Quarterly Return and Monthly Payment (QRMP) Scheme.

Quarterly Return and Monthly Payment (QRMP) Scheme.

A big and important change has come up from January 2021 as the government announced the launch of “Quarterly Return and Monthly Payment (QRMP)” scheme for small taxpayers under the GST system.

The Circular(20/01/08/2020) published by CBIC on November 10th, 2020 clearly stated- “The GST council in its 42nd meeting held on 5th November 2020 had recommended that registered person having aggregate turnover upto INR 5 crore may be allowed to furnish return on quarterly basis along with monthly payment of tax with effect from 1st January 2021.”

About

Quarterly Returns & Monthly Payment (QRPM) Scheme is an optional scheme that has been launched for small businesses having an annual aggregated turnover of Rupees 5 crore, which provide them the facility to file their form GSTR-1 and form GSTR-3B returns on quarterly basis, while paying their tax dues on monthly basis. Taxpayers can make GST payment through challan every month either by self assessment of monthly liability or 35% of net cash liability of previously filed GSTR-3B of the quarter.

The primary goal of this step is to promote ease of doing business and to provide relief to small taxpayers. By the implementation of the scheme, the taxpayers would be required to file 8 returns (GSTR-1 and 4 GSTR-3B) in a year rather than filing 16 returns which was the previous scenario.

Eligibility

Registered person who is required to furnish return in form GSTR-3B and has an aggregate turnover of upto Rupees 5 crore in preceding financial year. Further, any person obtaining a new GST Registration or opting out of the composition scheme under GST is also eligible to opt for QRMP scheme, provided that the return of October 3B (Sales) has been filed by November 30, 2020.

(Note : In case the aggregate turnover exceeds 5 Crore during any quarter in the current financial year, then the registered person shall not be eligible for the scheme from the next quarter. He shall opt for furnishing of return on a monthly basis, electronically, on the common portal from the succeeding quarter.)

Exercising Option for QRMP Scheme

● The facility to avail the scheme on common portal would be available throughout the year. According to the rule 61A of CGST rules, a registered person can opt in from any quarter from the first day of second month of the preceding quarter to last day of first month of the quarter.

(For Example - A registered person intending to avail scheme for quarter January to March, 2021 can exercise his option during 1st November to 31st January.)

● In order to exercise this option, the registered person must have furnished the last return as due on the date of exercising such option.

( For Example- If the registered person wants to file GSTR-3B quarterly on 1st December 2020, he will need to furnish his GSTR-3B return for October 2020, which would have been the last return due on the date of exercising the quarterly filing.)

● The Registered people are not required to exercise the option every quarter. Once the option is exercised, it'll continue to remain in action until it's revised by the taxpayer or if the taxpayer becomes ineligible for the said option.

The circular published also stated that for the first quarter of scheme i.e Jan-March, 2021, in order to facilitate the taxpayers, it has been decided that all the registered persons whose aggregate turnover for financial year 2019-20 is upto 5 Crore and who have furnished the form GSTR-3B for the month of October, 2020 by 30th November, 2020 shall be migrated on the common portal as given below.

● It is to be noted that the default option has been provided for the convenience of the people. However, such registered persons are free to change the option as below, if they so desire, from 5th of December, 2020 to 31st of January, 2021.

(For example : The default option on the portal for a registered taxpayer having turnover upto 5 crore has been migrated as monthly for Jan-March,2021 and If he wishes to file quarterly return, then he can change the option as quarterly any time from 5th December, 2020 to 31st January,  2021 )

The people who haven't furnished the return of October, 2020 will be ineligible for default migration. They will be eligible for the scheme once the form GSTR-3B as due on the date of exercising option has been filed.

● Similarly, the facility for opting out of the Scheme for a quarter will be available from first day of second month of preceding quarter to the last day of the first month of the quarter.

(For Example : Registered person intending to avail or opt out of the scheme for the quarter April-June, 2021 can exercise his option from 1st of February to 31st of April.)

● It is clarified further that the scheme is optional and thus can be availed based on GSTIN wise. So, distinct people as defined in Section 25 of the CGST Act (different GSTINs on the same PAN) have the option to avail the QRMP Scheme for one or more GSTINs. In other words, some GSTINs for that PAN can opt for the QRMP Scheme and remaining GSTINs may not opt for the Scheme.

Providing the details of outward supplies u/s 37 of CGST Act

The registered person opting for the scheme would be required to furnish the details of outward supply in form GSTR-1 quarterly as per rule 59 of CGST rules.

The Invoice Furnishing facility (IFF) will be provided to the taxpayers opting QRMP scheme for each first and second month of quarter which will allow quarterly GSTR-1 filers to upload their invoices every month.

The key points while furnishing IFF are as follows:

● The taxpayers can save the invoices in IFF from the first day of month till 13th day of succeeding month.

(It may be noted that after 13th of the month this facility for furnishing if for previous month would not be available)

● The said details of outward supply shall not exceed the value of 50 lakh rupees in each month

● The facility for furnishing details of invoices in IFF has been provided so as to allow details of such supplies to be duly reflected in the form gstr-2a and form GSTR-2B of concern recipient.

