Summary: The 57th GST Council meeting held on 8 October 2026 approved in principle a concept note for an optional Annual Return Quarterly Payment (ARQP) scheme for taxpayers having aggregate turnover of ₹5 crore or less in the preceding financial year and making supplies exclusively to unregistered persons. The proposal aims to simplify GST compliance for small consumer-facing businesses by replacing frequent return filing with an annual return while retaining quarterly tax payments. However, the Council’s recommendation does not mean that eligible businesses can immediately start filing only one GST return per year. The official announcement confirms in-principle approval of the concept, while the detailed legal provisions, return forms, payment procedures, transition rules and commencement date remain to be finalised. Small retailers and service providers could potentially benefit from reduced recurring compliance work, although their obligation to maintain accounts, determine tax liability and comply with other applicable GST provisions would continue. A significant unresolved issue is the treatment of taxpayers who make occasional supplies to GST-registered businesses after opting for the proposed scheme. Appropriate safeguards and transitional provisions would be necessary to prevent unintended non-compliance. While simplified return filing may reduce administrative expenses, professional accounting and tax advisory services continue to play an important role in maintaining financial discipline and ensuring accurate statutory compliance. Until the ARQP scheme is legally implemented, taxpayers must continue complying with their existing GST return-filing and payment requirements.
- What Is the Annual Return Quarterly Payment Scheme?
- Who Will Be Eligible for the Proposed ARQP Scheme?
- 1. Aggregate Turnover Up to ₹5 Crore
- 2. Exclusively B2C Supplies
- 3. Optional Participation
- How Will Annual Return Filing and Quarterly Payment Work?
- Difference Between Existing QRMP and Proposed ARQP
- Why Has the GST Council Proposed ARQP?
- Potential Benefits of the Proposed ARQP Scheme
- Reduced Return-Filing Frequency
- Lower Administrative Burden
- Potential Reduction in Routine Compliance Costs
- Continued Quarterly Tax Payments
- What Happens if an ARQP Taxpayer Makes a B2B Sale?
- Will ARQP Eliminate the Need for Chartered Accountants?
- When Will the ARQP Scheme Come Into Effect?
- Frequently Asked Questions on ARQP
- 1. Has the Government Introduced Annual GST Return Filing for All Small Businesses?
- 2. What Is the Proposed Turnover Limit?
- 3. Can Businesses Making B2B Supplies Opt for ARQP?
- 4. Will GST Be Payable Only Once a Year?
- 5. Is ARQP Mandatory?
- 6. Is ARQP Effective From 1 April 2027?
- 7. Can Taxpayers Stop Filing Existing GST Returns Immediately?
- Key Takeaway
What Is the Annual Return Quarterly Payment Scheme?
The Goods and Services Tax Council, at its 57th meeting on 8 October 2026, approved in principle a concept note for introducing an optional Annual Return Quarterly Payment (ARQP) scheme.
The proposal is intended for small taxpayers engaged exclusively in business-to-consumer supplies, subject to a turnover limit of ₹5 crore.
Under the proposed framework, eligible taxpayers would file an annual GST return while paying tax quarterly. This would reduce the number of recurring return-filing obligations without eliminating periodic tax payments.
However, the scheme is presently at the proposal stage. Its operational details and commencement date require further legal and administrative action.
Who Will Be Eligible for the Proposed ARQP Scheme?
1. Aggregate Turnover Up to ₹5 Crore
The GST Council’s recommendation specifies that aggregate turnover in the preceding financial year must be equal to or less than ₹5 crore.
Accordingly, a taxpayer with aggregate turnover of exactly ₹5 crore would fall within the proposed monetary threshold, subject to the other eligibility requirements.
2. Exclusively B2C Supplies
The taxpayer must be engaged exclusively in making supplies to unregistered persons.
Potential beneficiaries may include grocery stores, clothing retailers, salons, restaurants and other businesses primarily serving individual consumers.
However, eligibility depends on the nature of the supplies and the final scheme conditions, not merely on the type of business.
3. Optional Participation
The proposed ARQP scheme is voluntary. Eligible taxpayers would not be compelled to adopt it solely because their turnover falls within the prescribed threshold.
The mechanism for exercising the option, changing the filing scheme or withdrawing from ARQP has not yet been specified.
How Will Annual Return Filing and Quarterly Payment Work?
The proposed framework separates the frequency of GST return filing from the frequency of tax payments.
Instead of submitting periodic returns under the existing framework, qualifying taxpayers would be permitted to furnish an annual return while continuing to discharge their GST liabilities quarterly.
However, the official recommendation does not specify the return form, payment challan mechanism, calculation method, due dates or reconciliation procedure.
These details must be prescribed before the scheme becomes operational.
Difference Between Existing QRMP and Proposed ARQP
| Particulars | Existing QRMP | Proposed ARQP |
|---|---|---|
| Return filing | Quarterly | Annually |
| Tax payment | Monthly | Quarterly |
| Turnover limit | Up to ₹5 crore, subject to applicable conditions | Up to ₹5 crore in the preceding financial year |
| B2C-only restriction | No general restriction to exclusively B2C supplies | Exclusively supplies to unregistered persons |
| Status | Operational | Approved in principle; implementation awaited |
The comparison reflects the proposed broad structure of ARQP. Final compliance requirements may differ once the necessary legal provisions are notified.
