What you should know about the QRMP scheme and IFF facility on the GST portal

In its 42nd meeting on 5th October 2020, the GST council recommended the QRMP scheme and Invoice Furnishing Facility (IFF) for the small taxpayers whose aggregate turnover is up to INR five crores. This scheme's prime purpose is to reduce the burden of filing the monthly returns (Form GSTR-1 and GSTR-3B) and ease doing business.

Earlier, taxpayers had to wait for their suppliers to file their returns to avail input tax credit. This issue has been resolved by implementing IFF where the supplier can still file a quarterly return and declare his supplies like B2B invoices, debit, and credit notes in IFF every month. The taxpayer (customer/buyer) can avail ITC in that month instead of holding it for the quarter.

What is QRMP Scheme?

• This scheme's primary purpose is to simplify the compliances (Return filing) for the small taxpayers.
• The taxpayer can file Form GSTR-3B and Form GSTR-1 quarterly rather than filing every month.
• Payment can be made for the first two months of a quarter by simple challan in Form GST PMT-06.

Who is eligible for the scheme?

• Taxpayers whose turnover in the preceding year was up to INR five Crore can opt for this scheme.

When to opt for this scheme?

• The registered person who wishes to opt for the scheme can apply for any quarter from the 1st day of the second month of the preceding quarter till the last day of the 1st month of the quarter.

For example, if the taxpayer wishes to opt from quarter July 2021 to September 2021, he can apply for the scheme from 01.05.2021 to 31.07.2021.

What is IFF (Invoice Furnishing Facility)?

• This is an optional facility for the taxpayers filing their returns every quarter and wants to pass input tax credit to their recipient (Customer/buyer) monthly.
• The due date of furnishing invoices is the thirteenth day of the following month. 

Invoice furnishing facility (IFF):

• A taxpayer can upload a maximum of INR Fifty lakhs invoices each month on IFF.
• A taxpayer can upload only B2B invoices, debit and credit notes, and supply pertains to the unregistered person not required to declare in IFF.  

Payment method on QRMP Scheme:

• The taxpayer must make payment for the 1st two months of the quarter on or before the 25th of the following month in Form GST PMT-06
• Fixed sum method: Taxpayer must pay system-generated prefilled challan in Form GST PMT-06. This challan is commonly known as 35% challan. If the Fixed sum method is opted, no ITC should be passed in that month.
• Self-Assessment Method: Actual tax liability after considering inward (reverse charge liability) and outward supplies and input tax credit available for the month and net tax liability must be discharged in the Form GST PMT-06.
• The taxpayer must file Form GSTR-3B quarterly on the 22nd or 24th of the following month of such quarter. For the first two-month quarter, if the taxpayer has paid any liability in Form GST PMT-06 such amount shall be used for offsetting the liability declared in Form GSTR-3B. However, any surplus amount left after filing taxpayer can use such a refund claim or other purpose in subsequent quarters.

Applicability of Interest:

• No interest would be liable to pay while filing quarterly Form GSTR-3B if it is in any way found that tax payment made in the first two months is lesser than the tax liability arises while filing Form GSTR-3B, but the return is filed within the due date.
• If in case return filed after the due date, then interest will be leviable as per Section 50 of the CGST (Central Goods and Services Tax) Act, 2017 on net tax liability.

Late fees:

• Late fees do not apply to the first two months' payments because IFF is a facility for furnishing invoices and not return. Late fees will be applicable on delay furnishing of return as per Section 39(1) of the CGST Act, 2017.

Avalara analysis:

The monthly compliance requirement for small taxpayers will reduce significantly. The taxpayer will require to file Form GSTR-3B four times during a financial year. Only monthly payment of tax is needed, and Form GSTR-3B is to be filed quarterly instead of every month. If the taxpayer chooses to use the IFF facility, they are only required to declare B2B invoices, debit notes, and credit notes for the first two months of the quarter. These invoices will automatically reflect in quarterly Form GSTR-1, which will avoid duplication of work.

Glossary:

1. Form GSTR-3B: Consolidated summary of inward and outward supplies made during the tax period.
2. Form GSTR-1: Relevant details of sales/outwards supplies made during the tax period.