Quarterly GST Payment Scheme

Vide circular no. 143/13/2020-GST dated 10th November 2020, the Central Board of Indirect Taxes and Customs clarified the newly introduced quarterly GST payment scheme for small businesses in India. The Scheme is briefly explained in the current article.

The Gist of Notifications Issued in the Matter

For implementing the ‘Quarterly Return Monthly Payment Scheme’, the Central Board of Indirect Taxes and Customs has issued the following notifications:

A Brief Understanding of the Scheme

The Quarterly Return Monthly Payment Scheme is briefly explained hereunder:

Eligibility Criteria of the Scheme

The taxable person must satisfy the following two criteria to avail the benefits of the Scheme:

• The taxable person should be liable to furnish the return in Form GSTR-3B.
• The taxable person has an aggregate annual turnover up to INR 5 Crores in the preceding financial year.

The Effective Date of the Scheme

The Quarterly Return Monthly Payment Scheme will be effective from 1st January 2021.

Opting for the Scheme

• The eligible taxable person can exercise the option to avail the benefit of the Scheme throughout the year.
• As per rule 61A of the Central Goods and Services Tax Rules, 2017, the taxable person can opt-in the Scheme for any quarter from the first day of the second month of the preceding quarter till the last day of the first month of the quarter.
• Importantly, opting for the Scheme is possible only when the taxable person has furnished the last return within the date of exercising the option.
• The option, once exercised, can be continued till the elected option for the future tax period.

Default Migration under the Scheme

• Default migration facility is available to a taxable person who satisfies both the conditions:
  • Condition 1 – the aggregate annual turnover of the taxable person for the Financial Year 2019-2020 is up to INR 5 Crores; and
  • Condition 2 – the taxable person has duly furnished the return in Form GSTR-3B for the month of October 2020 by 30th November 2020.
• However, if the default migrated taxable person is unwilling to opt-in the Scheme, they can opt-out of the Scheme during the period 5th December 2020 to 31st January 2021.
• Subsequently, the taxable person can opt-out of the Scheme from the first day of the 2nd month of the preceding quarter to the last day of the 1st month of the quarter.

Monthly Payment of Tax for a Taxable Person Opting for the Scheme

• The taxable person is required to pay due tax in each of the first two months of the quarter.
• The amount should be deposited by using challan in Form GST PMT-06.
• The amount should be deposited within 25 days of the months succeeding respective month.
• The payment for the first two months of the quarter can be done based on any of the following two options:
  • Fixed Sum Method:
    • Here, a pre-filled challan in Form GST PMT-06 will be generated on the GST portal for the amount equal to:
      • 35% of the tax paid in cash in the preceding quarter, where the return was filed quarterly; or
      • Tax paid in cash in the last month of the immediately preceding quarter, where the return is filed monthly.
    • Explore the GST return filing services to aid in your tax compliance process.
  • Self-Assessment Method:

    Here, the taxable person can pay the tax liability considering the inward supplies, outward supplies, and available input tax credit. The tax can be paid using a challan in Form GST PMT-06.

Filing of Return Under the Scheme

• The taxable person opting to file a return under the Scheme is required to file Form GSTR-3B on a quarterly basis.
• Form GSTR-3B must be filed on or before the 22nd or 24th day of the month succeeding the respective quarter.

Interest Payable Under the Scheme

• No interest would be payable, provided the taxable person has duly paid the tax in the first two months of the quarter by depositing the auto-calculated fixed amount within the due date.
• However, if payment is not completed within the due date, interest would be payable from the due date of furnishing Form GST PMT-06 to the date of making the payment.
• Additionally, if Form GSTR-3B for the quarter is filed after the due date, interest would be payable as per the provisions of section 50.

Late Fee Applicable Under the Scheme

As per section 39(1) of the Central Goods and Services Tax Act, 2017, a return is to be filed on a quarterly basis. Thus, the late fee would be applicable for the delay in filing the said quarterly return. Therefore, it is clarified that no late fee will be charged/payable for a delay in payment of tax in the first two months of the respective quarter.

Other Important Points

• The taxable person is eligible for the scheme only if the aggregate annual turnover doesn’t exceed INR 5 Crores. Suppose the aggregate annual turnover exceeds INR 5 Crores in any quarter during the current financial year. In that case, the taxable person will not be eligible to avail of the benefit of the scheme from the next quarter.
• In case of cancellation of GST registration of the taxable person opting to file a return under the Scheme, during any of the first two months of the respective quarter, such taxable person is required to furnish a return in Form GSTR-3B for the relevant tax period.
• The amount deposited by the taxable person during the first two months of the quarter will be debited for offsetting the liability furnished in Form GSTR-3B. The balance amount left, if any, can either be claimed as a refund or used towards the payment of the subsequent liability.
• Importantly, the refund of balance amount will be permitted only after furnishing the quarterly return in Form GSTR-3B for the respective quarter.
• The taxable person will be required to furnish the details of outward supplies in Form GSTR-1. The taxable person will have an Invoice Furnishing Facility for furnishing details of such outward supplies.