The Crucial Choice: Understanding Monthly Quarterly GST Filing Obligations
For any business registered under the Goods and Services Tax (GST) regime in India, compliance is non-negotiable. Among the most critical decisions a taxpayer faces is determining the frequency of their return submissions. The choice between monthly quarterly GST filing significantly impacts cash flow, administrative burden, and timely utilization of Input Tax Credit (ITC).
While larger businesses are typically mandated to file returns monthly, the government introduced simplified options, such as the Quarterly Return Monthly Payment (QRMP) Scheme, to ease the burden on smaller enterprises. Understanding the rules governing who must file monthly and who qualifies for quarterly submission is essential for maintaining compliance and avoiding penalties.
This comprehensive guide will break down the mechanics of both filing frequencies, helping you make an informed choice that aligns perfectly with your business operations and turnover.
Decoding the Eligibility for Monthly Quarterly GST Filing
The primary factor determining whether a business files monthly or quarterly is its aggregate annual turnover (AATO). The GST Council has set a clear benchmark, primarily through the introduction of the QRMP Scheme.
Mandatory Monthly Filers
Businesses whose aggregate annual turnover in the preceding financial year exceeded ₹5 crore must compulsorily adhere to the monthly filing schedule for both GSTR-1 (Outward Supplies) and GSTR-3B (Summary Return).
Eligible Quarterly Filers (QRMP Scheme)
Businesses whose aggregate annual turnover in the preceding financial year was up to ₹5 crore have the option to opt into the QRMP Scheme. This allows them to submit returns quarterly while continuing to pay tax liability monthly.
Key Exception: Composition Scheme
Taxpayers registered under the GST Composition Scheme have a different set of rules. They must file GSTR-4 annually and pay tax using Form CMP-08 quarterly. They are distinct from standard monthly or quarterly filers.
It is important to note that the AATO is calculated based on the previous financial year. Once the turnover crosses the ₹5 crore threshold, the taxpayer must transition to monthly filing from the start of the next quarter.
The Mechanics of Monthly GST Compliance
Monthly filing is the standard mechanism for large taxpayers and those who choose not to opt for the QRMP scheme. While it demands greater administrative discipline, it offers significant advantages, particularly concerning cash flow management and Input Tax Credit (ITC) utilization.
GSTR-1 and GSTR-3B: The Monthly Cycle
A taxpayer opting for monthly filing must submit two primary returns:
- GSTR-1 (Details of Outward Supplies): Due by the 11th of the succeeding month. This return details all B2B (Business-to-Business) and B2C (Business-to-Consumer) sales transactions, enabling the recipient to claim ITC.
- GSTR-3B (Summary Return): Due between the 20th and 24th of the succeeding month (dates vary based on state classification). This return summarizes the output tax liability and the ITC claimed, resulting in the net tax payable.
The consistent flow of information ensures that the recipient of goods or services can claim their ITC promptly. As a leading expert in tax compliance once noted, "Frequent reconciliation is the bedrock of robust GST compliance; monthly filing naturally forces this discipline."
One of the strongest arguments in favor of monthly submission, even for eligible small businesses, is the immediate availability of ITC. When you file GSTR-3B every month, you utilize your eligible ITC much faster, improving working capital.
Navigating the QRMP Scheme: Benefits of Quarterly GST Filing
The Quarterly Return Monthly Payment (QRMP) Scheme was introduced specifically to reduce the compliance burden on Micro, Small, and Medium Enterprises (MSMEs). This scheme is a game-changer for those businesses meeting the ₹5 crore turnover limit, offering relief from continuous monthly administrative tasks.
If you are exploring your options for QRMP Scheme filing guide, it is critical to understand that ‘quarterly filing’ does not mean ‘quarterly payment.’
The Two Pillars of Quarterly Compliance
- Quarterly Returns (GSTR-1 and GSTR-3B): These returns are filed once every quarter, typically by the 22nd or 24th of the month following the quarter end. This drastically reduces the number of returns filed annually from 24 to 8.
- Monthly Tax Payment (Form PMT-06): Even though the returns are quarterly, the tax liability must be discharged monthly via Form PMT-06 by the 25th of the succeeding month. Taxpayers can use either the Fixed Sum Method (FSM) or the Self-Assessment Method (SAM) to calculate this liability.
The introduction of the Invoice Furnishing Facility (IFF) is what makes the QRMP scheme truly viable. IFF allows quarterly filers to upload their B2B sales invoices monthly (up to ₹50 lakh per month). This crucial facility ensures that the buyers of these quarterly filers can claim their ITC monthly without delay, removing a major disincentive for customers dealing with smaller businesses.
Monthly Quarterly GST Filing Comparison: A Visual Breakdown
When weighing the pros and cons of monthly quarterly GST filing, it’s essential to look beyond just the number of returns filed. The impact on cash flow, auditing risk, and customer relations must also be considered.
Compliance Frequency
Monthly: 24 returns (GSTR-1 and GSTR-3B) annually. Higher administrative effort but continuous tracking.
Quarterly (QRMP): 8 returns annually. Significantly reduced administrative burden, plus monthly IFF filing (optional).
Input Tax Credit (ITC) Flow
Monthly: ITC is utilized immediately upon filing GSTR-3B. Optimal cash flow management.
Quarterly (QRMP): ITC is utilized quarterly. This can lead to a slight delay in claiming credit, impacting working capital temporarily.
Tax Payment Schedule
Monthly: Tax is paid monthly along with GSTR-3B filing.
Quarterly (QRMP): Tax is paid monthly using PMT-06, ensuring government revenue neutrality.
