To increase the Ease of doing business has always been the goal of the government. Taking a step towards this goal and to provide relief to small taxpayers, GST Council on 5th October in their 42nd meet, proposed QRMP SCHEME that is “Quarterly Return Filing Monthly Payment Of Tax” which is an optional Scheme implemented w.e.f. 1st January, 2021.
Under this scheme, small scale businesses having aggregate turnover upto 5 crore rupees may choose the option to furnish returns on quarterly basis along with monthly payment of tax. Thus, small taxpayers would only need to file 8 returns in a year which is half from 16 returns in a year in present mechanism. This is how, the new scheme is an attempt to reduce the burden of return filing from small taxpayers as well as from the GST web portal.
Let’s discuss some features of this new scheme and acquire basic understanding of the scheme through this article.
WHO CAN OPT IN OR OPT OUT FROM THE SCHEME?
A registered person who is in requirement to furnish a return in FORM GSTR-3B, and who has an aggregate turnover of upto 5 crore rupees in the preceding financial year, is eligible for the QRMP Scheme. Further, in case the aggregate turnover exceeds five crore rupees during any quarter in the current financial year, the registered person shall not be eligible for the scheme from the next quarter.
For the purpose of this scheme, 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. It is clarified that this scheme is optional and can be availed based on GSTIN. It is further clarified that for calculating aggregate annual turnover, the turnover of PAN shall be considered. And while opting for the scheme, taxpayer can opt in as per GSTIN wise.
The GST portal will auto-migrate all taxpayers who are registered and falls within the criteria of the scheme. Further, one should have to opt out from the scheme if he decides not to go for the QRMP scheme. A registered person who intends to file his GSTR-3B quarterly should indicate the same on GST portal, from the 1st of the second month of the preceding quarter until the last day of the first month of the quarter for which such option is being exercised. Once the registered person opts for quarterly filing, he will have to continue to furnish his return every quarter for all future tax periods, except in the following situations:
- If the taxpayer becomes ineligible for furnishing a quarterly return
- If the taxpayer opts to furnish GSTR-3B on a monthly basis.
- A registered person will not be eligible to opt for furnishing quarterly returns if the last return, which was due on the date of exercising such an option has not been furnished.
In current GST regime, taxpayers whose aggregate turnover in preceding financial year is less than 1.5 crore rupees are allowed to file GSTR-1 on quarterly basis so that the compliance burden on them shall get reduced. However, this creates problems for taxpayers who make purchases from small taxpayers in claiming Input Tax Credit (ITC). The IFF has been introduced to remove these hardships and help the buyers from small taxpayers in claiming ITC.
INVOICE FURNISHING FACLITY (IFF): FEATURES AND BENEFITS
The taxpayers who opted for the QRMP scheme can use the INVOICE FURNISHING FACILITY (IFF) which requires quarterly GSTR-1 filers to upload their invoices every month. However, there are certain remarkable points regarding IFF which are as under:
• The IFF can be utilized only for the first two months of a quarter.
• The invoices relating to the last month of a quarter are to be uploaded in the GSTR-1 return only.
• There is no requirement to upload invoices in GSTR-1 if the same has been uploaded in the IFF.
• The taxpayer has to submit the B2B invoice details of sale transactions (both inter-state and intra-state) along with debit and credit notes of the B2B invoices issued during the month.
• The total net value of invoices that can be uploaded is restricted to Rs.50 lakhs per month.
• The details submitted in IFF will be reflected in the GSTR-2A, GSTR-2B, GSTR-4A or GSTR-6A of the recipients as the case may be.
Under IFF, small taxpayers are required to furnish both inter state and intra state B2B invoice details of sale transactions and debit/credit notes of the B2B invoices issued during the month.
Through IFF, buyers of goods from small taxpayers can claim ITC every month. This new facility also allows the monthly reconciliation of data and makes return filing easier. It enables Small taxpayers to increase their business by providing faster ITC claims. It provides ease in the compliance burden by reducing the volume of invoices to be uploaded at the end of the quarter.
Definitely, this is a good move to help both small taxpayers as well as buyers from small taxpayers. This facility will indirectly help small taxpayers to enhance their business by providing faster ITC claims to their buyers.
METHODS TO CALCULATE MONTHLY TAX LIABILITY:
As the name suggests, this scheme has mechanism to pay tax on monthly basis. The taxpayer has to deposit tax using form GST PMT-06 by the 25th of the following month, for the first and second months of the quarter. The taxpayers can pay their monthly tax liability either in the Fixed Sum Method (FSM) or Self Assessment Method (SAM). Let’s understand what these two methods are.
