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:
3. Eligibility for the scheme:
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.
4. Exercising the QRMP scheme option:
|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|
5. Furnishing outward supply details:
6. Payment under the QRMP scheme:
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.
|Periodicity of return filing||Amount of tax paid in cash in immediately preceding quarter/ month||Tax to be paid under QRMP scheme|
b) SELF ASSESSMENT METHOD:
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|
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:
|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.|
9. Interest and late fee under QRMP scheme:
√ 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 3rd month of the quarter.
10. Opting out of QRMP scheme:
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 [email protected].