QRMP Scheme in GST: A Detailed Guide to Quarterly Returns and Monthly Tax Payments for Small Businesses

The Goods and Services Tax (GST) regime in India, while transformative, can present compliance challenges, especially for small taxpayers and businesses with limited resources.

To address this, the GST Council introduced the Quarterly Return Filing and Monthly Payment of Taxes (QRMP) Scheme.

This scheme offers a more manageable approach to GST compliance. DisyTax presents a detailed and descriptive guide to the QRMP scheme, designed to help small businesses thoroughly understand its provisions, eligibility criteria, operational mechanics, and associated benefits.

Quarterly Return Filing and Monthly Payment of Taxes (QRMP) Scheme
is a significant facilitation measure implemented by the GST Council.

It aims to ease the compliance burden on small taxpayers by allowing them to file their GST returns on a quarterly basis, instead of the standard monthly frequency, while retaining the requirement for monthly tax payments.

This scheme is particularly beneficial for small and medium-sized enterprises (SMEs), micro-businesses, and other entities with a smaller scale of operations.

To be eligible to opt into and avail the benefits of the QRMP scheme, taxpayers must fulfill specific criteria:

• Aggregate Annual Turnover Limit:
  The taxpayer’s aggregate annual turnover during the preceding financial year must not exceed ₹5 crore.

  This turnover threshold is crucial in defining which businesses are considered “small” for the purpose of this scheme.

• Voluntary Option Exercise:
  Eligible taxpayers are not automatically enrolled in the QRMP scheme.

  They must explicitly and voluntarily opt for it through the GST portal.

  This ensures that businesses have the choice to select the compliance method that best suits their operational needs.

The QRMP scheme is characterized by several key features that dictate its functioning and impact on taxpayers:

• Quarterly Filing of GSTR-3B and GSTR-1 Returns:
  Taxpayers who opt for the QRMP scheme are required to file their GSTR-3B (summary return of outward supplies and input tax credit) and GSTR-1 (details of outward supplies) returns on a quarterly basis.

  This reduces the frequency of return filing to one-third of the standard monthly requirement.

• Monthly Payment of Taxes:
  While the returns are filed quarterly, the liability for tax payment continues to be on a monthly basis.

  This ensures a steady flow of revenue to the government while offering flexibility in return filing.

• Two Distinct Options for Monthly Tax Payment:
  Taxpayers under the QRMP scheme have two options for making their monthly tax payments:

  • Fixed Sum Method (or Challan PMT-06):
    This method allows taxpayers to pay a pre-determined amount as their monthly tax liability.

    The amount is typically calculated as a percentage of the net tax paid in the previous quarter.

    This offers simplicity and predictability for monthly payments.

  • Self-Assessment Method:
    Alternatively, taxpayers can choose to calculate their actual tax liability for each month and pay accordingly.

    This method requires a more detailed assessment of monthly transactions but ensures that the exact tax due is paid.

• Invoice Furnishing Facility (IFF) – A Key Facilitation:
  The Invoice Furnishing Facility (IFF) is a crucial component of the QRMP scheme, designed to facilitate business-to-business (B2B) transactions.

  It addresses the issue of delayed Input Tax Credit (ITC) for recipients of supplies from QRMP filers.

  • This facility allows taxpayers filing GSTR-1 quarterly to declare their B2B invoices electronically for the first two months of a quarter.

    This enables the recipients of these supplies to avail of the ITC in those months, improving their cash flow and working capital management.

The QRMP scheme offers several tangible benefits to small taxpayers:

• Significant Reduction in Compliance Burden:
  The most prominent advantage is the reduced frequency of return filing.

  Filing GSTR-1 and GSTR-3B quarterly instead of monthly translates to a substantial decrease in the administrative and logistical efforts required for GST compliance.

  This allows businesses to focus more on their core operations.

• Improved Cash Flow Management for Businesses and Their Recipients:

  • For suppliers, the IFF mechanism enables them to report their B2B invoices monthly, ensuring that their recipient customers can avail of ITC promptly.

    This can lead to better business relationships and more efficient transactions.

  • For recipients of supplies from QRMP filers, the IFF ensures that they can claim their ITC in a timely manner, which is crucial for maintaining healthy cash flow and working capital.

• Simplification of Monthly Tax Payment Procedures:
  The availability of the fixed sum method simplifies the process of monthly tax payments.

  It offers a convenient and predictable option for taxpayers who prefer not to calculate their exact tax liability every month.

Eligible taxpayers can exercise their option to opt into or opt out of the QRMP scheme through the GST portal.

It’s essential to adhere to the specified timelines for exercising this option.

• Step 1: Access the GST Portal:
  The first step involves logging into the official GST portal (www.gst.gov.in) using valid and authorized login credentials.

• Step 2: Navigate to the QRMP Option:
  Once logged in, taxpayers need to navigate to the specific section or functionality within the GST portal that allows for opting into or out of the QRMP scheme.

  This may be located within the “Services” or “Returns” section.

• Step 3: Select the Desired Option:
  Within the QRMP section, taxpayers must clearly select whether they wish to opt into the scheme (if currently not enrolled) or opt out of the scheme (if currently enrolled and wish to revert to monthly filing).

• Step 4: Confirm and Save Changes:
  After making the selection, taxpayers must carefully review their choice and then confirm and save the changes.

  The GST portal should provide a confirmation message or acknowledgment upon successful completion of this step.

• Quarterly Filing Requirement:
  Under the QRMP scheme, taxpayers are obligated to file their GSTR-1 returns on a quarterly basis.

