GST: Quarterly Return & Monthly Payment – QRMP effective from 1-1-2021

A Detailed Analysis “Quarterly Return & Monthly Payment Scheme”

PREFACE: –

The topic itself is self-explanatory, a recent development when GST Council met in its 42nd meeting held on 05.10.2020 and decided to allow up to 5 crore turnover suppliers proceed with “QRMP”. Why I came to understand that I should write on this topic – naturally peculiarity of this scheme and some extent it’s complex terminology which if explained in simple terms then it will be very helpful to the suppliers at large. So let us begin our small journey to explain the scheme in detail.

RESAONS BEHIND BRINGING THE SCHEME:

What I understood and readers are solicited to submit their views if my understanding is wrong, after reading this scheme when it is notified through “Circular No. 143/13/2020- GST” dt. 10^th Nov, 2020 that – there are so many suppliers who have opted “Quarterly Submission of GSTR-1” i.e submitting of Supply Details on quarter basis and these details of Invoices are available in GSTR 2A of the recipient of supply only when GSTR 1 quarterly filed by the supplier. As a consequence, recipient is not able to take ITC confidently because even wrong avail of ITC, on estimate basis, is also not allowed in the Act because in spite of GSTR 3B filed by supplier the recipient is not confident that supplier has considered and deposited tax on those supplies which he (recipient) has taken from him (supplier).

The GSTR 3B is net amount deposited by supplier and recipient has no tool to know that supplier has deposited tax on his supplies related to his purchases.

For example, any quarterly return filer will be filed on 13/01/2021 his GSTR 1 for qtr ended on Dec 2020 which will contain all supplies between Oct 20 to Dec 20 and will deposit tax through GSTR 3B on every 22/24 of next month, as the case may be. But the recipient of supply who bought goods on 5^th Oct, 2020 will only come to know that his tax has been deposited by supplier on 13^th Jan 2021 or later when supplier will file his GSGR 1 for qtr ended Dec 2020. Till then the recipient/purchaser is not confident that if he takes ITC on supply received by him on 5^th Oct,2020 in his GSTR 3B filed on 11^th Nov, 2020 is right or wrong.

EFFECTIVE DATE OF SCHEME:

This scheme is applicable w.e.f. 1^st Jan, 2021.

APPLICABILITY OF SCHEME:

Before proceeding to details of scheme let us understand who are going to be beneficiary of this scheme because unnecessary accumulation of knowledge is also bad for health while hundreds of things you have to already remember in GST era.

1. If you are existing registered supplier since 2019-20 or before & your turnover (as per the GST methodology i.e. exempted + taxable both turnover) did not cross Rs. 5 crores i.e. aggregate annual turnover of all GST numbers with similar PAN number (i.e. total of pan-India supply) –in previous financial year i.e. 2019-20. (notification No. 84/2020- Central Tax, dated 10.11.2020)

2. Any new registered supplier registered in current financial year and did not cross till Dec 2020 the said limit and also not expected to cross Rs. 5 crores in 200-21, (although not crossed Rs. 5 crores till Dec 2020 then in natural course he can opt for scheme and when crosses then he can opt out from scheme.

3. Any person is under Composition Scheme can also opt to come under this scheme by exiting from.

UNIQUE FEATURE Eligible Suppliers can opt for scheme GST Number wise it means if you are registered at many states with the same pan number then you can opt for one or more states or for all i.e. you can opt for UP but not for Delhi and vice versa or for all states as you **wish**.

Here your wish is based on your Buyer of goods or services needs because he may insist you to show him whether you have deposited his tax or not and if you are not able to show him then you may lose your business. Therefore, as per unique feature for scheme you can opt for state wise even for Invoice wise which you want to show in scheme and rest on general basis which I will discuss later.

Further, even you will be eligible to file GSTR 3B on quarter basis on 20^th or 22^nd of following month of quarter as the case may be.

