Summary: The 57th GST Council Meeting held on 8 October 2026 approved in principle the concept of an optional Annual Return Quarterly Payment (ARQP) Scheme aimed at simplifying GST compliance for eligible small businesses. Under the proposed mechanism, qualifying taxpayers would be permitted to file an annual GST return while making tax payments quarterly, thereby reducing frequent return-filing obligations without eliminating periodic tax payments. The proposed eligibility criteria cover businesses with aggregate turnover of up to ₹5 crore in the preceding financial year that exclusively make supplies to unregistered persons (B2C supplies). The article explains how the scheme could benefit small retailers, grocery stores and other consumer-facing businesses by reducing administrative work, improving cash-flow planning, increasing operational efficiency and allowing greater attention to business activities. An illustrative example considers a grocery store with preceding-year turnover of ₹1.75 crore that supplies only to B2C customers and does not claim input tax credit. However, businesses would still be required to maintain appropriate books of account, invoices, tax records and supporting documentation. Importantly, the GST Council has only granted in-principle approval to the proposed scheme, and its implementation will depend upon further legislative and administrative action, including applicable rules, notifications, eligibility conditions and prescribed procedures. Taxpayers should therefore continue complying with their existing GST obligations until the proposed framework is legally implemented and should verify their eligibility before opting for the new mechanism.
Annual Return and Quarterly Payment Mechanism for Small Businesses
The 57th GST Council Meeting, held on 8 October 2026, approved in principle the concept of an optional Annual Return Quarterly Payment (ARQP) Scheme for eligible small businesses. The proposed mechanism aims to simplify GST compliance by combining annual return filing with quarterly tax payments, potentially reducing the compliance burden on smaller taxpayers. It is a welcome step towards simplified GST Compliance.
Key Highlights of the Proposed Scheme
1. Annual Return Filing
Under the proposed mechanism, eligible businesses may be provided with an option to file an annual GST return instead of following the regular return-filing mechanism, subject to the prescribed rules and conditions. This could reduce the frequency of return-related compliance and administrative work.
2. Quarterly Tax Payments
Although the proposed scheme envisages annual return filing, tax payments would be made quarterly. This approach seeks to balance simplified reporting with periodic tax payments, helping businesses manage their tax obligations throughout the financial year.
3. Eligibility Criteria
The proposed scheme is intended for eligible businesses meeting the following broad criteria:
- Turnover limit: Aggregate turnover of up to ₹5 crore in the preceding financial year.
- Nature of supplies: Businesses exclusively making B2C supplies to unregistered persons.
The final eligibility conditions and operational requirements will depend on the detailed rules and notifications issued by the competent authorities.
For instance, a small grocery store, which does not claim ITC, and only serves B2C customers, having Rs. 1.75 cr turnover in the preceding year, now has the chance of making the payment quarterly and filing the return annually thereby decreasing the compliance burden on the business.
How Could This Benefit Small Businesses?
The proposed mechanism could offer several potential advantages:
- Reduced compliance burden: Fewer return-filing obligations may help businesses reduce administrative effort.
- Better cash-flow planning: Quarterly tax payments can help businesses plan their tax outflows more systematically.
- Greater focus on business growth: Simplified compliance may allow small businesses to devote more time and resources to their core operations.
- Operational efficiency: A streamlined reporting mechanism could reduce the time spent on routine compliance activities.
However, businesses must continue to maintain proper books of account, tax records, invoices and supporting documentation to ensure accurate reporting and compliance.
Important Note
The GST Council has approved the concept in principle. The proposed scheme should not be treated as operational merely on the basis of this approval. Its implementation, eligibility conditions, filing procedures and payment requirements will be subject to the applicable rules and official notifications.
It is to be noted that it is a recommendation of the council and has not been notified yet. Thus the businesses should check the applicability first and then act accordingly after the effect of the notification.
Conclusion
The proposed Annual Return Quarterly Payment Scheme could represent a significant step towards simplifying GST compliance for eligible small businesses. By combining annual return filing with quarterly tax payments, the initiative seeks to make compliance more manageable while retaining periodic tax payments.
The actual impact will depend on the final framework, eligibility criteria and implementation guidelines. Taxpayers should stay updated and consult their tax professionals before opting for any new compliance mechanism.
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Author: CA Rashi Jain | GST | Taxation | Compliance Advisory
