Selecting the right GST filing frequency is more than a compliance decision. It directly affects your administrative workload, cash flow management, tax planning, vendor relationships, and overall business efficiency.
GST provides a choice of monthly return or Quarterly Return Monthly Payment (QRMP) scheme to eligible businesses. Both options have the benefit of keeping businesses GST compliant but for different operational needs. For businesses with a high number of transactions, it is better to file monthly as they will have more control and reporting, as well as smaller businesses may choose to register for the QRMP scheme as there is less compliance burden.
This article outlines the pros and cons of monthly and quarterly filing of GST and how to decide which is better for your business.
What Are the GST Filing Options Available for Businesses?
GST compliance is not a one-size-fits-all system. The frequency of filing depends on the turnover, number of transactions, and compliance needs of the businesses.
The two primary filing options available to regular taxpayers are:
- Monthly GST filing and
- Quarterly Return Monthly Payment (QRMP) scheme
While monthly filers submit returns every month, QRMP taxpayers file returns quarterly but continue paying taxes monthly.
Now let us look at tehm in detail.
Understanding the Monthly GST Filing Scheme
Many businesses use monthly GST filing as a default filing system, especially those who have more turnover and larger transaction volumes.
What Is Monthly GST Filing?
Monthly GST filing is the process of filing taxes monthly. In this process, registered companies declare their sales, purchases, and taxable payments to the government through the GST portal. It provides correct calculation of taxes and enables businesses to claim the Input Tax Credit (ITC) on purchases.
Who Should Opt for Monthly GST Filing?
Monthly filing is well-suitable for:
- Businesses whose turnover limit exceeds QRMP eligibility limits, i.e., ₹5 crores.
- Firms that have high volumes of transactions.
- Companies that have B2B customers as their prime customer base.
- Companies that need regular ICT reconciliation.
- Companies that require real-time compliance.
Understanding the Quarterly GST Filing Scheme (QRMP)
The QRMP scheme was introduced to reduce compliance burdens for small taxpayers while maintaining regular tax collection for the government.
What Is the QRMP Scheme?
The QRMP (Quarterly Returns with Monthly Payment) scheme is a simplified form of GST filing in India that enables the eligible small taxpayers to file their GSTR-1 and GSTR-3B returns quarterly, but continue to pay their taxes on a monthly basis.
Eligibility Criteria for QRMP Scheme
A taxpayer can opt for QRMP if:
- Total yearly turnover is not more than 5 crore.
- It is a regular GST scheme taxpayer.
- The latest due GSTR-3B has been filed
- The taxpayer can file GSTR-3B and GSTR-1 returns.
The turnover limit is computed on the PAN basis among the GST registrations.
How the QRMP Scheme Works
Under QRMP:
- GSTR-1 is filed quarterly
- GSTR-3B is submitted every quarter.
- The payment of tax is monthly.
- Businesses can avail Invoice Furnishing Facility (IFF) up to the initial two months of a quarter.
- It is possible to maintain ITC benefits in form of IFF-reported invoices to buyers.
This arrangement decreases the rate of filing without doing away with monthly tax cases.
Monthly vs Quarterly GST Filing: Key Differences
Understanding the practical differences helps businesses make an informed choice.
| Parameter | Monthly GST Filing | Quarterly GST Filing (QRMP) |
| Return Filing Frequency | Every month | Once every quarter |
| GSTR-1 Filing | Monthly | Quarterly |
| GSTR-3B Filing | Monthly | Quarterly |
| Tax Payment | Monthly | Monthly |
| Compliance Workload | Higher | Lower |
| ITC Reconciliation | Monthly | Quarterly |
| Reporting Frequency | Real-time | Periodic |
| Suitable For | Medium and large businesses | Small businesses |
| Turnover Restriction | No specific limit | Up to ₹5 crore turnover |
| Administrative Effort | High | Moderate |
| Vendor Coordination | Easier | Requires planning |
| Record Monitoring | Continuous | Quarterly review |
Advantages of Monthly GST Filing
Monthly reporting provides enhanced financial transparency and control.
Key advantages include:
- Increased sales and purchases reconciliation.
- Improved monitoring of GST liabilities.
- Reduced time in detecting filing errors.
- Enhanced vendor and customer coordination.
- Less compliance pressure at the end of the year.
- Easier ITC management
- Enhanced accuracy in reporting of expanding businesses.
The more frequent compliance can be challenging to large businesses where the volumes of transactions are large, which makes monthly filing more manageable.
Disadvantages of Monthly GST Filing
Monthly filing is better in enhancing control; however, it also adds responsibilities to compliance.
Common drawbacks include:
- Higher compliance workload
- Increased reliance on accounting departments.
- Increased professional fees
- Frequent document preparation
- Increased chances of failure to meet deadlines because of several filings.
Monthly compliance may be time-consuming to small businesses with a limited amount of resources.
Advantages of Quarterly GST Filing (QRMP)
QRMP was specifically created to provide less compliance pressure to qualified small taxpayers.
Major advantages include:
- Less frequent filing of returns throughout the year.
- Reduced administrative burden
- Lower compliance costs
- Additional time to dedicate to business activities.
- Simplified filing process
- Fits well with businesses which have a constant transaction level.
QRMP offers a balance between operational efficiency and compliance to many SMEs.
Disadvantages of Quarterly GST Filing
Not all businesses can be served with quarterly filing.
Potential disadvantages include:
- Late balance sheets of records.
- Greater review of data at the end of the quarter.
