Understanding the Quarterly Return Monthly Payment Scheme with Practical Illustrations - The New GST Diwali Bonanza

The Goods & Service Tax (GST), in spite of its PAN India roll-out as 'One Nation One Tax', w.e.f. 1.7.2017, has been looked upon with some reservations and apprehensions by the small and middle-level businesses and traders on account of its perceived complicated compliances including the requirement of monthly return filings.

Currently, the businesses and traders having an annual aggregate turnover in excess of Rs. 1.5 crores are required to mandatorily file monthly GSTR 1 (Return for Outward Supplies) and GSTR 3B (Consolidated Return of Outward & Inward Supplies).

The GST Reform has been introduced as a trade facilitation measure, but ironically, due to this compulsory requirement of monthly return filings, the GST reform, instead of making business compliances easy, is being perceived as making businesses busy in frequent compliances including return filings. 

Thus, gauging the pulse of the small and middle level registered persons and taking cognizance of the recommendation of the 42nd GST Council, the Apex Body CBIC, on 10.11.2020, has issued 4 Notifications viz.  81, 82, 83 & 84/2020, giving the much-awaited option of filing quarterly GST Returns along with monthly payment of tax to the registered persons having aggregate annual turnover of up to 5 crore rupees, w.e.f. 01.01.2021.

In this Article, the practicalities and nitty-gritty of the new Quarterly Return Monthly Payment (QRMP) Scheme are being decoded and explained with the help of practical illustrations.

1. Who are Eligible Registered Persons for the QRMP Scheme?

A registered person who is required to furnish a return in FORM GSTR-3B, and who has an aggregate turnover of up to 5 crore rupees in the preceding financial year, is eligible for the QRMP Scheme.

The aggregate annual turnover for the preceding financial year shall be calculated in the common GSTN portal taking into account the details furnished in the returns by the taxpayer for the tax periods in the preceding financial year. This new Scheme will be effective from 01.01.2021. Further, in case the aggregate turnover exceeds 5 crore rupees during any quarter in the current financial year, the registered person shall not be eligible for the Scheme from the next quarter.

It is pertinent to mention here that currently, the GSTN portal is reflecting the information relating to an aggregate annual turnover of all the registered persons in the previous financial year as to whether the annual turnover in the preceding financial year was up to 5 crore rupees or was in excess of 5 crore rupees, so as to make the dealers aware about their eligibility or not for the QRMP Scheme. However, a facility for filing correction/grievance has also been made available to the dealers, in case of any discrepancy in the auto-populated annual turnover threshold limit.

2. How an Eligible Registered Person Can Opt for QRMP Scheme?

The eligible registered persons i.e. dealers having an annual aggregate turnover of up to 5 crore rupees in the previous financial year, can opt-in for the QRMP Scheme, for any quarter of the current financial year, from the first day of the second month of the preceding quarter to the last day of the first month of the quarter. In order to exercise this option, the registered person must have furnished the last return, as due on the date of exercising such an option. Registered persons are not required to exercise the option every quarter. Where such option has been exercised once, they shall continue to furnish the return as per the selected option for future tax periods, unless they revise the said option. The facility to avail the QRMP Scheme would be available throughout the year, in the common GSTN portal.

Practical Illustration: M/s TaxAaram, a registered person intending to avail of the QRMP Scheme for the quarter 'April to June 2021' can exercise its option from 1st of February, 2021 to 30th of April, 2021.

If M/s TaxAaram is exercising its option on 30th April 2021 for the quarter April to June 2021, in such case, it must have furnished the return for the month of March 2021, which was due on 22/24th April.

3. How will the Transition to the New QRMP Scheme take place from the Existing Monthly Return Filing Regime?

Default Migration: For the first quarter of the Scheme i.e. for the quarter January 2021 to March 2021, in order to facilitate the taxpayers, the default migration facility is being enabled and it has been provided that all the registered persons, whose aggregate turnover for the FY 2019-20 is up to 5 crore rupees and who have furnished the return in FORM GSTR-3B for the month of October 2020 by 30th November 2020, shall be migrated on the common portal, as below.

