QRMP scheme under GST: Small taxpayers guide to GST compliance relief

GST – Goods and Simple Tax. That is how Late Finance Minister Arun Jaitley defined GST when it was rolled out in the parliament at 12 midnight on 30 June 2020. At the heart of this reform was the objective to replace the decades old multiple tax based indirect tax structure and to make tax compliances simpler and easier for taxpayers all across India.

The heart and soul on Indian business are the small and medium taxpayers who constitute the majority of taxpayers falling within the tax ambit but lacking the robust infrastructure of big companies to ensure timely, accurate and efficient tax compliances. To reduce this burden and in the wake of how hard Covid-19 hit these small taxpayers, the government came up with the QRMP scheme, short for Quarterly Return Monthly Payment.

The rollout of this scheme will significantly reduce the compliance burden for small taxpayers due to limited number of returns to be filed during the year and availability of simple tax payment option.

1. GST law reference – Notifications and Circular relevant to QRMP scheme –

S.No.	Circular/ Notification reference	Remarks
1	Notification No. 81/2020-Central Tax, dated 10 November 2020	Notifies amendment carried out in sub-section (1), (2) and (7) of section 39 of the CGST Act vide Finance (No.2) Act, 2019.
2	Notification No. 82/2020-Central Tax, dated 10 November 2020	Makes the Thirteenth amendment (2020) to the CGST Rules 2017.
3	Notification No. 84/2020-Central Tax, dated 10 November 2020	Notifies class of persons under proviso to section 39(1) of the CGST Act.
4	Notification No. 85/2020-Central Tax, dated 10 November 2020	Notifies special procedure for making payment of tax liability in the first two months of a quarter.
5	Circular No. 143/13/2020-GST dated 10 November 2020	The circular provides provide clarification with respect to the QRMP scheme and to address taxpayers’ queries surrounding the above notifications.

2. Benefits of the QRMP scheme:

• Reduction in compliance burden due to reduced number of returns required to be filed by taxpayer.
• Simplified tax payment mechanism.Pay tax on monthly basis, either by fixed sum method(or) self-assessment method by generating pre-filled challan selecting “monthly payment for quarterly taxpayers”.
• It’s better than the quarterly tax return filing scheme as the taxpayer furnish details of outward supply using Invoice Furnishing Facility (‘IFF’) monthly so that the purchaser can claim the credit basis the details appearing in its GSTR-2A/ 2B.

3. Eligibility for the scheme:

• Taxpayer whose aggregate turnover in the preceding financial year is up to INR 5 croresis eligible for QRMP Scheme.
• For computing Aggregate turnover, the details furnished in returns for tax periods in the preceding Financial Year shall be taken into account.
• In case if the aggregate turnover exceeds INR 5 crores during any quarter in the current financial year, they shall not be eligible for the scheme from the next quarter.
• A newly registered taxpayer whose aggregate turnover is up to Rs. 5 Crores can opt for the QRMP scheme based on the following conditions:

a) If the registration is granted on any date during the first month of a quarter, the registered person will be able to opt for the QRMP scheme from the beginning itself.

b) If the registration is granted on any of the dates during the latter two months of a quarter, then the registered person will be able to opt for the QRMP scheme only from the next quarter onwards.

• ISD, Non-registered Taxable Person, Composition dealer, OIDAR service provider, TDS deductor and TCS collector are not eligible for QRMP scheme.

4. Exercising the QRMP scheme option:

• Taxpayer can opt in for QRMP Scheme for any quarter from first day of second month of preceding quarter up to the last day of the first month of the current quarter in which it wants to opt in for QRMP scheme. The time limit for exercising the QRMP scheme option during each quarter of the FY is detailed below:

Sr.  No	Quarter	Time limit to opt in for QRMP scheme
1	April – June	1st February – 30th April
2	July – September	1st May – 31stJuly
3	October – December	1st August – 31st October
4	January – March	1st November – 31st January

• Once the option is exercised, the taxpayer is not required to exercise the option every quarter.
• How to opt for the scheme – Login > Services > Returns > Opt-in for quarterly return.
• It is necessary that the taxpayer has filed its last tax return to be eligible for exercising the QRMP scheme.
• The option to opt for QRMP scheme is GSTIN wise and not at the PAN level. This means that a taxpayer with same PAN can opt for QRMP scheme in one state and pay tax under regular scheme in the other state.
• All persons who have obtained registration or taxpayers opting out of composition scheme, during any quarter shall be able to opt for the scheme from first day of second month of preceding quarter to the last day of first month of the quarter.
• Further, if the taxpayer has already filled in data in its GSTR-1 for the current period, then it has to first delete the data before opting for QRMP scheme as under this scheme, the taxpayer has to furnish IFF (optional) for the first 2 months of the quarter.

