The Indian government has introduced a new scheme known as QRMP (Quarterly Returns and Monthly Payment), which aims to simplify the tax filing process for small businesses. This scheme provides an excellent opportunity for businesses to streamline their operations while enjoying greater flexibility in terms of taxation.
QRMP enables eligible taxpayers to file their returns on a quarterly basis instead of monthly, thereby reducing the burden of compliance. Moreover, under this scheme, taxpayers need to make payments only on a monthly basis instead of twice a month.
As such, it allows businesses more time and resources to focus on other aspects of their operations without having to worry about frequent compliances. In this article, we will explore how the QRMP scheme works and its benefits for small businesses in India.
Latest Updates on QRMP Scheme
26th August 2021: Filing Restrictions for Pending GSTR-3B Filers
Starting 1st September 2021, under CGST Rule 59(6), taxpayers with pending GSTR-3B filings will face restrictions on filing GSTR-1 or using the Invoice Furnishing Facility (IFF) for August 2021. This applies to those with GSTR-3B pending for:
- Two months till July 2021 (monthly filers)
- Last quarter ending 30th June 2021 (quarterly filers)
28th May 2021: 43rd GST Council Meeting Outcomes
Key announcements from the meeting include:
- IFF Time Limit Extension for May 2021: The deadline for furnishing B2B supplies on the IFF for May 2021 has been extended from 13th June to 28th June 2021.
- Interest Relief for PMT-06 for April and May 2021:
- April 2021: No interest charged up to 9th June, 9% reduced interest between 10th June and 9th July, and 18% interest thereafter.
- May 2021: No interest charged up to 10th July, 9% reduced interest between 11th and 25th July, and 18% interest thereafter.
- Interest and Late Fee Relief for Quarterly GSTR-3B Filing (Jan-Mar 2021): Specific relief measures were laid down for this period.
1st May 2021: IFF Time Limit Extension for April 2021
The deadline for furnishing B2B supplies on the IFF, an optional facility for taxpayers opting into the QRMP scheme, has been extended to April 2021. The new deadline is now 28th May 2021, shifted from the original date of 13th May 2021.
These updates highlight the ongoing efforts to streamline the QRMP scheme and provide relief measures to taxpayers amid changing circumstances. It is essential for taxpayers to stay informed about these updates and adapt accordingly to ensure compliance with GST filing requirements.
QRMP Scheme Eligibility
The Quarterly Return Monthly Payment (QRMP) scheme is designed to simplify compliance for small taxpayers. To be eligible for the QRMP scheme, a registered person must meet the following criteria:
- GSTR-3B Filing Requirement: The person must be required to furnish a return in GSTR-3B.
- Aggregate Turnover: The person’s aggregate turnover in the preceding financial year should not exceed Rs. 5 crores.
- Ineligibility for Exceeding Turnover: If the aggregate turnover surpasses Rs. 5 crores during any quarter in the current financial year, the person will lose eligibility for the scheme from the next quarter.
It is important to note that the aggregate annual turnover for the preceding financial year is calculated on the common portal, taking into account the details furnished in the returns by the taxpayer for the tax periods in the preceding financial year.
The QRMP scheme, which has been available since 1st January 2021, is optional and can be availed based on the taxpayer’s GSTIN.
Opting for the QRMP Scheme: Step-by-Step Guide
To exercise the option for the QRMP scheme, a registered person should follow these steps:
- Timing: Indicate the intention to file GSTR-3B quarterly on the GST portal from the 1st of the second month of the preceding quarter until the last day of the first month of the quarter for which the option is being exercised. Example: For the quarter of Apr-Jun 2021, opt for quarterly filing between 1st February 2021 and 30th April 2021.
- Continuation of Quarterly Filing: Once opted, the person must continue to furnish returns every quarter for all future tax periods, except in specific situations:
- Ineligibility for Quarterly Return: If the taxpayer becomes ineligible for quarterly return filing (e.g., aggregate turnover exceeds Rs. 5 crores during a quarter), they must file GSTR-3B on a monthly basis starting from the next quarter.