Therefore, taxpayers are advised to furnish the return of October 2020 in time so as to be eligible for default migration. The taxpayers who have not filed their return for October 2020 on or before 30th November 2020 will not be migrated to the Scheme. They will be able to opt for the Scheme once the FORM GSTR-3B as due on the date of exercising option has been filed.

The above default option has been provided for the convenience of registered persons based on their anticipated behavior. However, such registered persons are free to change the option as above, if they so desire, from the 5th of December, 2020 to 31st of January, 2021.

In case the aggregate turnover exceeds 5 crore rupees during any quarter in the current financial year, the registered person shall not be eligible for the Scheme from the next quarter. Such registered person, whose aggregate turnover crosses 5 crore rupees during a quarter in the current financial year, shall opt for furnishing of return on a monthly basis, electronically, on the common portal, from the succeeding quarter. The facility for opting out of the Scheme for a quarter will be available from the first day of the second month of the preceding quarter to the last day of the first month of the quarter.

Practical Illustration: M/s TaxAaram is having a turnover of Rs 3 crores in the previous FY 2019-20. Its turnover in the current FY 2020-21 (for the period 1.4.2020 to 31.12.2020) is Rs. 4.5 crores. It has furnished its GSTR 3B Return for the month of October 2020 on 25.11.2020.

As per the "default migration" facility in the GSTN portal, M/s TaxAaram will be able to opt-in for the QRMP Scheme, for the first quarter of the Scheme, i.e. January 2021 to March 2021, and will be able to file its quarterly Return under the QRMP Scheme.

Suppose, M/s TaxAaram, makes an additional turnover of Rs. 55 lakhs, in the month of March 2021 resulting in its annual turnover for FY 2020-21 crossing Rs 5 crores, then it will be mandatorily required to opt-out from the QRMP Scheme for the succeeding quarter starting from April 2021 to June 2021 and it shall be required to file the monthly GST Return (GSTR 1 & GSTR 3B) from April 2021 onwards.

Further, suppose, M/s TaxAaram, makes an additional turnover of Rs. 50 lakhs, in the month of March 2021, making its annual turnover for FY 2020-21 Rs 5 crores. Now, since the aggregate annual turnover of M/s TaxAaram for FY 202-21, has remained within the stipulated threshold limit of Rs 5 crores, therefore, M/s TaxAaram may continue to opt for filing of the quarterly Return under QRMP Scheme, even for the next quarter starting from April 2021, to June 2021.

However, even if the annual turnover of M/s TaxAaram remains up to Rs 5 crores in the FY 202-21, still it may opt-out of QRMP Scheme for the next quarter starting from April 2021 to June 2021, on any day starting from 1st February 2021 to 30th April 2021.

4. What is the criteria for determining the threshold annual turnover limit- PAN or GSTIN?

The option to avail the QRMP Scheme is GSTIN wise and therefore, distinct persons 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 GTINs. In other words, some GSTINs for that PAN can opt for the QRMP Scheme, and remaining GSTINs may not opt for the Scheme.

Practical Illustration: M/s TaxAaram is having multiple branches on a PAN India basis and has accordingly obtained multiple States GSTINs on the same PAN. If the turnover of M/s TaxAaram remains within the threshold annual turnover limit of Rs. 5 crores in the FY 202-21, then, it may opt for the filing of quarterly return under QRMP Scheme for some of its GSTINs based upon its administrative convenience and may file the monthly return for the remaining GTINs.