Penalty Risk & Audit Readiness
Monthly: Higher number of deadlines means higher risk of late filing penalties. However, data is always up-to-date, making audits easier.
Quarterly (QRMP): Fewer deadlines reduce administrative errors. However, requires strict monthly reconciliation to ensure accurate payment via PMT-06.
Decision Matrix: Choosing the Best Monthly Quarterly GST Filing Frequency
The optimal filing frequency depends entirely on your business structure, cash flow requirements, and customer base. While the QRMP scheme is highly attractive due to reduced compliance frequency, it isn’t always the best choice.
Factors Influencing Your Monthly Quarterly GST Filing Choice
1. Customer Base and B2B Sales Volume
If the majority of your sales are B2B (selling to other GST-registered businesses), your customers rely on your timely GSTR-1 filing to claim their ITC. If you opt for quarterly filing and do not use the IFF, your customers will face a delay of up to three months in claiming their credit. This can negatively impact business relationships.
- Recommendation: If B2B sales are high, monthly filing or diligently using the IFF under QRMP is critical.
2. Volume of Transactions and Data Management
Businesses with a very high volume of invoices often find monthly reconciliation less daunting than quarterly. Delaying data entry and reconciliation for three months can lead to significant bottlenecks and increased chances of errors when the quarterly deadline approaches. For complex operations, monthly compliance ensures real-time accuracy.
3. Input Tax Credit (ITC) Availability
If your business typically has a substantial net tax payable (output liability is much greater than ITC), the frequency doesn’t dramatically affect cash flow. However, if your business is capital-intensive or frequently has a net refund position, claiming ITC promptly is vital. Monthly filing ensures immediate claim and faster processing of refunds.
For small businesses that require less frequent compliance, the QRMP scheme provides a perfect balance. For more in-depth guidance on navigating the requirements, you may want to consult resources on GST Return Filing.
4. Administrative Capacity
If you have limited internal accounting staff or rely heavily on external consultants, quarterly filing can drastically reduce accounting costs and time spent on compliance tasks. The reduced frequency allows staff to focus on other critical business functions.
Scenario A: High B2B Sales (>70%)
Decision: Monthly Filing (or QRMP with mandatory IFF usage).
Reason: Prioritize customer satisfaction and ensure their immediate ITC claims. Delays can push customers to competitors.
Scenario B: Small Turnover (< ₹1 Crore) & Mostly B2C
Decision: Quarterly Filing (QRMP).
Reason: Minimal need for immediate ITC passing to consumers. Lower administrative load maximizes efficiency for the small business owner.
Scenario C: High ITC Claims / Refund Business
Decision: Monthly Filing.
Reason: Faster utilization and processing of ITC claims and refunds, significantly boosting working capital cycle.
The Importance of Timely Compliance and Penalties
Regardless of whether you choose monthly quarterly GST filing, adhering to deadlines is non-negotiable. The GST portal imposes strict penalties for late submissions of both GSTR-1 and GSTR-3B.
Failure to file returns on time attracts late fees, which accrue daily, and interest charges on the outstanding tax liability. The late fee for GSTR-3B is currently ₹50 per day (₹20 per day for nil returns), subject to a maximum cap. Consistent non-compliance can lead to the cancellation of GST registration, severely disrupting business operations.
Ensuring compliance is not just about avoiding penalties; it’s about maintaining a healthy business ecosystem. As the Indian government continues to digitalize the tax structure, the scrutiny on discrepancies between GSTR-1 and GSTR-3B, and GSTR-2A/2B (which reflects inward supplies), is increasing. Timely filing, whether monthly or quarterly, reduces the chances of mismatch notices.
For more detailed information regarding the official scheme criteria and compliance requirements, taxpayers should regularly refer to the Central Board of Indirect Taxes and Customs (CBIC) website and the official GST portal.
Conclusion
The decision between monthly and quarterly GST filing is strategic, not merely administrative. While the QRMP scheme offers substantial relief to small taxpayers by reducing the number of returns, it mandates strict monthly discipline regarding tax payment via PMT-06 and careful use of the IFF for B2B transactions.
Large businesses (over ₹5 crore AATO) must stick to monthly filing, benefiting from superior cash flow management through faster ITC utilization. Ultimately, the best choice ensures high compliance while minimizing operational friction. Regularly reviewing your annual turnover and adjusting your filing frequency accordingly is key to optimal GST management.
FAQs
No, the option to switch between monthly and quarterly filing (under the QRMP scheme) is available only at the beginning of any quarter. The taxpayer must exercise this option on the GST portal before the deadline specified for that quarter.
Yes. The QRMP scheme allows for quarterly return filing (GSTR-1 and GSTR-3B) but mandates monthly tax payment using Form PMT-06. This ensures tax collection remains consistent for the government, while reducing the compliance burden for the taxpayer.
The IFF is an optional facility under the QRMP scheme that allows quarterly filers to upload their B2B invoices monthly (up to ₹50 lakh). It is crucial because it ensures that the recipient of the goods/services can immediately claim their Input Tax Credit (ITC), preventing delays that might otherwise occur if the recipient had to wait for the quarterly return filing.
If your aggregate annual turnover exceeds ₹5 crore during the current financial year, you cease to be eligible for the QRMP scheme. You must mandatorily switch to monthly filing from the start of the next quarter immediately following the quarter in which your turnover exceeded the threshold.
Yes. Even though you file the return quarterly, the monthly tax payment via PMT-06 is mandatory. Failure to pay the tax liability by the 25th of the succeeding month will attract interest charges at the prescribed rate (currently 18% per annum) on the delayed amount.