AUTO MIGARTION TO SCHEME & TIME FRAME FOR OPT OUT FROM SCHEME:

A. Changes on the GST Portal Auto Migration: For qtr. Jan., 2021 to March, 2021, all Registered persons whose Average Annual Turnover for the FY 2019-20 is up to Rs 5 Cr. and have furnished the return in Form GSTR-3B for the month of October, 2020 by 30^th, 2020, will be migrated by default in the GST system as follows:

Sl. No.	Class of Registered Supplier with Turnover of	Default Return Option
1	Up to Rs 1.5 Cr., who have furnished Form GSTR-1 on quarterly basis in current FY	Qtrly
2	Up to Rs 1.5 Cr., who have furnished Form GSTR-1 on monthly basis in current FY	Monthly
3	More than Rs 1.5 Cr. and up to Rs 5 Cr. in preceding FY	Qtrly

B. When can a person opt for the scheme or opt out from the scheme:

• Facility can be availed throughout the year, in any quarter.
• Option for QRMP Scheme, once exercised, will continue till registered supplier revises the option or his Average Annual Turnover exceeds Rs 5 Cr.
• Registered supplier can migrated by default can choose to remain out of the scheme by exercising their option from 5^th, 2020 till 31^st Jan., 2021.

WHAT IS QRMP & MODUS OPERANDI:

Currently tax payers up to turnover of Rs.1.50 crores can opt for quarterly return but coverage in current scheme has been increased up to Rs.5 crores turnover. The moment turnover crosses Rs. 5 crores supplier shall be in-eligible for the scheme. The scheme is as under:

FOR FURNISHING OUTWARD INVOICES:

1. The supplier, opting the scheme, will file his GSTR 1 on quarterly basis. (Details of outward supplies).

2. For first two months of quarter he can opt for uploading his selective B2B Invoices (which his registered buyer wants to reflect in his GSTR 2A in the same month) to a newly introduced system at GST Server – “Invoice Furnishing Facility – IFF”. For example, in Jan 2021 you issued 12 Invoices and you want to give your four buyers facility to view his purchases in GSTR-2A for the month of his GSTR 3B of Jan 2021 itself due on 20^th Feb 2020 (or as the date may be) then you can upload only 4 Invoices in IFF between 1^st Feb to 13th Feb 2021 and rest 8 invoices as usual in quarterly GSTR 1 due at 13^th April 2021(as per the rule 59 of CGST Rules, 2017).

Likewise, in Feb 2021 you have issued 15 invoices and as per your requirement or your buyers 8 Invoices need to be filed with IFF between 1^st March to 13^th March 2021 then remaining 7 shall be uploaded in GSTR 1 at 13^th April, 2021.

But for March 2021 no such need is required because you will upload all Invoices in GSTR1 itself on or before 13^th April, 2021 i.e. as per above example 8 Invoices of Jan 2021 + 7 Invoices of Feb 2021 + all Invoices issued in March 2021 shall be uploaded in GSTR 1 of quarter ended March 2021.

3. The aggregate value of such Invoices uploaded on monthly basis to IFF shall not be exceeded aggregate Rs.50 lacs. It means in two months in above example aggregate value of 4 Invoices of Jan 2021 + 8 Invoices of Feb 2021 uploaded to IFF should not exceed Rs 1 crore (i.e. limit of Rs.50 lacs each month).

4. The facility to upload Invoices in IFF shall be available on 1^st to 13^th of following month of quarter except last month of the quarter. After, 13^th of following month this facility shall not be available, it will be blocked by GSTN.

5. It is re-iterated that said facility is not mandatory and is only an optional facility made available to the registered persons under the QRMP Scheme.

6. The details of invoices furnished using the said facility in the first two months are not required to be furnished again in FORM GSTR-1.

MODUS OPERANDI FOR MAKING PAYMENT IN SCHEME:

1. The monthly GSTR 3B has been done away and it will be also filed on quarter basis.

2. Payment shall be made on monthly basis by the 25^th of following month for first two months of quarter.

3. Payment shall be made in portal by depositing money through FORM GST PMT -06. The taxpayers should select “Monthly payment for quarterly taxpayer” as reason for generating the challan.

4. There are two payment methods along with example has been illustrated in the said circular is reproduced below, with little bit changes:

(a) Fixed Sum Method: A 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 per cent 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. For easy understanding, the same is explained by way of illustration in table below:

i. In case the last return filed was on quarterly basis for Quarter Ending Dec 2020:

Tax paid in Cash in Quarter (Oct 20 to Dec 2020)		Tax to be paid in each month – Jan & Feb, 2021
CGST	100	CGST	35
SGST	100	SGST	35
IGST	500	IGST	175

i.e. 35% as amended in CGST Act, 39(7) Notification No.85/2020 dt. 10/11/2020

ii. In case the last return filed was on monthly basis for tax period Dec 2020:

Tax paid in Cash in Dec, 2020		Tax to be paid in each month – Jan & Feb, 2021
CGST	100	CGST	100
SGST	100	SGST	100
IGST	500	IGST	500

** Monthly tax payment through this method would not be available to those registered persons who have not furnished the return for a complete tax period preceding such month. A complete tax period means a tax period in which the person is registered from the first day of the tax period till the last day of the tax period.