  This return provides details of outward supplies of goods and services.

• Invoice Furnishing Facility (IFF) – Monthly B2B Reporting:
  To facilitate the timely availability of Input Tax Credit (ITC) to recipients of supplies, the QRMP scheme incorporates the Invoice Furnishing Facility (IFF).

  This allows suppliers to declare their B2B invoices electronically on a monthly basis for the first two months of each quarter.

  • This ensures that B2B transactions are reported promptly, allowing the recipients to claim ITC without waiting for the entire quarter to end.

• Quarterly Filing Requirement:
  Similar to GSTR-1, GSTR-3B returns are also required to be filed on a quarterly basis by taxpayers under the QRMP scheme.

  GSTR-3B is a self-declared summary return of outward supplies, input tax credit claimed, and tax payable.

• Monthly Tax Payment Obligation:
  Despite the quarterly filing of GSTR-3B, the obligation to pay taxes remains on a monthly basis.

  Taxpayers must ensure that their tax liability is paid every month, even though they file the return quarterly.

Taxpayers under the QRMP scheme have two distinct options for fulfilling their monthly tax payment obligations:

• Fixed Sum Method (or Challan PMT-06):

  • This method offers a simplified approach to monthly tax payments.

  • Taxpayers choosing this option pay a pre-determined amount, typically calculated as a percentage of the net tax paid in the preceding quarter.

  • This method is suitable for businesses with relatively stable monthly transactions and tax liabilities.

  • It provides predictability and ease of payment.

  • The payment is made using Challan PMT-06.

• Self-Assessment Method:

  • Alternatively, taxpayers can opt to calculate their actual tax liability for each month and make the payment accordingly.

  • This method involves a more detailed assessment of the taxpayer’s monthly sales, purchases, and input tax credit.

  • This method is appropriate for businesses with fluctuating monthly transactions or those who prefer to pay the exact amount of tax due each month.

The Invoice Furnishing Facility (IFF) is a critical and unique aspect of the QRMP scheme.

It plays a vital role in ensuring a smooth flow of Input Tax Credit (ITC) in the GST system.

• Purpose and Functionality:
  The IFF is designed to address the potential delay in ITC availability for recipients of supplies from taxpayers who file their GSTR-1 quarterly.

  Without the IFF, recipients would have to wait until the end of the quarter to claim ITC on these supplies.

• Monthly B2B Invoice Reporting:
  The IFF allows suppliers to declare their B2B invoices electronically on a monthly basis for the first two months of each quarter.

  This means that for each of the first two months, suppliers can upload the details of their B2B invoices, enabling the recipients to view and claim ITC on these invoices in the same month.

• Impact on ITC Availability:
  By providing this facility, the GST system ensures that ITC is available to recipients on a more timely basis, improving their cash flow and working capital management.

  It facilitates smoother business transactions and reduces the financial burden on businesses.

While the QRMP scheme offers numerous benefits, taxpayers must also be aware of potential challenges and important considerations:

• Importance of Accurate Monthly Estimation (for Fixed Sum Method):
  If taxpayers choose the fixed sum method for monthly tax payments, it’s crucial to ensure that the estimated amount is reasonably accurate.

  Underestimating the monthly liability can lead to interest and penalties, while overestimating can tie up working capital unnecessarily.

• Necessity of Diligent Reconciliation of Monthly Payments with Quarterly Returns:
  Regardless of the tax payment method chosen, taxpayers must diligently reconcile their monthly payments with their quarterly GSTR-3B returns.

  This reconciliation is essential to ensure accuracy in reporting and avoid discrepancies that could lead to notices or audits from tax authorities.

DisyTax offers a range of expert services to help businesses effectively navigate the QRMP scheme and ensure seamless GST compliance:

• Eligibility Determination and Guidance:
  DisyTax can help businesses determine their eligibility for the QRMP scheme and provide expert guidance on whether opting into the scheme is the right decision for their specific circumstances.

• Assistance with Option Selection (Opting In/Out):
  DisyTax can assist businesses in making informed decisions about opting into or out of the QRMP scheme, considering their business needs, transaction volume, and compliance capabilities.

• Support with Invoice Furnishing Facility (IFF) Compliance:
  DisyTax provides comprehensive support with accurate and timely IFF filing, ensuring that B2B invoices are reported correctly and that recipients can avail of ITC promptly.

• End-to-End GSTR-1 and GSTR-3B Filing Support:
  DisyTax offers complete support for quarterly filing of GSTR-1 and GSTR-3B returns, ensuring accuracy, timeliness, and compliance with all applicable regulations.

• Expert Assistance with Monthly Payment Calculation:
  DisyTax can provide expert assistance with calculating monthly tax payments, whether businesses choose the fixed sum method or the self-assessment method, ensuring accurate calculations and timely payments.

• Accurate Reconciliation of Monthly Payments and Quarterly Returns:
  DisyTax can help businesses in accurately reconciling their monthly tax payments with their quarterly returns, minimizing the risk of discrepancies and ensuring compliance.

The QRMP scheme represents a significant step towards simplifying GST compliance for small taxpayers in India.

By understanding its features, eligibility criteria, and operational procedures, businesses can effectively leverage its benefits to reduce their compliance burden, improve their cash flow management, and enhance their operational efficiency.

DisyTax is committed to empowering businesses with the knowledge, expertise, and support they need to navigate the QRMP scheme and ensure seamless GST compliance.

For the most accurate and up-to-date information, always refer to the official GST portal:
https://www.gst.gov.in/
.