Quarterly GST Payment Scheme
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 a 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-
Notification number and date | Purpose of the notification |
Notification No. 81/2020- Central Tax dated 10th November 2020 |
Amendments in section 39(1), section 39(2) and section 39(7) of the Central Goods and Services Tax Act, 2017 notified. |
Notification No. 82/2020- Central Tax dated 10th November 2020 |
Introduced Central Goods and Services Tax (Thirteenth Amendment) Rules, 2020. |
Notification No. 84/2020- Central Tax dated 10th November 2020 |
Notifies class of person eligible under the Scheme. |
Notification No. 85/2020- Central Tax dated 10th November 2020 |
Notifies special procedure for making payment of 35% of the tax liability in the first two months of the quarter. |
A brief understanding of the scheme-
The Quarterly Return Monthly Payment Scheme is briefly explained hereunder-
Eligibility criteria of the Scheme-
The taxable person is required to satisfy the following two criteria for availing the benefit of the Scheme-
- The taxable person should be liable to furnish the return in Form GSTR-3B; and
- 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-
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- 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 selected option for the future tax period.
Default Migration under the Scheme-
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- Default migration facility is available to a taxable person who satisfies both the below 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 not willing to opt-in the Scheme. Then, he can easily 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.
- Default migration facility is available to a taxable person who satisfies both the below conditions-
Monthly payment of tax for a taxable person opting for the Scheme-
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- 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, 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, in cases, wherein, the return was filed quarterly; or
- Tax paid in cash in the last month of the immediately preceding quarter, in cases, wherein, the return is filed monthly.
- 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 challan in Form GST PMT-06.
- Here, pre-filled challan in Form GST PMT-06 will be generated on the GST portal for the amount equal to-
- Fixed Sum Method-
Filing of return under the Scheme-
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- The taxable person opting to file a return under the Scheme is required to file Form GSTR-3B on a quarterly basis.
- The said Form GSTR-3B is to be filed on or before 22nd or 24th day of the month succeeding the respective quarter.
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Interest payable under the Scheme-
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- In case the Fixed Sum Method is followed by the taxable person-
- Here, 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 done within 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, then, interest would be payable as per provisions of section 50.
- In case the Fixed Sum Method is followed by the taxable person-
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- In case the Self-Assessment Method is followed by the taxable person-
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- Here, interest would be payable as per provisions of section 50 on unpaid tax beyond the due date for the first two months of the quarter.
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- In case the Self-Assessment Method is followed by the taxable person-
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Late fee applicable under the Scheme-
As per section 39(1) of the Central Goods and Services Tax Act, 2017 return is to be filed on a quarterly basis. Thus, the late fee would be applicable for delay in filing of the said quarterly return. Therefore, it is clarified that no late fee will be charged/ payable for delay in payment of tax in the first two months of the respective quarter.
Other important points-
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- As seen above, the taxable person is eligible for the scheme only if the aggregate annual turnover doesn’t exceed INR 5 Crore. In case the aggregate annual turnover exceeds INR 5 Crores in any quarter during the current financial year, the taxable person will not be eligible to avail the benefit of the scheme from the next quarter.
- In case there is a 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 the purpose of setting off the liability furnished in Form GSTR-3B. Balance amount left, if any, can either be claimed as refund or the same can be used towards the payment of the subsequent liability.
- Importantly, the refund of balance amount will be permitted only after furnishing of 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 Invoice Furnishing Facility for furnishing details of such outward supplies.
Post by poonamgandhi
CA Poonam Gandhi is a Chartered Accountant and a Lawyer. With a wide practice experience and deep understanding of different laws and taxes, she has been an independent professional writer in the field of taxation, finance and laws.