- Unfurnished Last Return: A person cannot opt for quarterly returns if the last return due on the date of exercising the option has not been furnished. Example: If opting for quarterly GSTR-3B filing on 1st December 2020, the person must have already furnished their GSTR-3B return for October 2020, as it would be the last return due on the date of exercising the quarterly filing option.
By following these guidelines, registered taxpayers can successfully opt for the QRMP scheme, simplifying their GST compliance process.
Deemed Monthly/Quarterly Filing of GSTR-3B
While taxpayers can follow the previously mentioned procedure to opt for quarterly GSTR-3B filing, some registered persons are deemed to have opted for monthly or quarterly filing based on their actions. The categories and their deemed options are as follows:
| S No. | Class of Registered Persons | Deemed Option |
|---|---|---|
| 1 | Registered individuals with an aggregate turnover of up to Rs. 1.5 crore, who have furnished Form GSTR-1 quarterly in the current financial year | Quarterly GSTR-3B |
| 2 | Registered persons with an aggregate turnover of up to Rs. 1.5 crore, who have furnished Form GSTR-1 monthly in the current financial year | Monthly GSTR-3B |
| 3 | Registered persons having an aggregate turnover exceeding Rs. 1.5 crore and up to Rs. 5 crores in the preceding financial year | Quarterly GSTR-3B |
Taxpayers referred to in Sl. No. 2 in the table above had the option to change the default option and opt for quarterly GSTR-3B filing between 5th December 2020 and 31st January 2021.
Submitting Details of Outward Supplies
Taxpayers who opt for the QRMP scheme can use the Invoice Furnishing Facility (IFF) to upload their invoices every month. This allows quarterly GSTR-1 filers to submit their invoices more frequently. Before using the IFF, consider the following key points:
- Limited Usage: The IFF can be used only for the first two months of a quarter.
- Last Month of Quarter: Invoices relating to the last month of a quarter must be uploaded in the GSTR-1 return only.
- No Duplication: There’s no need to upload invoices in GSTR-1 if they have already been uploaded in the IFF.
- Invoice Details: Submit B2B invoice details of sale transactions (both inter-state and intra-state) along with debit and credit notes of the B2B invoices issued during the month.
- Value Limit: The total net value of invoices that can be uploaded is restricted to Rs. 50 lakh per month.
- Recipient’s Returns: Details submitted in IFF will be reflected in the GSTR-2A, GSTR-2B, GSTR-4A, or GSTR-6A of the recipients, as applicable.
The Invoice Furnishing Facility has been in effect since 1st January 2021.
Making Monthly Tax Payments Under the QRMP Scheme
Taxpayers need to deposit tax using Form PMT-06 by the 25th of the following month for the first and second months of the quarter. They can pay their monthly tax liability using either the Fixed Sum Method (FSM) or the Self-Assessment Method (SAM).
Fixed Sum Method (FSM) or 35% Challan Method
In this method, taxpayers pay an amount of tax mentioned in a pre-filled challan in Form GST PMT-06, equal to 35% of the tax paid in cash.
