GST Returns: Monthly vs Quarterly

  • Setindiabiz Team
  • December 21, 2023
GST Returns: Monthly vs Quarterly

This blog explores the key difference between monthly and quarterly GST return filing based on parameters like applicability, frequency, calculation methods, due dates and suitability for businesses. The discussion helps you make an informed decision as to what you must opt for to avail maximum benefits. While the monthly return filing approach reduces the burden of assessing bulky transactions at once, quarterly returns reduce the frequency and overall cost of annual compliance. Read more to understand what sets them apart!

BRIEF SUMMARY
The basic difference between filing quarterly GST returns and monthly GST returns lies in the frequency of compliance. While monthly filing has always been the regular approach, quarterly filing was later introduced under the QRMP scheme to overcome the challenges of the former. For instance, quarterly filing has drastically reduced the burden and cost of GST compliance, despite bringing more businesses under the framework through reduction in the applicable threshold limits. Moreover, the self-assessment method of calculation and payment of taxes has eased the process further. The new scheme is suitable for small businesses involved in B2C transactions, and having a similar and regular pattern of sales, as opposed to the monthly return filing system which is more suitable for larger businesses involved in B2B transactions, and having a dissimilar and highly unpredictable pattern of sales.

Why Must Businesses File GST Returns?

Filing GST returns is a crucial aspect of tax compliance for businesses supplying goods/services in India and registered under the framework of GST. The process involves reporting the details of sales, purchases, and taxes paid to the government. Understanding the significance of GST returns is essential for businesses to navigate through the GST laws and opt for the right approach of return filing. It forms the foundation of analysing the difference between monthly and quarterly GST return. So, let’s dig deeper into what makes GST Returns crucial for businesses in India.
Why Must Businesses File GST Returns
  1. Legal Compliance and Avoiding Penalties: Businesses are legally obligated to file GST returns to abide by tax regulations. Failure to comply can result in penalties and legal consequences. The difference between filing quarterly GST returns and monthly GST returns lies in the frequency and procedural nuances, necessitating businesses to choose the filing method that aligns with their operational needs.
  2. Input Tax Credit (ITC) Claims: Filing GST returns allows businesses to claim Input Tax Credit, a crucial benefit that offsets the taxes paid on inputs against the taxes due on output. This is applicable to both monthly and quarterly filers, highlighting a common thread between the two systems.
  3. Transparent Financial Records: Maintaining accurate and up-to-date financial records is facilitated through regular GST return filing. This transparency aids in better financial management, audits, and decision-making. Whether opting for monthly or quarterly filing, businesses benefit from improved financial visibility.
  4. Building Trust with Stakeholders: Timely and accurate GST return filing fosters trust among stakeholders, including customers, suppliers, and financial institutions. It ensures transparency in financial dealings and showcases the business’s commitment to compliance and ethical practices. Recognizing the difference between monthly returns and quarterly returns in GST becomes pivotal in establishing this trust.
  5. Government Benefits and Schemes: Governments often extend benefits and schemes to businesses based on their GST compliance. Being informed about the difference between monthly returns and quarterly returns in GST helps businesses strategically choose the filing method that aligns with their financial goals and maximizes the available benefits.

Difference Between Monthly and Quarterly GST return

GST returns can be filed using two methods, one involving the monthly filing of returns and the monthly payment of taxes, while the other involving the quarterly filing of returns and the monthly payment of taxes. While the former is mandatorily required to be opted by businesses having an aggregate monthly turnover beyond Rs.5 crores, the latter can be opted by businesses having an aggregate quarterly turnover equal to or less than Rs. 5 lakhs. Refer to the table below to understand the detailed difference between monthly and quarterly GST returns in India.
Parameters Monthly Quarterly
Point of Applicability
Mandatory if aggregate annual turnover is more than Rs.5 crores
Can be opted if the aggregate annual turnover is upto Rs. 5 crores
Number of Returns
12 for 12 months Forms: GSTR 1 and GSTR 3B
4 returns for 4 quarters in a year Forms: GSTR 1 and GSTR 3B
Calculation and payment of taxes
Every Month
Payment of taxes every month. Filing of returns every quarter.
Calculation
Actual Basis
Fixed sum Self-assessment method
Payment
GSTR 3B
PMT-06 for the first two months of the quarter.
Third month- GSTR 3B
Invoice Furnishing Facility
Not Required as returns for inward and outward supplies are filed each month
Can be availed
Due Dates
GSTR 1- 11th day of the following month

GSTR 3B- 20th day of the following month
GSTR 1- 13th day of the following month after the end of the quarter.

