QRMP Scheme Explained: Benefits, Eligibility, and Application Process

Table of Contents:

• What is the QRMP Scheme?
• Eligibility Criteria for QRMP Scheme
• Benefits of the QRMP Scheme
• Exercising the Option of QRMP Scheme
• How to Calculate Tax Under the QRMP Scheme?
• Interest Under QRMP Scheme
• Late Fee Under QRMP Scheme
• Due Dates for Quarterly Filing GSTR-3B Under QRMP Scheme
• IFF Under QRMP Scheme
• How to Apply for the QRMP Scheme?
• Opt-Out Process
• Conclusion

The Quarterly Return Filing and Monthly Payment of Taxes (QRMP Scheme) was introduced by the Central Board of Indirect Taxes and Customs (CBIC) to ease the compliance burden on small and medium-sized businesses. This scheme allows eligible taxpayers to file their GST returns quarterly while making monthly tax payments, making it an efficient and simplified option for businesses across various sectors.

What is the QRMP Scheme?

The QRMP Scheme is a compliance relief measure under the GST regime. It enables taxpayers with a turnover of up to ₹5 crore to file GSTR-3B returns quarterly instead of monthly. However, the tax payment is still required to be made on a monthly basis.

The primary objective of this scheme is to streamline the GST compliance process for small and medium enterprises. By reducing the frequency of return filing, the scheme not only eases the compliance burden but also enables better management of working capital. This is particularly important for businesses with limited resources, where cash flow management is a critical factor in sustaining operations.

The scheme is implemented through the official GST portal, where eligible taxpayers can  opt into the scheme on a quarterly basis. Once opted in, the taxpayer is required to make tax payments on a monthly basis while filing the GSTR-3B returns every quarter.

Eligibility Criteria for QRMP Scheme

Eligibility for the QRMP Scheme is straightforward, targeting small and medium-sized businesses. The key eligibility criteria are as follows:

• Turnover Limit: The scheme is available to taxpayers with an aggregate turnover of up to ₹5 crore in the preceding financial year. This turnover limit is calculated on a PAN India basis, meaning the combined turnover of all GSTIN numbers under a single PAN should not exceed ₹5 crore.
• Opt-In Mechanism: Taxpayers who wish to avail themselves of the QRMP scheme must opt-in at the beginning of each quarter. This is done through the GST portal, where taxpayers can select the relevant quarter and confirm their participation in the scheme.
• Regular Taxpayers: Only regular taxpayers under the GST regime are eligible for the QRMP scheme. This means that taxpayers registered under the Composition scheme, Input Service Distributors(ISD), non-resident taxpayers, and taxpayers liable to deduct or collect tax at source are not eligible.

Note: Taxpayers whose aggregate turnover exceeds ₹5 crore in any quarter during the financial year will no longer be eligible for the scheme in the subsequent quarter. Additionally, if a taxpayer fails to file their GSTR-3B returns for the preceding tax period, they will be automatically ineligible for the QRMP scheme in the next quarter.

Benefits of the QRMP Scheme

The scheme offers numerous benefits that make it an attractive option for eligible taxpayers. Some of the key benefits include:

• Reduced Compliance Burden: By allowing quarterly filing of GSTR-3B returns, the scheme significantly reduces the compliance burden on small and medium-sized businesses. This reduction in the frequency of filings allows businesses to focus more on their core operations rather than being bogged down by administrative tasks.
• Improved Cash Flow Management: One of the most significant benefits of the QRMP scheme is the improvement in cash flow management. By making tax payments on a monthly basis while filing returns quarterly, businesses can better manage their working capital. This is especially important for businesses that experience seasonal fluctuations in revenue.
• Interest Savings: Under the QRMP scheme, businesses can avoid paying interest on late tax payments as long as they make the payments on time each month. This is particularly beneficial for businesses that may struggle with liquidity issues, as it reduces the financial burden associated with delayed tax payments.
• Flexibility in Payment Methods: The scheme offers flexibility in tax payment methods, allowing taxpayers to choose between the self assessment method and the fixed sum method. This flexibility ensures that businesses can select the payment method that best suits their financial situation.
• E-Invoicing Compliance: For businesses required to comply with e-invoicing regulations, the QRMP scheme allows for seamless integration with the e-invoicing system. This ensures that businesses can comply with both e-invoicing and GST return filing requirements without any additional administrative burden.