5. What is the New Invoice Furnishing Facility (IFF) under the QRMP Scheme?

In the existing framework i.e. pre-QRMP regime also, the registered persons having an aggregate annual turnover of up to Rs. 1.5 crores have been given the option of filing their quarterly GSTR-1 & GSTR 3B Returns. However, on practical considerations, such registered persons are not able to avail this benefit of quarterly return filing, due to the non-reflection of the corresponding ITC in GSTR 2A/2B of their respective recipients of goods or services. Such recipients of goods or services, including some big corporates or dealers, have become reluctant to purchase their goods or services from such small registered persons who have opted for filing quarterly GST Returns, due to the non-reflection of their corresponding ITC in their GSTR 2A/2B, and as such this benefit of filing quarterly GST Return, has somehow become redundant.

In order to do away with similar practical difficulty, in the post-QRMR regime, an Invoice Furnishing Facility (IFF) is being enabled in the GSTN portal.

The registered persons opting for the QRMP Scheme would be required to furnish the details of an outward supply in FORM GSTR-1 quarterly as per rule 59 of the CGST Rule.

For each of the first and second months of a quarter, such a registered person will have the facility (Invoice Furnishing Facility- IFF) to furnish the details of such outward supplies to a registered person, as he may consider necessary, between the 1st day of the succeeding month till the 13th day of the succeeding month. The said details of outward supplies shall, however, not exceed the value of fifty lakh rupees in each month. It may be noted that after the 13th of the month, this facility for furnishing IFF for the previous month would not be available. As a facilitation measure, continuous upload of invoices would also be provided for the registered persons wherein they can save the invoices in IFF from the 1st day of the month till the 13th day of the succeeding month. The facility of 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 the concerned recipient.

Practical Illustration: M/s TaxAaram, a registered person who has availed the QRMP Scheme wants to declare four invoices out of the total ten invoices issued in the first month of the quarter since the recipient of supplies covered by those four invoices desires to avail ITC in that month itself. Details of these four invoices may be furnished using IFF. The details of the remaining 6 invoices shall be furnished in FORM GSTR-1 of the said quarter. The four invoices furnished in IFF shall be reflected in FORM GSTR-2B of the concerned recipient of the first month of the quarter and the remaining six invoices furnished in FORM GSTR-1 shall be reflected in FORM GSTR-2B of the concerned recipient of the last month of the quarter. The said facility would however be available, say for the month of January 2021, from 1st February 2021 till 13th February 2021. Similarly, for the month of February 2021, the said facility will be available from 1st March 2021 till 13th March 2021.

The IFF facility is not mandatory and is only an optional facility made available to the registered persons under the QRMP Scheme.

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. 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 GSTR-1 for the quarter. At his option, a registered person may choose to furnish the details of outward supplies made during a quarter in FORM GSTR-1 only, without using the IFF.

6. How and in what manner the Monthly Payment of Taxes is to be made under the QRMP Scheme?

The registered person under the QRMP Scheme would be required to pay the tax due in each of the first two months of the quarter by depositing the due amount in FORM GST PMT-06, by the twenty-fifth day of the month succeeding such month. While generating the challan, taxpayers should select "Monthly payment for the quarterly taxpayer" as a reason for generating the challan. The said person can use any of the following two options provided below for monthly payment of tax during the first two months (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 percent 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.

Practical Illustration: M/s TaxAaram, a registered person, has opted for QRMP Scheme for the Quarter April 2021 to June 2021. Then the manner and mode of computation of monthly taxes payable by M/s TaxAaram, are being computed and tabulated below:

(i) In case the last return filed by M/s TaxAaram, was on a quarterly basis for Quarter Ending March 2021:

(ii) In case the last return filed by M/s TaxAaram was monthly for the tax period March 2021:

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 Registered Persons, can also 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.

Thus, M/s TaxAaram is free to avail either of the above-stated two tax payment methods of making a monthly payment of tax, in any of the two months of the quarter under the QRMP Scheme.

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 a 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 a nil tax liability, the registered person may not deposit any amount.

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

7. Has any New Form for Filing Quarterly Return under QRMP Scheme, been prescribed?

Under the QRMP Scheme, No New Return Form has been prescribed. The registered persons would be required to furnish their quarterly returns in FORM GSTR-3B, for each quarter, on or before the 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 the filing that quarter's FORM GSTR-3B may either be claimed as a 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 the return in FORM GSTR-3B for the relevant tax period.

