GST Quarterly Return Filing Option for Small Business Owners

GST Quarterly Return Filing: Filing GST returns is a mandatory compliance activity for businesses registered under India’s Goods and Services Tax (GST) system. To simplify compliance for small businesses, the government has introduced the Quarterly Returns Monthly Payment (QRMP) scheme, enabling eligible taxpayers to file returns quarterly while paying taxes monthly. This blog explains the QRMP scheme in detail and highlights how small businesses can benefit from the GST Quarterly Return Filing Option.

Understanding GST Returns

GST returns are official documents submitted to tax authorities that detail a business’s financial transactions, including sales, purchases, tax collected, and tax paid. These returns are essential for reporting GST liabilities and claiming Input Tax Credit (ITC). Depending on the size and nature of the business, GST returns must be filed either monthly or quarterly.

Who Are Small Taxpayers?

Small taxpayers are businesses or individuals whose annual turnover does not exceed ₹5 crores in the previous financial year. To reduce their compliance burden, the government allows small taxpayers to choose between quarterly or monthly GST return filing options. Under the quarterly filing system, three distinct types of returns can be filed:

1. GSTR-Quarterly: Designed for businesses that prefer traditional quarterly filing.
2. GSTR-Sahaj: Simplified return filing for businesses with minimal tax complexity.
3. GSTR-Sugam: A quarterly filing option for businesses with straightforward transactions.

Introduction to the QRMP Scheme

The Quarterly Returns Monthly Payment (QRMP) scheme is a government initiative that allows eligible businesses to file GSTR-1 and GSTR-3B quarterly while paying taxes every month. This scheme is particularly beneficial for small businesses with annual turnovers of up to ₹5 crores.

Previously, businesses had to file these returns monthly, leading to higher compliance costs and time investment. With the QRMP scheme, businesses can reduce the frequency of return filings while maintaining compliance with monthly tax payment requirements.

Key Features of the QRMP Scheme:

• Quarterly filing of GSTR-1 and GSTR-3B.
• Monthly payment of taxes through two methods: Fixed Sum Method (FSM) and Self-Assessment Method (SAM).
• Simplified compliance process, especially for small businesses with fewer transactions.

Eligibility for GST Quarterly Return Filing Option

The QRMP scheme is available for the following:

1. Registered Persons with Annual Turnover Up to ₹5 Crores:
   Small businesses with aggregate annual turnover (AATO) of ₹5 crores or less in the previous fiscal year are eligible. If turnover exceeds ₹5 crores during a quarter, the taxpayer will no longer be eligible from the next quarter.
2. New GST Registrants or Composition Scheme Opt-Outs:
   Businesses newly registered under GST or those opting out of the Composition Scheme can also choose the QRMP option.
3. GSTIN-Based Eligibility:
   Taxpayers with multiple GSTINs under the same PAN can choose QRMP for specific GSTINs while keeping others on monthly filing.

How to Opt for the QRMP Scheme?

Opting for the QRMP scheme is a straightforward process. Eligible taxpayers can log in to the GST portal and follow these steps:

1. Go to Services > Returns > Opt-in for Quarterly Return.
2. Select the option between the 1st of the second month of the previous quarter and the last day of the first month of the quarter.
3. To opt-out, repeat the same process.

This flexibility allows businesses to align their filing preferences with operational needs.

Benefits of GST Quarterly Return Filing for Small Businesses

The GST Quarterly Return Filing option provides several advantages to small businesses:

1. Reduced Compliance Burden

Filing returns quarterly instead of monthly significantly reduces the administrative workload, allowing businesses to focus more on their operations.

2. Improved Cash Flow Management

Quarterly return filing gives small businesses more time to plan their finances, as they only need to calculate and file returns once every three months.

3. Cost Savings

The reduced frequency of return filing lowers compliance costs, particularly for small businesses that rely on external consultants for tax filing.

4. Time Efficiency

Small business owners can dedicate their time to core business activities instead of spending excessive time on tax compliance.

5. Simplified Documentation

The QRMP scheme simplifies the process of maintaining and submitting records, making it accessible for businesses with limited financial expertise.

Methods for Monthly Tax Payment Under the QRMP Scheme

Even though returns are filed quarterly, taxpayers must pay taxes monthly using one of the following methods:

1. Fixed Sum Method (FSM):

• A pre-filled challan is generated based on the tax liability from the previous quarter or month.
• If the previous GSTR-3B was filed quarterly, the challan amount is 35% of the tax paid in cash during the preceding quarter.
• If the previous GSTR-3B was filed monthly, the challan amount equals the tax paid in cash during the last month of the previous quarter.
• New taxpayers or those who haven’t filed their previous GSTR-3B are not eligible for this method.

2. Self-Assessment Method (SAM):

• Taxpayers manually calculate their tax liability by considering inward and outward supplies and available ITC.
• Payments are made using Form GST PMT-06 by the 25th of the following month for the first and second months of the quarter.

Late Fees and Penalties

To encourage timely compliance, the government imposes late fees for delayed filing of returns:

1. For Taxpayers with Tax Liability:
   • ₹25 under CGST Act
   • ₹25 under SGST Act
2. For Taxpayers with NIL Tax Liability:
   • ₹10 under CGST Act
   • ₹10 under SGST Act

The maximum penalty is capped at ₹5,000.

Practical Example of GST Quarterly Return Filing

Let’s consider a small retail business with an annual turnover of ₹3 crores:

1. The business opts for the QRMP scheme and files GSTR-1 and GSTR-3B for the April-June quarter.
2. Tax payments for April and May are made monthly using the FSM or SAM method.
3. The final return for the quarter is filed in July, consolidating all transactions from April to June.

This process reduces the compliance burden while ensuring tax obligations are met.

Limitations of the QRMP Scheme

While the QRMP scheme is beneficial for small businesses, there are some limitations:

• Tax payments must still be made monthly, requiring businesses to stay updated on their financial transactions.
• Businesses with complex tax structures may find the self-assessment method challenging.

Conclusion: Why Opt for GST Quarterly Return Filing?

The GST Quarterly Return Filing Option is a game-changer for small businesses. By reducing the frequency of return filings, the QRMP scheme simplifies tax compliance, lowers costs, and provides much-needed flexibility. For businesses with straightforward transactions, this scheme offers an ideal balance between compliance and operational efficiency.

With the option to file returns quarterly and pay taxes monthly, small businesses can better manage their resources and focus on growth. The scheme also minimizes potential errors and disputes by extending the timeline for addressing issues.

If you are a small business owner with an annual turnover of ₹5 crores or less, consider opting for the QRMP scheme to take advantage of its many benefits. Streamline your GST compliance and experience the convenience of quarterly return filing today!