What is the quarterly return monthly payment scheme? Who shall opt for this? Who will get the advantage of this scheme? Who can exercise this from 01.01.2021?
As per the recent circular issued by the Central Board of Indirect Taxes and Customs (CBEC-20/01/08/2020-GST). A Registered person having turnover up to 5 crores Rupees in the preceding financial year has been given the option to file GSTR 3B on a quarterly basis known as quarterly return monthly payment scheme (QRMP) as against in currently they need to file GSTR 3B on Monthly basis.
Let us first check what are the eligibility criteria for this scheme
In terms of notification No. 84/2020- Central Tax, dated 10.11.2020, 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. It is clarified that the aggregate annual turnover for the preceding financial year shall be calculated in the common 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.
Let us take an example to understand this provision in very simple may and relate it with the actual provision.
• Rajat, a sole proprietor of Soni Textile is having T/O in Previous Financial of 1 crore, and during the year turnover up to March 2021 is 1.4 crores. Soni Textile files return on GSTR 3B Monthly basis and GSTR 1 on a quarterly basis. Rajat has recently filed their return of quarter Jan to March 2021 on 20 April 2021. Rajat is willing to avail QRMP scheme from 1st April 2021.
Let's see what the circular says about it. "Facility to avail the Scheme on the common portal would be available throughout the year. In terms of rule 61A of the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as CGST Rules), a registered person can opt-in for any quarter from the first day of the second month of the preceding quarter (i.e. 1st of February 2021) to the last day of the first month of the quarter (i.e. 30st of April 2021). In order to exercise this option, the registered person must have furnished the last return, as due on the date of exercising such option”. (i.e. if, Rajat is willing to avail the scheme on 21st of April 2021 then he is eligible as he has filled in return on 20th April 2021. However, Rajat wants to avail on the 1st of April he will not be eligible as has not filed a return of the previous quarter before the date of exercising of the scheme).
Note: Once the scheme is exercised, they shall continue to furnish the return as per the selected option for future tax periods, unless they revise the said option. As this scheme is optional, a registered person can any time opt-out from this scheme.
Exception: Cut off for Migration from existing monthly scheme to QRMP (Transition phase/1st-time adoption of the scheme)
For the first quarter of the Scheme i.e. for the quarter January 2021 to March 2021, in order to facilitate the taxpayers, it has been decided 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.
To exercise this 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 25th 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 –
1. Fix Sum Method
2. Self-Assessment Method
Let us take an example to understand it in an easy manner
• Soni Textile file GSTR 3B on monthly basis; detail of tax paid in cash for preceding month is as follow;
CGST - Rs. 1000
SGST - Rs. 1000
IGST - Rs. 1000
1. Fix 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 35% of the tax paid in cash in the preceding quarter where the return was furnished quarterly (i.e. Rs. 350 in SGST, CGST & IGST Respectively); or equal to the tax paid in cash in the last month of the immediately preceding quarter where the return was furnished monthly.
Note: 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.
After understanding the above provision Question arise to whom this will be beneficial and not beneficial:
As per my understanding, this will be beneficial to those registered persons who are not maintaining books of account on a monthly basis or they just maintain for GST purposes. In such cases, they can pay fixed amounts generated by the system on the GSTN portal and get temporary relief from the calculation of GST payable and maintaining books of account.
This will not be beneficial to the registered persons who are having a seasonal business.
Let us understand this with a simple example
• Rajat is doing a business of Firework (Sale of Cracker) he is having full business in the month of October to march during the year and the remaining month business is very less.
In this type of business when a registered person enters from a free period to a busy period temporarily net cash outflow will be less and in inverse situation i.e. from busy to free period net cash outflow will be more than required as the base to calculate the tax payable is taken as the previous quarter. Hence it is advisable to opt-out during the non-busy phase.
2. 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.
As per my understanding, if a registered person opts for the Self-Assessment Method then in this case he shall do proper working the same way it was done while filing GSTR 3B every month to determine tax liability payable in cash every month.
After understanding the above provision a question arises as to whom this will be beneficial;
This is not at all beneficial to any type of registered person as this only allows defer filing of GSTR 3B. Hence it is not at all advisable to avail this method.
Now after understanding the Eligibility and method of payment of Tax let us discuss the Interest calculation and due date for filing GSTR 3B;
1. If opted for Fix Sum Method
• 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.
• 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 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.
Let us understand this with an example
• Soni Textile file GST Return on monthly basis; detail of tax paid in cash for preceding month is as follow;
CGST - Rs. 1000
SGST - Rs. 1000
IGST - Rs. 1000
Rajat, who has opted for the Scheme, had paid a total amount of Rs. 1000/- in cash as tax liability in the previous quarter for CGST, SGST & IGST each. He opts to pay tax under a fixed sum method. He, therefore, pays Rs. 350/- each for discharging tax liability for the first two months of the quarter. In his return for the quarter, it is found that liability, based on the outward and inward supplies, for the first month was Rs. 400/- and for the second month, it was Rs. 420/-. No interest would be payable for the lesser amount of tax (i.e. Rs. 50 and Rs. 70 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.
2. If opted for 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.
Quarterly filing of FORM GSTR-3B
Such registered persons would be required to furnish 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 of 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 a return in FORM GSTR-3B for the relevant tax period.