8. How and in what manner, the Interest for making Delayed Payment of tax, be calculated under the QRMP Scheme?

Interest for making Delayed Payment of tax be calculated under the QRMP Scheme will be calculated as under:

A. For a 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 an 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 the 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 the 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.

Further, in case of 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.

Practical Illustration 1: M/s TaxAaram, a registered person, who has opted for the QRMP Scheme, had paid a total amount of Rs. 100,000/- in cash as tax liability in the previous quarter of October to December 2020. He opts to pay tax under the fixed sum method. He, therefore, pays Rs. 35,000/- each on 25th February 2021 and 25th March 2021 for discharging tax liability for the first two months of quarter viz. January and February 2021. In its return for the quarter, it is found that liability, based on the outward and inward supplies, for January was Rs. 40,000/- and for February it was Rs. 45,000/-. No interest would be payable for the lesser amount of tax (i.e. Rs. 5,000 and Rs. 10,000 respectively) discharged in these two months provided that M/s TaxAaram discharges its entire tax liability for the quarter in the FORM GSTR-3B of the quarter by the due date.

Practical Illustration 2: M/s TaxAaram which has opted for the QRMP Scheme, had paid a total amount of Rs. 100,000/- in cash as tax liability in the previous quarter of October to December 2020. It opts to pay tax under the fixed sum method. It, therefore, pays Rs. 35,000/- each on 25th February and 25th March 2021, for discharging tax liability for the first two months of quarter viz. January and February 2021. In its return for the quarter, it is found that total liability for the quarter net of available credit was Rs. 125,000 but it files the return on 30th April 2021. Interest would be payable at the applicable rate on Rs. 55 [Rs. 125,000 – Rs. 70,000 (deposit made in cash ledger in M1 and M2)] for the period between the due date of quarterly GSTR 3B and 30th April 2021.

B. For a 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.

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

9. How and in what manner Late Fees for furnishing quarterly Return under QRPM Scheme will be levied?

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 Section 39(1) of the CGST Act is quarterly. Accordingly, a late fee would be the application for the delay in furnishing of the said quarterly return/details of outward supply. No late fee is applicable for delay in payment of tax in the first two months of the quarter.

10. Can a registered person switch back to the option of filing monthly return once he has opted for the QRMP Scheme?

Yes, a registered person can switch back to the option of filing a monthly return once he has opted for the QRMP Scheme. The facility for opting out of the Scheme for a quarter will be available from the first day of the second month of the preceding quarter to the last day of the first month of the quarter.

Practical Illustration: M/s TaxAaram is having a turnover of Rs 3 crores in the previous FY 2019-20. Its turnover in the current FY 2020-21 (for the period 1.4.2020 to 31.12.2020) is Rs. 4.5 crores. It has furnished its GSTR 3B Return for the month of October 2020 on 25.11.2020.

As per the "default migration" facility in the GSTN portal, M/s TaxAaram will be able to opt-in for the QRMP Scheme, for the first quarter of the Scheme, i.e. January 2021 to March 2021, and will be able to file its quarterly Return under the QRMP Scheme.

Suppose, M/s TaxAaram, makes an additional turnover of Rs. 50 lakhs, in the month of March 2021, making its annual turnover for FY 2020-21 Rs 5 crores. Now, since the aggregate annual turnover of M/s TaxAaram for FY 202-21, has remained within the stipulated threshold limit of Rs 5 crores, therefore, M/s TaxAaram may continue to opt for filing of the quarterly Return under QRMP Scheme, even for the next quarter starting from April 2021, to June 2021.

However, even if the annual turnover of M/s TaxAaram remains up to Rs 5 crores in the FY 202-21, still it may opt-out of QRMP Scheme for the next quarter starting from April 2021 to June 2021, on any day starting from 1st February 2021 to 30th April 2021.