5. Furnishing outward supply details:

• Taxpayer opting for QRMP scheme have to file GSTR-1 on quarterly basis. The due date for filing GSTR-1 is 13^th day of the month succeeding the end of the quarter.
• Only for the first 2 months of the quarter, the taxpayer has the option to furnish the details using IFF facility.
• Details furnished using IFF facility not required to be reported again in GSTR-1.
• Details furnished using IFF facility will be reflected in the GSTR-2A / GSTR-2B/ GSTR-4A/ GSTR-6A of the recipient.
• The IFF facility can be used for furnishing outward supply details of value upto INR 50 lakhs in each of the 2 months.
• Due date for furnishing outward supply details using IFF facility is upto 13^th day of the succeeding month.
• In case of B2C supplies, they are not required to be disclosed in IFF. They can be furnished in the GSTR-1 return to be filed for the quarter.

6. Payment under the QRMP scheme:

• For the first 2 months of the quarter, the taxpayer has to pay tax for each of the month on or before 25^th day of the succeeding month. For instance, for the month of April for April – June quarter, the due date for payment will be 25^th May.
  
• For the 3^rd month of the quarter, the tax payment should be made on or before 22^nd or 24^th day of the month succeeding the end of the quarter, at the time of filing of GSTR-3B return for such quarter.
• The taxpayer should deposit tax using pre-filled Form GST PMT-06.There are 2 methods of payment of tax under the QRMP scheme as detailed below:

a) FIXED SUM METHOD:

Under this method, the taxpayer can pay the tax by generating challan for tax amount equivalent to following:

Periodicity of return filing	Tax to be paid under QRMP scheme
Quarterly	35% of tax paid in cash in preceding quarter
Monthly	100% of tax paid in cash in the last month of preceding quarter.

Note: 1. Under this method, the challan in Form GST PMT-06 is pre-filled basis the periodicity of filing.

2. Filing of tax returns upto date is mandatory to apply this method. You will not be able to avail this method, if returns for a complete tax period is not filed as the computation of amount of tax liability is dependent on the tax liability (paid in cash) in previous returns.

Example –  

Periodicity of return filing	Amount of tax paid in cash in immediately preceding quarter/ month		Tax to be paid under QRMP scheme
Quarterly	CGST	1000	CGST	350
	SGST	1000	SGST	350
	IGST	5000	IGST	1750
Monthly	CGST	2000	CGST	2000
	SGST	2000	SGST	2000
	IGST	12000	IGST	12000

b) SELF ASSESSMENT METHOD:

• • Under this method, the taxpayer has to pay tax on outward supplies after taking into consideration the input tax credit available to it. Thus, the taxpayer will manually arrive at its tax liability and deposit the same in Form GST PMT-06. The taxpayer can refer Form GSTR-2B to determine the amount of ITC available to it.
  • If cash balance is available in Electronic Cash Ledger and utilizable, then only balance deposit would be sufficient.

Note: In the following situations, the taxpayer is not required to deposit amount in cash ledger for discharge of tax liability:

Month of the quarter	Condition to be satisfied for non-deposit
First month	Balance in electronic cash/ credit ledger is adequate for the tax liability of the said month, OR Tax liability is NIL
Second month	Balance in electronic cash/ credit ledger is adequate for cumulative tax liability of 1st and 2ndmonth of the quarter, OR Tax liability is NIL

7. Steps for making payment under QRMP scheme on GSTN portal:

Step 1: Login to GSTN portal. On the dashboard page, navigate through the following:

Services > Payments > Create Challan

Step 2: Under ‘Reason for challan’, select the ‘Monthly payment for quarterly return’ option. Select the financial year, period, type of challan (35% challan or Challan on self-assessment basis).

Step 3: If the type of challan selected is ‘35% challan’, select 35% challan and proceed. The portal will automatically generate the challan basis the details of the previous period(s) GSTR-3B(s).