(b) Self-Assessment Method: 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. In order 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.

5. The said registered person is free to avail either of the two tax payment method above in any of the two months of the quarter.

6. It is clarified that in case the balance in the electronic cash ledger and/or electronic credit ledger is adequate for the tax due for the first month of the quarter or where there is nil tax liability, the registered person may not deposit any amount for the said month. Similarly, for the second month of the quarter, in case the balance in the electronic cash ledger and/or electronic credit ledger is adequate for the cumulative tax due for the first and the second month of the quarter or where there is nil tax liability, the registered person may not deposit any amount.

7. Any claim of refund in respect of the amount deposited for the first two months of a quarter for payment of tax 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.

OTHER FEATURES OF THE SCHEME

8. Quarterly filing of FORM GSTR-3B Such registered persons would be required to furnish FORM GSTR-3B, for each quarter, on or before 22nd or 24th day of the month succeeding such quarter. In FORM GSTR-3B, they shall declare the supplies made during the quarter, ITC availed during the quarter and all other details required to be furnished therein. The amount deposited by the registered person in the first two months shall be debited solely for the purposes of offsetting the liability furnished in that quarter’s FORM GSTR-3B. However, any amount left after filing of that quarter’s FORM GSTR-3B may either be claimed as refund or may be used for any other purpose in subsequent quarters. In case of cancellation of registration of such person during any of the first two months of the quarter, he is still required to furnish return in FORM GSTR-3B for the relevant tax period.

9. Applicability of Interest

9.1. For registered person making payment of tax by opting Fixed Sum Method

i. No interest would be payable in case the tax due is paid in the first two months of the quarter by way of depositing auto-calculated fixed sum amount as detailed in para 6.1(a) above by the due date. In other words, if while furnishing return in FORM GSTR-3B, it is found that in any or both of the first two months of the quarter, the tax liability net of available credit on the supplies made /received was higher than the amount paid in challan, then, no interest would be charged provided they deposit system calculated amount for each of the first two months and discharge their entire liability for the quarter in the FORM GSTR-3B of the quarter by the due date.

ii. In case such payment of tax by depositing the system calculated amount in FORM GST PMT-06 is not done by due date, interest would be payable at the applicable rate, from the due date of furnishing FORM GST PMT-06 till the date of making such payment.

iii. Further, in case FORM GSTR-3B for the quarter is furnished beyond the due date, interest would be payable as per the provisions of Section 50 of the CGST Act for the tax liability net of ITC.

9.2 For registered person making payment of tax by opting Self-Assessment Method

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.

9.3 Interest payable, if any, shall be paid through FORM GSTR-3B.

10. Applicability of Late Fee – 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, late fee would be the applicable for delay in furnishing of the said quarterly return/details of outward supply. It is clarified that no late fee is applicable for delay in payment of tax in first two months of the quarter.

ILUSTARTIONS FOR CALCULATING INTEREST ETC

Illustration 1 –

A registered person, who has opted for the Scheme, had paid a total amount of Rs. 100/- in cash as tax liability in the previous quarter of October to December. He opts to pay tax under fixed sum method. He therefore pays Rs. 35/- each on 25th February and 25th March for discharging tax liability for the first two months of quarter viz. January and February. In his return for the quarter, it is found that liability, based on the outward and inward supplies, for January was Rs. 40/- and for February it was Rs. 42/-. No interest would be payable for the lesser amount of tax (i.e. Rs. 5 and Rs. 7 respectively) discharged in these two months provided that he discharges his entire liability for the quarter in the FORM GSTR-3B of the quarter by the due date.

Illustration 2 –

A registered person, who has opted for the Scheme, had paid a total amount of Rs. 100/- in cash as tax liability in the previous quarter of October to December. He opts to pay tax under fixed sum method. He therefore pays Rs. 35/- each on 25th February and 25th March for discharging tax liability for the first two months of quarter viz. January and February. In his return for the quarter, it is found that total liability for the quarter net of available credit was Rs. 125 but he files the return on 30th April. Interest would be payable at applicable rate on Rs. 55 [Rs. 125 – Rs. 70 (deposit made in cash ledger in M1 and M2)] for the period between due date of quarterly GSTR 3B and 30th April.