Summary: The proposed Annual Return Quarterly Payment (ARQP) Scheme, approved in principle at the 57th GST Council meeting on 8 October 2026, aims to simplify GST return filing for small businesses. Under the proposal, eligible taxpayers would pay GST quarterly while filing only one return annually, replacing the more frequent return-filing obligations applicable under the existing system. The scheme is intended to reduce compliance costs, simplify the filing calendar and provide relief to small businesses supplying goods or services exclusively to unregistered consumers. As proposed, eligibility would be restricted to businesses having aggregate turnover of up to ₹5 crore in the preceding financial year and making supplies only to unregistered persons. The scheme would be optional, allowing eligible taxpayers to continue under the existing return-filing arrangements. Its rationale is based on the structure of the GST input tax credit chain: businesses supplying exclusively to final consumers do not ordinarily generate downstream input tax credit claims. Reportedly, approximately 16.85 lakh taxpayers fall within this consumer-facing category, with their combined contribution representing less than 1% of GST liability. The proposal differs from the existing Quarterly Return Monthly Payment (QRMP) Scheme, which permits quarterly returns but requires monthly tax payments. It also differs from the GST Composition Scheme, which provides simplified compliance subject to different turnover limits, concessional tax rates and restrictions on input tax credit. The proposed ARQP framework seeks to combine an easier filing calendar with the normal GST tax structure.
One Return a Year, Tax Every Quarter – The proposed Annual Return Quarterly Payment (ARQP) Scheme in brief
Proposed ARQP Scheme: One Annual Return and Quarterly GST Payments
On 8 October 2026, the 57th GST Council approved, in principle, the concept of an optional Annual Return Quarterly Payment (ARQP) Scheme with the aim of easing the burden of return filing by small businesses.
Eligible businesses would pay GST once a quarter and file just one return for the whole year: four payments and one return, instead of today’s monthly or quarterly returns with monthly payments.
Businesses with aggregate turnover of up to ₹5 crore in the preceding financial year and supplies made only to unregistered persons, that is, pure B2C sellers are eligible for this Scheme.
The scheme is optional. Those who prefer the present system can continue with it.
We all are aware that GST works on a credit chain. A seller who supplies only to final consumers sits at the end of it; no one downstream depends on its returns to claim credit. As reported, about 16.85 lakh taxpayers supply only to consumers, nearly all of them below ₹5 crore, and together they account for less than 1% of GST liability. Frequent returns from them add paperwork without adding much control.
The Scheme differs from already existing Quarterly Return Monthly Payment (QRMP) Scheme available since 2021 for businesses with aggregate turnover up to ₹5 crore further, the Composition Scheme already has quarterly payment and an annual return, but with a concessional rate, no ITC and a lower turnover limit. ARQP borrows composition’s easy calendar while, as reported, keeping the normal tax structure.
Benefits for Taxpayers
For taxpayers the gains are clear: fewer due dates, lower compliance cost, better cash flow and fewer late fees. But invoices, stock records and books of account must still be kept properly.
Key Questions for Tax Consultants
For tax consultants, the key questions remain open: what happens if a taxpayer makes even one B2B sale, how e-commerce sales will be treated, how the annual return relates to GSTR-9, and how the quarterly tax will be computed. Identify eligible clients, but advise no change until notification.
Compliance and Monitoring for GST Officers
For GST Officers, fewer returns mean fewer data points. Officers should watch for businesses that bill registered buyers as consumers to stay eligible, or split turnover across registrations to stay under ₹5 crore. E-way bill data, bank data and timely scrutiny of the annual return will matter more.
Implementation Timeline
This is only an in-principle approval. The detailed framework and law amendments will go to the Council’s next meeting, with the reforms targeted from 1 April 2027. Until then, existing return and payment rules continue.
Bottom Line:
ARQP rightly treats the small consumer-facing trader as a low-risk taxpayer. If the final design stays simple and guards against misuse, it could become one of GST’s most useful relief measures for small businesses.
Author is JKAS, State Taxes Officer Circle- Budgam, Kashmir and writes about GST compliance.