- Possibility of accumulated errors
- Increased work when preparing quarterly returns.
- Further surveillance on monthly taxes.
- B2B customers might want quicker invoice reporting.
Companies that have complicated activities might also find quarterly reviews more difficult compared to monthly monitoring.
Factors to Consider Before Choosing Between Monthly and Quarterly Filing
When deciding which filing period to use (monthly or quarterly GST filing), one has to consider how each system will fit your business operations, compliance ability, and the needs of your customers. The following considerations should be made before choosing a filing scheme:
- Annual Turnover: QRMP can be used by businesses with a turnover of up to ₹5 crore, whereas businesses with higher turnover will have to file on monthly basis.
- Transaction Volume: High invoice volumes tend to be more conveniently handled using monthly filing and reconciliation.
- Customer Type: Monthly filing is more suitable in B2B business as customers are eager to see ITC sooner.
- Cash Flow Planning: QRMP asks that monthly tax payments will be made in spite of quarterly returns.
- Compliance Workload: Quarterly filing minimizes the number of returns filings and administrative work.
- Accounting Resources: Most businesses that have a dedicated finance team are in a position to more easily handle monthly compliance.
- Reconciliation Requirements in ITC: Monthly filings allow faster detection and resolution of ITC discrepancies.
- Business Growth Plans: Monthly filing can provide a faster growing business the increased visibility and control provided by the monthly filing.
Which GST Filing Scheme Is Right for Your Business?
To select the right scheme, it is necessary to balance the effort on compliance and the business needs.
Monthly Filing
Choose monthly filing when:
- There is a high volume of transactions.
- There are several GST registrations.
- ITC should be reconciled frequently.
- Customers anticipate prompt reporting of invoices.
- Specialized accounting facilities are provided.
- There is an increase in business growth.
Quarterly Filing
QRMP can be appropriate in case:
- The annual turnover falls under ₹5 crore.
- The volume of transactions is average.
- There is limited compliance resources.
- Business activities are fairly predictable.
- Less administration is an objective.
Common Mistakes Businesses Make While Choosing a GST Filing Scheme
A number of businesses opt to the filing frequency without a comprehensive evaluation of the needs of the operations.
Efficiency of compliance can be enhanced by avoiding such common mistakes.
Selecting Based Only on Convenience
A reduced rate of filing can look appealing at the onset but the complexity of operation should be taken into account.
Businesses ought to consider long-term compliance requirements as opposed to simply paying attention to frequency of filing.
Ignoring Transaction Volume
A company that issues hundreds of invoices monthly might have a problem reconciling quarterly.
Turnover alone does not always have such a significant effect as transaction volume.
Overlooking Cash Flow Implications
Even though QRMP permits the filing of quarterly returns, the tax payments must be made every month.
The liquidity position of businesses should be adequate in order to pay taxes on a monthly basis.
Not Reviewing Eligibility Conditions
In some cases, businesses operate under QRMP without checking on turnover limits.
It goes beyond the ₹5 crore threshold, which may affect eligibility and necessitate a change to monthly filing.
How GSTZen Helps Businesses in Monthly and Quarterly GST Filing
GST compliance is a lot more than filing returns. The business should monitor invoices, reconcile ITC, keep an eye on the deadlines of filing, and proper calculation of taxes.
GSTZen can assist businesses to complete monthly and quarterly GST filling by:
- Computerised preparation of GST returns.
- Real-time reconciliation tools
- Matching input tax credit.
- Identifying and correcting errors.
- Compliance tracking dashboards
- Due date reminders
- QRMP management support
- GST reporting and analytics
GSTZen enables a business to simplify compliance regardless of whether it is monthly or QRMP filing, and less manual effort is required.
Conclusion
The monthly or quarterly filing option of GST depends on the size, complexity and compliance requirement of your business. Monthly filing can be more visible, quicker to reconcile, and have more control over compliance, which is appropriate with more volume of transactions.
The QRMP scheme gives eligible small businesses a great deal of compliance relief as it allows them to file less frequently without paying taxes monthly. The choice of a filing option must consider the patterns of transactions, turnover, accounting facilities, and future expansion strategies before adopting a filing option to help businesses comply with the law and to operate effectively.
FAQs
What is the difference between monthly and quarterly GST filing?
Under the monthly filing, businesses are required to submit GST returns on a monthly basis and QRMP taxpayers submit returns on a quarterly basis whilst they remain subject to monthly payment of taxes.
Who is eligible for the QRMP scheme under GST?
Businesses with aggregate annual turnover up to ₹5 crore that meet GST filing requirements are eligible for QRMP.
Is tax payment also quarterly under the QRMP scheme?
No. QRMP will permit the filing of returns quarterly, though tax payments should be made monthly by use of Form PMT-06.
Can a business switch from quarterly to monthly GST filing?
Yes. Eligible taxpayers may choose to join or not to join the QRMP scheme as per GST portal and as per specified schedules.
Which GST filing scheme is better for small businesses?
QRMP decreases compliance work to many eligible small businesses. Nonetheless, monthly filing might be more advantageous to businesses that have large volumes of transactions.
Does quarterly filing affect Input Tax Credit claims?
QRMP can still be applied to ITC. The first two months in a quarter through the Invoice Furnishing Facility (IFF) Businesses can report eligible invoices in the first two months of a quarter.
What happens if a business exceeds the QRMP turnover limit?
In case the aggregate annual turnover is more than 5 crores the tax payer will not be allowed to claim QRMP and will have to change to the filing frequency as required by the GST provisions.