Tax to be paid under FSM:
| S No | Type of Taxpayer | Tax to be paid |
|---|---|---|
| 1 | Who furnished GSTR-3B quarterly for the last quarter | 35% of tax paid in cash in the preceding quarter |
| 2 | Who furnished GSTR-3B monthly during the last quarter | 100% of tax paid in cash in the last month of the immediately preceding quarter |
Scenario 1: GSTR-3B filed quarterly for January 2021 to March 2021
Tax paid in cash during Jan’21 – Mar’21 quarter:
| Tax Component | Amount | Tax required to be paid in each of Apr’21 and May’21 | Amount |
|---|---|---|---|
| CGST | 10,000 | CGST | 3,500 |
| SGST | 10,000 | SGST | 3,500 |
| IGST | 20,000 | IGST | 7,000 |
| Cess | 3,000 | Cess | 1,050 |
Scenario 2: GSTR-3B filed monthly during the quarter of January 2021 to March 2021
Tax paid in cash during Mar’21:
| Tax Component | Amount | Tax required to be paid in each of Apr’21 and May’21 | Amount |
|---|---|---|---|
| CGST | 3,000 | CGST | 3,000 |
| SGST | 3,000 | SGST | 3,000 |
| IGST | 5,000 | IGST | 5,000 |
| Cess | 1,000 | Cess | 1,000 |
Self-Assessment Method (SAM)
In this method, taxpayers pay the tax liability by considering the tax liability on inward and outward supplies and the input tax credit available. They manually calculate the tax liability for the month and pay it using Form PMT-06. For ascertaining the amount of ITC available for the month, taxpayers can use Form GSTR-2B.
Instances with no amount required to be deposited:
- First month of the quarter: When the balance in the electronic cash/credit ledger is adequate for the tax liability of the month or when the tax liability is nil.
- Second month of the quarter: When the balance in the electronic cash/credit ledger is adequate for the cumulative tax liability for the first and second months of the quarter or when the tax liability is nil.
Note: A registered person is not eligible for these procedures unless they have furnished the return for the complete tax period preceding the month. A complete tax period is a tax period where the person is registered from the first until the last day of the tax period.
Due Dates for Filing Quarterly GSTR-3B
| S No | GST Registration in States and Union Territories | Due Date |
|---|---|---|
| 1 | Chhattisgarh, Madhya Pradesh, Gujarat, Dadra and Nagar Haveli, Daman and Diu, Maharashtra, Karnataka, Goa, Lakshadweep, Kerala, Tamil Nadu, Puducherry, Andaman and Nicobar Islands, Telangana and Andhra Pradesh | 22nd of the month succeeding such quarter |
| 2 | Jammu and Kashmir, Ladakh, Himachal Pradesh, Punjab, Chandigarh, Uttarakhand, Haryana, Delhi, Rajasthan, Uttar Pradesh, Bihar, Sikkim, Arunachal Pradesh, Nagaland, Mizoram, Manipur, Tripura, Meghalaya, Assam, West Bengal, Jharkhand and Odisha | 24th of the month succeeding such quarter |
Input Tax Credit Claims under QRMP Scheme
There is no procedural difference in the way Input Tax Credit (ITC) is claimed by a registered person opting into the QRMP scheme. The QRMP taxpayers who are using the self-assessment method of calculating the tax payments for the first two months of the quarter can consider the ITC available as per their GSTR-2B for the month. Accordingly, they can pay the balance as cash towards the GST liability.
However, the GSTR-2B for the quarter gets generated on the 14th of the month following the quarter upon the filing of quarterly GSTR-1. Hence, the buyers who deal with the vendors under the QRMP scheme will need to refer to the quarterly GSTR-2B for ITC claims.
Interest under QRMP Scheme
Fixed Sum Method (FSM) or 35% Challan Method
| S No | Scenario | Interest to be paid |
|---|---|---|
| 1 | Tax liability mentioned in the pre-filled form GST PMT-06 is paid by the 25th of the following month | Nil |
| 2 | Tax liability mentioned in pre-filled form GST PMT-06 is not paid by 25th of the following month | 18% of the tax liability (from 26th of the following month till the date of payment) |
| 3 | The final tax liability for the first two months is less than or equal to the amount paid through pre-filled form GST PMT-06 | Nil |
| 4 | The final tax liability for the first two months is higher than the tax amount paid through pre-filled form GST PMT-06, and such excess liability has been paid within quarterly GSTR-3B due date | Nil |
| 5 | The final tax liability for the first two months is higher than the tax amount paid through pre-filled form GST PMT-06, and such excess liability has not been paid within quarterly GSTR-3B due date | 18% of the tax liability (from GSTR-3B due date* till the date of payment) |
*22nd or 24th of the month succeeding such quarters based on the state of the taxpayer.
