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New GST return filing system: How ‘Quarterly Return Monthly Payment’ scheme helps small taxpayers

gst, goods and services tax, indirect tax, qrmp schemegst, goods and services tax, indirect tax, qrmp schemeThe registered person under the QRMP Scheme would be required to pay the tax due in each of the first two months of the quarter. (Bloomberg image)

Gaurav Mohan, Richa Jain

With an intent to ease of doing business & as a trade facilitation measure, GST Council in its 42nd Meet held on 5th October 2020 proposed new GST Return Filing System for the small taxpayers having aggregate annual turnover (hereinafter AATO) up to Rs 5 crore in the preceding FY i.e. 2019-20, with effect from January 01, 2021. The very attempt behind the Introduction of this scheme is to reduce the monthly return filing burden on the small taxpayers. The council recommended that the taxpayers having the AATO up to Rs 5 Crore is allowed to furnish GSTR-3B quarterly with a monthly payment of GST Liability, from January 01, 2021, onwards. The government has issued various notifications to implement this scheme & circular to explain this scheme in simple terms & to ensure uniformity in its implementation

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In the ensuing paragraphs, we have discussed the QRMP scheme in-depth to provide better clarity in regards to this scheme & also tried to deliver the answers to all of the questions roaming in the mind of the taxpayers & practitioners, about this scheme. To start with the question that who can opt for the QRMP scheme: As per recent Circular, the Following registered person can file quarterly returns and pay tax monthly w.e.f. 01.01.2021:

  1. A Registered person who has an AATO of up to Rs 5 Cr. in the previous financial year is eligible.
  2. Any person obtaining a new registration or opting out of the Composition Scheme can also opt for this Scheme.
  3. The option to avail this Scheme can be availed GSTIN wise. Therefore, few GSTINs for that PAN can opt for the Scheme, and the remaining GSTINs can remain out of the Scheme.

When can a person opt for the QRMP scheme: As per recent Circular: –

  1. The Facility to avail the Scheme on the common portal would be available throughout the year.
  2. A registered person can opt-in for any quarter from the first day of the second month of the preceding quarter to the last day of the first month of the quarter. For Example, a registered person intending to avail of the Scheme for the quarter ‘July to September can exercise his option from May 01 to July 31.
  3. Option for QRMP Scheme, once exercised, will continue till the taxpayers revise the option or his AATO exceeds Rs 5 Cr.

Invoice furnishing facility (hereinafter ‘IFF’) for taxpayers opting for QRMP Scheme: The taxpayers who opted for the QRMP scheme can avail the option of the IFF and furnish their details of outward supply on monthly basis for the first two months so that the recipient of such outward supplies get these invoices reflected in their respective GSTR-2A & GSTR-2B. The details of an outward supply in IFF need to be furnished by the 13th of the succeeding month. The said details of outward supplies shall, however, not exceed the value of fifty lakh rupees in each month. Thus, the details of outward supplies by the taxpayer during a quarter shall consist of details of invoices furnished using IFF for each of the first two months and the details of invoices furnished in FORM GSTR-1 for the quarter.

Manner of monthly payment of taxes, if a person opts QRMP scheme: The registered person under the QRMP Scheme would be required to pay the tax due in each of the first two months of the quarter by depositing the due amount in FORM GST PMT-06, by the 25th of the month succeeding such month. The recent circular lay down two options for the monthly payment of tax during the first two months.

Under this method, the facility is being made available on the portal for generating a pre-filled challan in FORM GST PMT-06 for an amount equal to thirty-five percent (35%) of the tax paid in cash in the preceding quarter where the return was furnished quarterly or equal to the tax paid in cash in the last month of the immediately preceding quarter where the return was furnished monthly.

The said persons, in any case, can pay the tax due by considering the tax liability on inward and outward supplies and the input tax credit available, in FORM GST PMT-06. To facilitate ascertainment of the ITC available for the month, an auto-drafted input tax credit statement has been made available in FORM GSTR-2B, for every month.

Any amount of tax paid in excess can be claimed as a refund by the taxpayers. However, refund shall be permitted only after the return in FORM GSTR-3B for the said quarter has been furnished. Further, this deposit cannot be used by the taxpayer for any other purpose till the filing of return for the quarter.

Applicability of interest: In case FIXED SUM METHOD is been opted by the taxpayer then no interest would be payable for the amount short paid in the first two months’ conditional to full tax liability is discharged for the quarter in the FORM GSTR-3B.

On the contrary, if the taxpayer opted SELF ASSESSMENT METHOD, the Interest amount would be payable as per the provision of Section 50 of the CGST Act for tax or any part thereof (net of ITC) which remains unpaid/paid beyond the due date for the first two months of the quarter.

Applicability of Late fees: Late fee is applicable for delay in furnishing of return/details of outward supply as per the provision of Section 47 of the CGST Act. As per the Scheme, the requirement to furnish the return under the proviso to sub-section (1) of Section 39 of the CGST Act is quarterly. Accordingly, a late fee would be applicable for delay in furnishing of the said quarterly return/details of outward supply.

QRMP is a step towards reducing the compliance of the MSME sector, still, there is an apprehension about the overall interlocking of the compliance framework from January 01, 2020. Since the GST Liability is to be paid on a monthly basis, the monthly reconciliation of the same is required to be prepared by the taxpayers to keep the payment of taxes on track.

Gaurav Mohan is CEO and Richa Jain is Manager at AMRG & Associates. Views expressed are the authors’ personal. 

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