions such as TaxBuddy streamline this journey by automating data checks, managing challans, and reconciling annual figures. For anyone looking for assistance in tax filing, it is highly recommended to download the TaxBuddy mobile app for a simplified, secure, and hassle-free experience.
FAQs
Q1. Does TaxBuddy offer both self-filing and expert-assisted plans for ITR filing, or only expert-assisted options?
TaxBuddy provides two filing pathways designed for different user needs. The self-filing option allows taxpayers to upload Form 16 or enter income details into an automated system that computes tax liability instantly. The expert-assisted plan is built for those who prefer a professional review, especially in cases involving multiple income sources, deductions, capital gains, or notices. Both options include smart error detection and personalised dashboards, making TaxBuddy suitable for simple and complex returns.
Q2. Which is the best site to file ITR?
The best platform combines accuracy, speed, ease of use, and post-filing support. While the Income Tax Department’s portal is the official channel, many taxpayers opt for platforms like TaxBuddy because of features such as automated data extraction from Form 16, pre-filled schedules, deduction suggestions, and expert verification. The combination of automation and human oversight helps minimise errors and reduces the likelihood of future notices.
Q3. Where to file an income tax return?
Income tax returns can be filed directly on the ITD e-filing portal, through authorised intermediary portals, or via reliable tax-filing platforms like TaxBuddy. Using a platform that integrates automated calculations, document checks, and guided workflows ensures that the return is complete, compliant, and free of inconsistencies before submission.
Q4. Is GSTR-4 mandatory for all taxpayers under the Composition Scheme?
Yes. Every taxpayer enrolled under the Composition Scheme must file GSTR-4 annually, regardless of turnover volume or activity during the year. Even those with zero transactions must submit the return to maintain scheme compliance and avoid penalties.
Q5. What happens if CMP-08 is not filed on time?
Delayed CMP-08 filing leads to a daily late fee and may also suspend the taxpayer’s ability to generate e-way bills. Repeated delays can trigger system-generated notices or force an exit from the Composition Scheme. Maintaining timely quarterly compliance helps avoid disruptions in business operations.
Q6. Can amendments be made in a previously filed CMP-08?
Once a CMP-08 is filed, its details cannot be revised for that quarter. Any corrections must be adjusted in later quarters or reflected in the annual GSTR-4. This makes accuracy during each filing cycle essential, especially for businesses with high transaction volumes.
Q7. Does GSTR-4 require invoice-level reporting?
No. GSTR-4 does not require invoice-level details like regular GST returns. Instead, it summarises total inward and outward supplies, tax paid, reverse charge liability, and Composition Scheme declarations. This structure reduces compliance time while still ensuring annual reporting accuracy.
Q8. Who cannot opt for the GST Composition Scheme?
Businesses engaged in inter-state supplies, e-commerce sales, manufacturing of notified goods such as tobacco or ice cream, or those supplying through TCS-registered operators cannot use the Composition Scheme. These restrictions ensure that the scheme remains limited to smaller, locally-operating entities.
Q9. Are NIL returns applicable for CMP-08 and GSTR-4?
Yes. When no outward supplies occur during a quarter or financial year, NIL CMP-08 or NIL GSTR-4 must still be filed. The GST system recognises non-filing as non-compliance, so maintaining NIL submissions is crucial for uninterrupted scheme eligibility.
Q10. How does TaxBuddy help Composition taxpayers avoid common filing mistakes?
TaxBuddy verifies quarterly turnover, checks for reverse charge liabilities, reconciles annual figures with CMP-08 data, and highlights mismatches before filing. Automated reminders and expert validation reduce common errors such as under-reporting turnover, missing challan details, or mismatching annual values.
Q11. What documents are required for filing GSTR-4?
GSTR-4 requires consolidated purchase records, inward supply summaries under reverse charge, details of quarterly CMP-08 filings, challan receipts, and annual turnover data. Maintaining updated ledgers and accurate quarterly filings ensures that the annual return reflects correct aggregated values.
Q12. How does the Composition Scheme benefit small businesses?
The scheme simplifies compliance by reducing the frequency of returns, offering flat-rate tax payments, and eliminating Input Tax Credit complexities. Businesses gain predictability in tax liability and spend less time on reconciliation. This allows smaller enterprises to maintain compliance without extensive accounting resources.
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