Self Assessment Method (SAM)
The taxpayer has to pay interest at 18% on the net tax liability which remains unpaid or paid beyond the due date for the first two months of the quarter.
It is important to note that the taxpayer has to pay interest at 18% if there is any late payment of tax in the third month of a quarter. This is applicable irrespective of Fixed Sum Method (FSM), popular as 35% challan method, or Self Assessment Method (SAM).
Late Fee under QRMP Scheme
The late fee should be paid as follows if the quarterly GSTR-3B is not filed within the due date, subject to a maximum late fee of Rs 5,000:
| Name of the Act | Late fee for everyday of delay | Late fee for everyday of delay (in case of ‘Nil’ tax liability) |
|---|---|---|
| CGST Act | Rs. 25 | Rs. 10 |
| SGST Act | Rs. 25 | Rs. 10 |
| IGST Act | Rs. 50 | Rs. 20 |
However, it is clarified that no late fee is applicable for delay in payment of tax in the first two months of the quarter in form PMT-06.
Frequently Asked Questions
What is the QRMP scheme and its benefits?
The QRMP (Quarterly Return Filing and Monthly Payment of Taxes) scheme, introduced by the Central Board of Indirect Taxes & Customs (CBIC), is a GST initiative for small taxpayers with a turnover below Rs. 5 crores. This scheme allows eligible taxpayers to file returns and pay taxes on a quarterly basis.
Why was I automatically assigned to quarterly filing without opting for it?
GST automatically assigns eligible taxpayers to the QRMP scheme and notifies them via email or SMS.
How do I pay my tax liability for the first two months of the quarter?
You can pay your tax liability for the first two months of the quarter using either the Fixed Sum Method or the Self-Assessment Method.
Can I opt for the QRMP scheme at any point during the fiscal year?
Yes, you can opt for the QRMP scheme at any time, provided you file Form GSTR-1 and Form GSTR-3B returns.
Is a newly registered taxpayer eligible for the QRMP scheme?
Newly registered taxpayers are eligible for the QRMP scheme if their Annual Aggregate Turnover is up to Rs. 5 crores.
Do I need to opt for the QRMP scheme every quarter or year?
When you choose the QRMP scheme, you are required to file both Form GSTR-1 and Form GSTR-3B on a quarterly basis.
What if my business turnover exceeds Rs. 5 crores during the year?
If your business turnover exceeds Rs. 5 crores during the year, you will no longer be eligible for the QRMP scheme and must file your returns and pay taxes monthly.
Can I switch between the Fixed Sum Method and the Self-Assessment Method?
Yes, you can switch between the Fixed Sum Method and the Self-Assessment Method for paying your tax liability during the first two months of the quarter.
What happens if I miss the deadline for filing my quarterly returns under the QRMP scheme?
If you miss the deadline for filing your quarterly returns, you will be liable to pay late fees and interest based on the number of days the returns are delayed.
Conclusion
The QRMP scheme introduced by the GST Council is a pragmatic approach towards easing the compliance burden on small taxpayers.
By allowing quarterly filing of returns and monthly payment of taxes, it provides ample time for businesses to manage their cash flows effectively while staying compliant with the tax laws.
Switching from this scheme to the regular scheme mid-year may not be possible; hence, taxpayers must carefully assess their eligibility before deciding to opt for QRMP.
Failure to make timely payments under this scheme can attract interest or penalty, but there are no such consequences if zero or negative liability arises.
In conclusion, the QRMP scheme is an excellent initiative that promises to streamline compliance procedures for smaller businesses.
Taxpayers must understand its nuances thoroughly and comply diligently to avoid any potential penalties.
It symbolizes a step forward in simplifying India’s complex tax system and promoting ease of doing business for all stakeholders involved.