These benefits make the QRMP Scheme an attractive option for small businesses looking to streamline their GST compliance process.

Exercising the Option of QRMP Scheme

If a registered business owner wishes to file their returns through the QRMP scheme, then they have to opt for the quarterly format option by logging into the GST portal. It should be noted that the option should be selected within the time period ranging from the first date of the second month of the previous quarter to the last date of the first month of the quarter in question.

For example, if a person wants to file quarterly reports for the July-September quarter, then he/she must opt for it on the portal between May 1st and July 31st.

Once opted for quarterly filing, the registered individual will have to file their returns for all future tax periods every quarter. However, there are few cases where the person might be unable to file quarterly returns:

1. If the taxpayer becomes ineligible for filing quarterly returns (aggregate turnover exceeds ₹5 crore in a quarter).
2. If the taxpayer has not filed his/her last due GSTR-3B return before the quarter.

How to Calculate Tax Under the QRMP Scheme?

Calculating tax under the QRMP scheme involves a clear and systematic approach. The scheme offers two methods for calculating and paying taxes: the Self-Assessment Method and the Fixed Sum Method. Understanding these methods is crucial for ensuring accurate and timely tax payments:

Self-Assessment Method:

• Under this method, taxpayers are required to calculate the tax payable for each month based on the actual turnover and input tax credit available for that period.
• The taxpayers must assess their tax liability for the month and make the payment accordingly. This method is particularly useful for businesses with fluctuating monthly turnovers, as it allows for precise calculation of tax liability based on actual sales.
• The Self Assessment method provides flexibility and accuracy, ensuring that taxpayers do not overpay or underpay their tax liability.

Fixed Sum Method:

• The Fixed Sum method allows taxpayers to pay a fixed amount of tax each month, based on the previous quarter’s return. The fixed sum is calculated as 35% of the tax liability reported in the last quarter of the previous financial year.
• Taxpayers can simply make the payment of the fixed sum each month without the need to calculate the exact tax liability. This method is ideal for businesses with consistent sales throughout the year.
• This method simplifies the payment process and reduces the administrative burden on businesses, making it a popular choice for those with steady revenue streams.

Payment Deadlines:

• Taxpayers must ensure that the tax is paid by the 25th of the following month, by using the PMT-06 form. For instance, the tax liability for January must be paid by 25th February. Late payments may attract interest charges, so timely payment is crucial.
• At the end of the quarter, taxpayers are required to reconcile the monthly tax payments with their quarterly GSTR-3B return. Any discrepancies must be addressed, and additional tax payments (if any) should be made before filing the return.

Note: Businesses opting for the Self Assessment method must ensure accurate calculations to avoid penalties. Meanwhile, those using the Fixed Sum method should be aware that any significant changes in sales could affect the accuracy of their tax payments.

Interest Under QRMP Scheme

The Quarterly Return Monthly Payment (QRMP) scheme has specific provisions for interest on late payments, and understanding these is crucial for businesses opting into the scheme. The interest payment will be dependent on the method of payment chosen by the taxpayer under the scheme.

Interest Payment under Fixed Sum Method (FSM)

Interest Payment Under Self Assessment Method (SAM)

Under the Self-Assessment Method in the QRMP Scheme, if the tax payment is delayed or short, interest at 18% per annum is applicable on the outstanding tax amount from the due date of payment until the actual date of payment. If you delay filing the GSTR-3B quarterly return or the GSTR-1 return under this scheme, a late fee is levied. However, there is no late fee for delays in monthly tax payments for the first two months of the quarter under this scheme.

Late Fee Under QRMP Scheme

Under the QRMP scheme, late fees apply primarily when taxpayers fail to file their quarterly returns or furnish details of outward supplies within the prescribed deadlines.

