The Quarterly Return and Monthly Payments (QRMP) Scheme is an initiative introduced by the Indian government to simplify the Goods and Services Tax (GST) compliance process for small taxpayers. It allows eligible taxpayers to file GSTR-1 and GSTR-3B returns on a quarterly basis, while still making monthly tax payments. Launched on January 1, 2021, this scheme aims to ease the compliance burden for businesses by reducing the frequency of filing returns without compromising on the regularity of tax payments.
Key
Features of the QRMP Scheme
- Eligibility Criteria
The QRMP
scheme is available to GST-registered taxpayers with an aggregate annual
turnover of up to ₹5 crore in the preceding financial year. Taxpayers
can opt for the scheme on a voluntary basis, and eligibility is determined for
each financial year. If the turnover exceeds the ₹5 crore threshold at any time
during the year, the taxpayer will automatically exit the scheme.
- Quarterly Return Filing
Under this scheme, taxpayers are required to file GSTR-1 (for outward supplies) and GSTR-3B (summary return including tax liability) quarterly, instead of monthly. This reduces the number of returns filed from 24 to 8 annually, making compliance simpler and more manageable.
- Monthly Tax Payments
Although returns are filed quarterly, tax payments must still be made monthly. Taxpayers can use one of two payment methods: - Fixed Sum Method (FSM): Taxpayers can pay 35% of the tax paid in cash in the
previous quarter (for quarterly filers) or the tax paid in the last month
of the previous quarter (for monthly filers).
- Self-Assessment Method (SAM): Under this option, taxpayers can calculate their actual tax liability for the month and pay that amount.
- Invoice Furnishing Facility (IFF)
To facilitate the smooth flow of Input Tax Credit (ITC) for buyers, the QRMP scheme includes an Invoice Furnishing Facility (IFF). Under the IFF, taxpayers can upload details of their outward supplies for the first two months of the quarter, ensuring their buyers can claim ITC without waiting for the full quarter to end. The total value of invoices uploaded in the IFF is capped at ₹50 lakh for each month.
- Late Fees and Interest
The QRMP scheme reduces the compliance burden, but penalties still apply for late filing or delayed payments. Interest is charged for late tax payments, and late fees are imposed for delayed return filing. However, the scheme does provide some relief in terms of reduced penalties for quarterly filers.
Benefits
of the QRMP Scheme
- Reduced Compliance Burden: By shifting from monthly to quarterly filing, the
number of returns is significantly reduced. This lightens the load for
small businesses, allowing them to focus more on business operations
rather than frequent tax filing.
- Flexibility in Tax Payments: The availability of both the Fixed Sum and
Self-Assessment Methods allows taxpayers to choose a tax payment method
that suits their business’s cash flow and tax liability pattern.
- Improved Cash Flow Management: The scheme provides better liquidity for businesses
as they don’t need to block large sums of money for tax payments every
month. They can choose to pay based on actual liability or a fixed sum.
- Continuity of Input Tax Credit (ITC): With the IFF, businesses can upload invoices in the
first two months, allowing their buyers to claim ITC promptly without
waiting for the full quarter.
Challenges
in the QRMP Scheme
- Monthly Payments:
While the filing frequency is reduced, taxpayers are still required to
make monthly payments, which may not completely eliminate the need for
regular compliance.
- Monitoring Cash Flow:
Businesses using the Fixed Sum Method need to be cautious about ensuring
adequate funds for tax payments based on the previous quarter’s liability,
which may not always reflect the current quarter's performance.
- System Dependence: Since the scheme relies heavily on the GST portal, taxpayers must ensure timely access to the system to make payments and file returns, which can be challenging during peak filing times.
How
to Opt for the QRMP Scheme
Taxpayers can opt in or opt out of
the QRMP scheme at the beginning of any quarter through the GST portal. Once
opted in, the option continues unless the taxpayer opts out or exceeds the
turnover threshold. The window for selecting the QRMP scheme for a specific
quarter remains open until the end of the preceding quarter.
Conclusion
The QRMP scheme is a significant
step towards simplifying GST compliance for small taxpayers. By reducing the
frequency of return filing and offering flexibility in tax payments, it enables
businesses to focus more on growth and less on administrative tasks. However,
it requires careful management of monthly payments and awareness of system
deadlines to ensure smooth compliance.
This scheme strikes a balance
between compliance ease and maintaining the regular flow of tax payments,
making it a valuable option for eligible businesses looking to streamline their
GST obligations.