Fixed Sum Method (FSM):
Under the fixed sum method, The taxpayer has to pay an amount of tax mentioned in a pre-filled challan in the form GST PMT-06 for an amount equal to 35% of the tax paid in cash in the preceding quarter if the taxpayer has furnished GSTR-3B quarterly for the last quarter. However, if the tax payer has furnished GSTR-3B monthly during the last quarter, fixed amount to be paid by him would be equal to 100% of tax paid in cash in the last month of the immediately preceding quarter. This option can be used to pay tax for the month of January-2021 and February-2021 at the initial implementation level of the QRMP scheme.
Self Assessment Method (SAM):
This method is like the existing method where a taxpayer can pay the tax liability by considering the tax liability on outward supplies and by adjusting the same with the input tax credit available. The tax payer has to assess the same and has to arrive at the tax liability for the month and has to pay the same in form GST PMT-06. Form GSTR-2B to be used to ascertain the amount of available ITC to the taxpayer. There are certain instances where no amount may be required to be deposited, such as –For the first month of the quarter – where the balance in the electronic cash/credit ledger is adequate for the tax liability of the said month OR where the tax liability is nil. And for the second month of the quarter – where the balance in the electronic cash/credit ledger is adequate for the cumulative tax liability for the first and second months of the quarter OR where the tax liability is nil.
It is also to be noted that a registered person will not be eligible for the said procedures unless he has furnished the return for the complete tax period preceding such month. A complete tax period is a tax period where the said person is registered from the first until the last day of the tax period.
Taxpayer is free to avail either of the two tax payment methods above in any of the two months of the quarter.
DUE DATES UNDER QRMP SCHEME:
Due dates to file returns under this scheme would be-GSTR-1 till 13th of the next month from the end of the quarter and GSTR 3B till 22nd or 24th of the next month from the end of the quarter. Further, any claim of refund in respect of the amount deposited for the first two months of a quarter for payment of tax shall be permitted only after the return in FORM GSTR-3B for the said quarter has been furnished.
PROVISION FOR LATE FEE AND INTEREST:
Late fee is payable under this scheme if details of outward supply or return is furnished late. Hence, late fee will be applicable on late filling of quarterly return. Late fee is not applicable if tax is paid late. However, trade notices may be issued for depositing tax late.
Wheres, Interest is payable if tax is paid late. Hence, interest will depend on the option of payment chosen by the taxpayer.
a) If tax is paid as per Fixed Sum Method:
Interest will be levied if taxpayer has paid as per auto generated challans, for the first 2 months and liability is paid in Form GSTR 3B of the quarter by the due date.
b) If tax is paid as per Self Assessment Method
If tax is not deposited within due date, interest would be applicable from the due date of filling Form PMT 06, till date of payment.
SOME ISSUES AND THEIR POSSIBLE SOLUTIONS REGARDING THE SCHEME:
As per this scheme, if GSTR-1 and GSTR-3B are filed quarterly, refund claims on export of goods/services, zero rated supplies to SEZ and deemed export are delayed considerably. In the IFF, there is no provision to upload the invoices relating to Zero rated supplies. Invoices of zero rated supplies can only be uploaded only after the end of the quarter. Now, IGST refund becomes available within 15 days after filing GSTR-1 and GSTR-3B. In the QRMP scenario this IGST refund would be possible only after 120 days. Hence, seeing above situations it is advisable for taxpayers engaged in export or zero rated supply businesses not to opt for QRMP Scheme. It is stated that in order to avail input tax credit, optional Invoice Furnishing Facility (IFF) has been provided, wherein a registered person can upload the B2B invoices, Debit and Credit notes as per his requirements either all invoice issued or certain invoices only and such uploaded invoices will be made available in GSTR-2A and GSTR-2B for the recipient. Here the issue is invoices up to the value of Rs.50 Lakhs’ can only be uploaded. Let’s also note that the IFF Scheme is optional and if the outward supplier chose to upload only after the quarter end. The recipient has to wait for more than 3 months to get the ITC credit to be reflected in GSTR-2A and GSTR-2B. Due to this, large number of taxpayers may try to avoid supplies from QRMP optee’s.
Howerver, despite of some technical and non-technical issues, undoubtedly, this scheme would bring in a big relief to those taxpayers who may have been losing their eligible credits due to compliance of Rule 36(4) where their suppliers are filing GSTR 1 quarterly. Now, with the introduction of QRMP scheme, Invoice Furnishing Facility (IFF) will help the taxpayers to opt for quarterly filing of returns (GSTR-1 as well as GSTR-3B) and simultaneously upload the invoices on a monthly basis which will be duly reflected in the GSTR-2A and GSTR-2B of the customer based on which the customer can avail the input tax credit timely. Summing all these up, we can say that this whole scheme sounds beneficial for small taxpayers. Offcourse, assuming clear guidelines and functioning from the department side and timely as well as smoothly compliance by taxpayers and tax professionals.