QRMP Scheme: It is complicated, make it simple

If one asks GST taxpayers with a turnover of up to Rs 5 crore what they would require to simplify their GST compliances, most would probably reply that they would prefer a quarterly filing of returns and monthly payment of taxes with no terms and conditions.

They would be disappointed with Circular No. 143/13/2020-GST, issued by the Central Board of Indirect Taxes and Customs (CBIC) which provides the nitty-gritty on the Quarterly Return Monthly Payment Scheme (QRMP) announced by the government. The Circular has 20 paragraphs (some mandatory, some optional) on different aspects of the Scheme.

A registered person who is required to furnish a return in Form GSTR-3B, and who has an aggregate turnover of up to Rs 5 crore in the preceding financial year, is eligible for the QRMP (Quarterly Return Filing and Monthly Payment of Taxes) Scheme. It is clarified that the aggregate annual turnover for the preceding financial year shall be calculated in the common portal taking into account the details furnished in the returns by the taxpayer for the tax periods in the preceding financial year.

This new Scheme is effective from January 1, 2021. Further, in case the aggregate turnover exceeds Rs 5 crore during any quarter in the current financial year, the registered person shall not be eligible for the Scheme from the next quarter.

Facility to avail the Scheme on the common portal would be available throughout the year. In terms of Rule 61A of the Central Goods and Services Tax Rules, 2017, a registered person can opt for any quarter from first day of second month of preceding quarter to the last day of the first month of the quarter.

In order to exercise this option, the registered person must have furnished the last return, as due on the date of exercising such option. Registered persons are not required to exercise the option every quarter. Where such an option has been exercised once, they shall continue to furnish the return as per the selected option for future tax periods unless they revise the said option.

Options, restrictions and conditions: If taxpayers thought that the QRMP Scheme was an option, CBIC gives them a surprise. For the first quarter of the Scheme, it has been decided that all the registered persons, whose aggregate turnover for the FY 2019-20 is up to Rs 5 crore and who have furnished the return in Form GSTR-3B for the month of October, 2020 by November 30, 2020, shall be migrated on the common portal.

The CBIC says that the above default option has been provided for the convenience of registered persons based on their anticipated behaviour. Taxpayers would be wondering what other surprises CBIC has in store for them in future if they draft laws on the anticipated behaviour of taxpayers.

Thankfully, a window has been provided to change the option as above, if they so desire, from December 5, 2020 to January 31, 2021. A useful clarification given by CBIC is that the QRMP scheme is GSTIN-specific - so an entity with multiple GSTIN’s can opt for the Scheme only for some.

With e-invoicing planned to be rolled out to all taxpayers from April 1, 2021, CBIC is preparing those who opt for the QRMP Scheme to learn the nuances of e-invoicing. For each of the first and second months of a quarter, a registered person will have the facility (Invoice Furnishing Facility-IFF) to furnish the details of such outward supplies to a registered person, as he may consider necessary, between the first day of the succeeding month till the 13th day of the succeeding month.

The said details of outward supplies shall, however, not exceed the value of Rs 50 lakh in each month. Just like in the e-invoicing scheme, credit to the recipient is almost instant.

Tax payment: Taxpayers opting for the QRMP Scheme would be required to pay the taxes by the 25th of the succeeding month. Two options for payment of taxes have been provided - a fixed sum method and self-assessment method. Under the fixed sum method, an amount equal to 35% of the tax paid in cash in the preceding quarter where the return was furnished quarterly needs to be paid in a pre-filled challan.

Otherwise, an amount equal to the tax paid in cash in the last month of the immediately preceding quarter where the return was furnished monthly, needs to be paid. Under the self-assessment method, the taxpayer can continue what he is going now for payment of taxes.

It appears that CBIC has needlessly complicated the QRMP Scheme by providing too many details and options. The QRMP Scheme has been rolled out at a time when they had just about adapted to GST. Combined with the fact that there are too many angles to the QRMP scheme (mandatory transitioning, two methods of payment of taxes, option for e-invoicing with a monetary limit), there may not be too many takers for this Scheme.

Ideally, CBIC should provide an option for taxpayers to opt for the Scheme. The Scheme itself should be simple - quarterly filing of returns with a monthly payment of taxes. If no late fee and interest are levied for the monthly payment of taxes, almost all taxpayers would opt for a 100% payment of taxes. Mathematical limits such as 35% would not be required to be given as an option. Since the e-invoicing portal is different from the GST portal, all taxpayers can be given an option to take a dry run on the portal for three months from January 1. Transition to the e-invoicing regime would then be easier.

“Subject to such conditions as may be imposed”, finds mention in the CGST Act 33 times. CBIC should think of replacing this with “Subject to such minimum conditions as may be imposed” so that those drafting the laws don’t go overboard with conditions just because it is a part of GST laws.

(The writer is a Bengaluru-based tax expert)