If the type of challan selected is ‘Challan on self-assessment basis’, the taxpayer should manually calculate its tax liability and enter the details in the challan. After filing the details, click on ‘Generate challan’.

Note: The payment is not required in the first 2 months in case of condition specified in Note to Point 6 above.

Step 4: Pay the challan generated as per your preferred mode of payment.

8. GSTR-3B filing:

• Taxpayer opting for QRMP scheme has to file the GSTR-3B on a quarterly basis i.e. 4 GSTR-3B for a FY.
• The due date is 22^nd or 24^th of the month succeeding the quarter to which such return relates.

Sr.  No	Particulars	Due date of GSTR-3B
1	Chhattisgarh, Madhya Pradesh, Gujarat, Dadra and Nagar Haveli, Daman and Diu, Maharashtra, Karnataka, Goa, Lakshadweep, Kerala, Tamil Nadu, Puducherry, Andaman and Nicobar Islands, Telangana and Andhra Pradesh	22nd of month succeeding end of the quarter.
2	Jammu and Kashmir, Ladakh, Himachal Pradesh, Punjab, Chandigarh, Uttarakhand, Haryana, Delhi, Rajasthan, Uttar Pradesh, Bihar, Sikkim, Arunachal Pradesh, Nagaland, Mizoram, Manipur, Tripura, Meghalaya, Assam, West Bengal, Jharkhand and Odisha	24th of month succeeding end of the quarter.

• Any amount deposited during the first 2 months of the quarter can be utilized only for the purpose of offsetting the liability furnished by the taxpayer in its GSTR-3B
• Any amount left in after filing GSTR-3B for the quarter, can be claimed as refund or used for other purposes in the following quarters. However, for claiming refund, it is mandatory that the taxpayer has furnished its GSTR-3B for the quarter.
• In the case of cancellation of registration of a taxpayer (who has opted for QRMP scheme) during any of the first two months of the quarter, he would still be required to furnish his Form GSTR-3B for that relevant tax period.

9. Interest and late fee under QRMP scheme:

Interest

√ Fixed sum method:

Sr.  No	Particulars	Interest rate applicable
1	Tax liability for the first 2 months of the quarter is paid on or before 25th day of succeeding month.	NIL
2	Tax liability for the first 2 months of the quarter isnot paid till 25th day of succeeding month.	18% (from 26th day of succeeding month till the date of actual payment)
3	The tax liability for the first 2 months is higher than the tax amount paid through pre-filled Form GST PMT-06, and such excess tax liability has been paid by the taxpayer, alongwith quarterly GSTR-3B return on or before due date.	NIL
4	The tax liability for the first 2 months is higher than the tax amount paid through pre-filled Form GST PMT-06, and such excess tax liability has not beenpaid by the taxpayer, alongwith quarterly GSTR-3B return on or before due date.	18% (from the due date of filing of GSTR-3B till the date of actual payment).

√ Self-assessment method:

In case of self-assessment method, any tax liability which remains unpaid/ paid after the due date for the first 2 months of the quarter, interest will be payable under the provisions of Section 50 of CGST Act, 2017 (interest @ 18%).

Note: Irrespective of the method of payment of tax adopted by the taxpayer, interest will be applicable in case of delay in payment of tax for the 3^rd month of the quarter.

Late Fee

• Late fee applicable for delay in filing of quarterly return/ details of outward supply.
• No late fee applicable for delay in payment of tax in the first 2 months of the concerned quarter.

10. Opting out of QRMP scheme:

• In case the taxpayers’ aggregate turnover during the financial year exceed INR 5 crores, it has to opt out of QRMP scheme.
• Further, the taxpayer, at its own discretion, can opt out of the QRMP scheme from the first day of second month of preceding quarter to the last day of the first month of the current quarter.

The scheme is a welcome move on part of the government to stand by its motto of making the tax laws and compliance simpler for taxpayers. The scheme will benefit both small as well as large taxpayers, reducing the compliance requirements for small taxpayers and protecting large taxpayers against delayed availment of credit in its returns.

Disclaimer:The above article is based on the information provided in the tax laws, rules, notifications, circulars, various tax platforms and the author’s personal view of the tax law. Please refer to the latest law and consult the author before forming an opinion basis the information provided above as tax laws are subject to frequent changes. The author is not responsible for any issues arising as a result of opinion based on the above article without consultation. The author welcomes the feedback of the readers at gauravmittal756@gmail.com.