Why Has the GST Council Proposed ARQP?
The principal objective is to simplify GST compliance for smaller consumer-facing businesses.
Businesses making exclusively B2C supplies generally do not pass input tax credit to their unregistered customers. This characteristic may facilitate a simplified return-filing framework while maintaining periodic tax collection.
Reducing the frequency of return filing could help small businesses devote fewer resources to repetitive compliance activities.
However, the official GST Council recommendation does not establish the figures of 16.85 lakh beneficiaries, 16.66 lakh taxpayers below the turnover threshold or their contribution of less than 1% of GST revenue. These figures should not be presented as verified government statistics without separate supporting evidence.
Potential Benefits of the Proposed ARQP Scheme
Reduced Return-Filing Frequency
The principal benefit would be the reduction of recurring GST return filings for eligible taxpayers.
Lower Administrative Burden
Businesses may spend less time compiling and submitting periodic returns, although their underlying accounting and tax-payment obligations would continue.
Potential Reduction in Routine Compliance Costs
Fewer filing cycles may reduce certain recurring administrative expenses. The actual benefit would depend on the final procedural requirements.
Continued Quarterly Tax Payments
The proposed scheme would retain quarterly GST payments, supporting periodic discharge of tax liabilities.
What Happens if an ARQP Taxpayer Makes a B2B Sale?
One important issue requiring clarification is the treatment of an otherwise eligible taxpayer who makes an occasional supply to a GST-registered person.
For example, a retailer may conduct exclusively B2C transactions for most of the financial year but make a single B2B sale towards the year-end.
The final rules should clarify whether such a transaction results in immediate ineligibility, prospective withdrawal from ARQP or additional return-filing obligations.
Appropriate transitional arrangements would help ensure that isolated transactions do not create disproportionate compliance difficulties.
Will ARQP Eliminate the Need for Chartered Accountants?
No. Reducing return-filing frequency does not eliminate the need for accurate accounting, reconciliation, tax computation and statutory compliance.
Chartered Accountants and tax professionals help businesses maintain financial discipline, identify compliance risks, prepare reliable financial records and meet statutory obligations.
Professional fees should therefore not be regarded merely as an unnecessary compliance expense. Appropriate professional advice can help prevent errors, interest liabilities, penalties and disputes.
The success of ARQP should be measured by genuine simplification of compliance rather than by any assumed elimination of professional services.
When Will the ARQP Scheme Come Into Effect?
The GST Council’s official recommendation dated 8 October 2026 does not prescribe a confirmed commencement date for ARQP.
Although 1 April 2027 has been mentioned in discussions concerning the proposal, it should not be represented as the legally notified effective date.
Implementation will depend on the necessary legislative or rule changes, notifications, return-filing procedures and GST portal readiness.
Until these requirements are completed, taxpayers must continue filing returns and paying GST under the presently applicable provisions.
Frequently Asked Questions on ARQP
1. Has the Government Introduced Annual GST Return Filing for All Small Businesses?
No. The GST Council has approved in principle a concept note for an optional scheme. It has not introduced an operational annual return-filing mechanism for all small businesses.
2. What Is the Proposed Turnover Limit?
The aggregate turnover in the preceding financial year must be ₹5 crore or less.
3. Can Businesses Making B2B Supplies Opt for ARQP?
The proposed eligibility is restricted to taxpayers making supplies exclusively to unregistered persons. The final treatment of occasional B2B supplies remains to be clarified.
4. Will GST Be Payable Only Once a Year?
No. The proposed framework envisages quarterly tax payments even though return filing would be annual.
5. Is ARQP Mandatory?
No. The GST Council has described it as an optional scheme.
6. Is ARQP Effective From 1 April 2027?
No officially confirmed commencement date has been established in the Council’s published recommendation. Taxpayers should await the relevant legal notification.
7. Can Taxpayers Stop Filing Existing GST Returns Immediately?
No. Existing return-filing and payment obligations continue until the proposed scheme is legally implemented and the taxpayer becomes eligible to opt for it.
Key Takeaway
The GST Council has approved in principle an optional Annual Return Quarterly Payment scheme for taxpayers having aggregate turnover up to ₹5 crore in the preceding financial year and making supplies exclusively to unregistered persons. The proposal could substantially simplify compliance for eligible B2C businesses, but it is not yet operational. The final rules, procedures and effective date remain awaited.
Disclaimer: This article is intended for general information and is based on the GST Council’s recommendations available as of 18 October 2026. The proposed ARQP scheme is subject to the necessary legal provisions, notifications and implementation guidelines. Readers should verify the applicable statutory requirements and seek professional advice before taking compliance decisions. TaxGuru accepts no responsibility for any loss, liability or consequence arising from reliance on this article.