The late fee for regular GSTR-3B is ₹50 (split evenly between CGST and SGST) for every day of delay, while the late fee for NIL-GSTR-3B gets reduced to ₹20 per day (again divided between CGST and SGST), with the maximum possible fine being ₹5000.

Due Dates for Quarterly Filing GSTR-3B Under QRMP Scheme

The due dates for filing quarterly GSTR-3B returns under the QRMP scheme are generally the 22nd or the 24th of the next month after the quarter in question. The due date of the filing is dependent on the taxpayer’s location.

IFF Under QRMP Scheme

The Invoice Furnishing Facility (IFF) is a unique and optional feature provided under the QRMP scheme that allows taxpayers to upload and furnish the details of outward supplies (sales) monthly, even though they are filing their GSTR-1 and GSTR-3B returns quarterly. This facility is particularly beneficial for businesses that want to ensure their buyers can claim Input Tax Credit (ITC) on a timely basis.

Some key features of IFF include:

• Monthly Reporting of B2B Invoices: Taxpayers who opt for the QRMP scheme can upload their B2B sales invoices for the first two months of the quarter using IFF. This ensures that the details of these invoices are available to the recipients for claiming ITC without waiting for the quarterly GSTR-1 return.
• Invoice Limit: Taxpayers can upload invoices up to a maximum value of ₹50 lakhs per month through IFF, which enables significant transactions to be reported monthly, benefiting both the seller and the buyer.
• No Late Fees or Interest: There are no late fees or interest charges associated with using IFF. Amendments in the GSTR-1 return is not possible after uploading the invoice through IFF. So, accuracy is essential while using this facility.

By uploading B2B invoices monthly through the IFF, the recipients can see these invoices in their GSTR-2A and GSTR-2B, enabling them to claim ITC on a timely basis. This helps maintain a smooth cash flow and ensures that the buyers are not waiting for the quarterly GSTR-1 filing to claim ITC, thus providing flexibility to them, without increasing the business’s compliance burden.

How to Apply for the QRMP Scheme?

Applying for QRMP Scheme is a straightforward process. Here’s a step-by-step guide:

1. Login to the GST Portal: Begin by logging into the official GST portal using your credentials.
2. Navigate to the QRMP Section: After logging in, go to the services tab, click on ‘Returns,’ and select ‘Opt-in for Quarterly Return.’
3. Select the Relevant Quarter: Choose the quarter for which you want to opt-in. The option is available for each quarter, so ensure you make the selection before the deadline.
4. Confirm and Submit: After selecting the quarter, review the details and confirm your choice. Submit the application to complete the process.

If you are a previously registered taxpayer and fulfill the requirements, you will be auto-migrated to the quarterly return format, from where you have the option to continue this format or revert back to the monthly return format, as per your preference.

Opt-Out Process

If a taxpayer wishes to opt-out of the QRMP scheme, they can do so at the end of any quarter by selecting the monthly return filing option in the GST portal. It’s important to note that opting out will require the taxpayer to revert to monthly GSTR-3B filings.

Conclusion

The QRMP Scheme is a valuable tool for small businesses seeking to reduce their GST compliance burden. By allowing quarterly return filing with monthly payments, the scheme offers flexibility and improved cash flow management. This makes it particularly advantageous for MSMEs, which often face resource constraints in managing their tax obligations.Eligible businesses should consider opting into the scheme to take advantage of its benefits, ensuring a smoother and more efficient compliance experience.

*This article is for information only. For more details please visit msme.gov.in or cbic.gov.in, or consult with a GST practitioner,CA or tax consultant for professional advice.

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Author: Anirban Sinha

A product manager with a writer’s heart, Anirban leverages his 6 years of experience to empower MSMEs in the business and technology sectors. His time at Tata nexarc honed his skills in crafting informative content tailored to MSME needs. Whether wielding words for business or developing innovative products for both Tata Nexarc and MSMEs, his passion for clear communication and a deep understanding of their challenges shine through.