For example - A registered person who has availed the scheme wants to declare three invoices out of the total 10 invoice issued in the first month of quarter, since the recipient of supplies covered by those two invoices desired to avail ITC in that month itself. Details of these two invoices may be furnished using IFF. The details of the remaining eight invoices shall be furnished in form GSTR-1 of the said quarter. The two invoices furnished in IFF shall be reflected in form GSTR-2B of the concern recipient of the first month of the quarter and remaining eight invoices furnished in form GSTR-1 shall be reflected in form GSTR-2B of the concern recipient of the last month of the quarter.

● The details of invoices furnished using the IFF in the first two months are not required to be furnished again in form GSTR-1 and accordingly, the details of outward supplies made by such a registered person during a quarter shall consist of details of invoices furnished using IFF for each of the first two months and the details of invoices furnished in form GSTR1 for the quarter.

Any registered person can also choose to furnish the details of outward supply made during the quarter in form GSTR-1 only, without using the IFF facility.

Making monthly payment of Tax under QRMP scheme

The registered person under QRMP scheme would be required to pay the tax due on a monthly basis in each of the first two months of quarter by the 25th of succeeding month using Form GST PMT-06.

The taxpayers can pay their monthly tax liability either in the Fixed Sum Method (FSM) or Self-Assessment method (SAM).

Fixed Sum Method (FSM).

● The taxpayer who furnishes GSTR-3B quarterly for the last quarter has to pay 35% of tax paid in cash in the preceding quarter.

● Whereas, the taxpayer furnishes GSTR-3B monthly during the last quarter can opt to pay equal amount of tax paid in cash in the last month of the preceding quarter.

You will be able to understand the above statement better by the following examples :

Example 1 - Is GSTR-3B for Jan-March, 2021 was filed on quarterly basis -

Example 2 - If GSTR-3 was filed on a monthly basis for tax period March, 2021.

Self Assessment Method (SAM) :

In this method the registered person can pay the tax due by considering the tax liability on inward and outward supplies and the input tax credit available.

In order for ascertaining of the ITC available for the month the taxpayer can use form GSTR-2B.

Non requirement of monthly tax deposit -

No amount may be required to be deposited on certain conditions, such as-

 ● If the balance in electronic cash ledger or electronic credit ledger is adequate for the tax due for the first month or where there is a nil tax liability, the registered person may not deposit any amount for the said months

● If the balance in electronic cash / credit ledger is adequate for the communicative tax liability for the first and second month of the quarter or where there is a Nil tax liability.

( Note : This facility of monthly tax payment through this method would not be available to those registered people who have not furnished the return for a complete tax period preceding such month.)

Quarterly filing of GSTR-3B

In Form GSTR-3B, the registered people shall declare the supplies made during the quarter, ITC availed during the quarter, and all other details required to be furnished therein, The taxpayers would be required to furnish form GSTR-3B for each quarter on or before the 22nd or 24th day (depending upon the state or union territory) of the month succeeding such quarter.

If any amount is left after the filing of the particular quarter’s Form GSTR-3B, then it can either be claimed as a refund or can be used for any other purpose in subsequent quarters.

(Note : If the registration of a taxpayer is cancelled during any of the first two months of the quarter, he is still required to furnish a return in Form GSTR-3B for the required tax period. )

Applicability of Interest under QRMP scheme:

If the taxpayer opts for Fixed Sum Method (FSM),  the interest will be applicable to him as follows:

● No interest would be payable in case the tax liability mentioned in pre file form GST pmt-06 is paid by 25th of the following month

● If tax liability mentioned in pre-filled form GST PMT-06 is not paid by 25th of the following month then, the interest @ 18% of the tax liability is to be paid from 26th of the following month till the date of making payment.

● No interest would be payable if the final tax liability for the first two months is less than or equal to the amount paid through pre-filled form GST PMT-06.

● No interest would be payable if the final tax liability for the first two months is higher than the tax amount paid through pre-filled Form GST PMT-6, and such excess liability has been paid within quarterly GSTR-3B due date.

● If the final tax liability for the first two months is higher than the tax amount paid during pre-filled form GST PMT-06 and such excess liability has not been paid within quarterly GSTR-3B due date, then the interest @ 18% of tax liability is to be paid from the GSTR-3B due date till the payment of date of payment.

If the taxpayer opts for Self Assessment method (SAM), then the interest will be applicable as follows :

● He will have to pay interest at the rate of 18% on the net tax liability which remains unpaid or paid beyond the due date of the first two months of the quarter.

(Interest payable, if any should be paid through form GSTR-3B. It is also to be noted that the the taxpayer has to pay interest @ 18% if there are any late payment of tax in third month of a quarter irrespective of the method he is choosing for payment)

Applicability of Late Fee

Late fees applicable for delay in furnishing of returns/details of outward supply as per the provisions of section 47 of CGST Act 

●  If the quarterly GSTR-3B is not filed within due date, the late fee should be paid as follows and is subject to a maximum of Rs. 5,000

● No late fee is applicable for delay in payment of tax in first two months of the quarter in form GST PMT-06.