GSTR 3B- 22nd or 24th (according to the state) day of the following month after the end of the quarter

IFF- 13th day of the following month for the first two months of the quarter (GSTR 3B will be used in the third month)

PMT 06- 25th day of the following month for first two months of the quarter (GSTR 3B will be used in the third month)
Suitability
B2B transactions
Dissimilar pattern of sales
Highly unpredictable turnover
B2C transactions
Similar pattern of sales
Limited transactions

GST Monthly Returns

One of the most prominent GST monthly return and quarterly return differences between them, is their applicability. Monthly returns are filed by businesses with an annual turnover greater than Rs.5 crores in the previous financial year. As far as the frequency of filing is concerned, it extends to once every month or 12 times in a financial year in forms GSTR 1 and GSTR 3B. GSTR1 is the form in which a taxpayer files the necessary details that are required to calculate the net amount of tax payable.
These include the aggregate turnover, outward and inward supplies supported by invoices, revised invoices, debit notes, credit notes, and delivery challans. GSTR 3B, on the other hand, is the form that contains the actual details of tax payable to the government. These include the details of taxable inward and outward supplies for inter-state, intra-state, and export-related business activities, the amount claimed for ITC and the details related to the actual payment of taxes. This includes the payments of TDS, tax cess, interest, and late fee, if any. Late fee for delay in filing the monthly returns actually depends on the period of delay. Here are the due dates and late fees details.
  • GSTR-1 Filing Due Date: 13th day of the following month
  • GSTR-3B Filing Due Date: 20th day of the following month.
Late Fees for Monthly GST Returns Filing
CGST/ day of delay

SGST/ day of delay

IGST/ day of delay
TOTAL/ day of delay
Intra-state supplies
Rs.25
Rs.25
-
Rs.50
Inter-state supplies
-
-
Rs.50
Rs.50
Nil Filing
Rs.10
Rs.10
-
Rs.20
However, the government has capped the late fee at the maximum values as mentioned in the table below.
Criteria of filing the monthly returns Maximum Late Fee
Nil. returns in GSTR 1 and GSTR 3B
Rs.500
Annual Turnover in the previous financial year is upto Rs.1.5 crores
Rs.2,000
Annual Turnover in the previous financial year is between Rs. 1.5 crores to Rs. 5 crores
Rs.5,000
Annual Turnover in the previous financial year is beyond Rs. 5 crores
Rs.10,000

GST Quarterly Returns

The quarterly returns monthly payment scheme or QRMP scheme can be opted by businesses whose annual turnovers in the previous financial years is less than or equal to Rs.5 crores. Such businesses ought to be small and the scheme rightly reduces their cost of filing GST returns. Businesses that have opted for the QRMP scheme must file GST returns four times a financial year or one in each quarter of a year. This is the primary gst monthly return and quarterly return difference between their filing.
QRMP scheme stands for Quarterly Returns, and Monthly Payments which distinctly means that while the returns are being filed quarterly, the tax payments are being made every month. The forms used for these purposes include GSTR-1 and GSTR-3B for filing the returns, and PMT-06 for tax payment purposes. However, for tax payments in the last month of each quarter, taxpayers must use the GSTR-3B form. Additionally, businesses can also avail of the Invoice Furnishing Facility or IFF under the QRMP scheme. IFF can be used to upload invoices and claim Input Tax Credit in the first two months of the quarter itself, instead of having to wait for the quarter’s end.
  • Due date for GSTR 1:13th day of the following month after the end of the quarter.
  • Due date for GSTR 3B: 22nd or 24th day of the following month after the end of the quarter
  • Due date for IFF: 13th day of the following month for the first two months of the quarter
  • Due date for PMT 06:  25th day of the following month for first two months of the quarter
The late fee for filing GSTR 1 and GSTR 3B is the same as that of the monthly returns. There is no late fee prescribed for the delayed filing of PMT-06 and the delayed payment of taxes in the first two months of the quarter.

GST Returns: Monthly vs Quarterly Suitability for Businesses

In the choice between monthly and quarterly returns, businesses must consider their transaction patterns, turnover predictability, and overall compliance preferences. Larger enterprises with intricate B2B transactions may find monthly returns more suitable, ensuring comprehensive and timely documentation. On the other hand, small businesses, especially those with regular B2C transactions, benefit from the reduced burden and lower costs associated with the quarterly return filing system. Ultimately, the decision hinges on a thorough understanding of the major difference between monthly and quarterly GST returns and aligning it with the unique needs of the business.

Monthly Returns

Monthly returns are well-suited for larger businesses engaged in Business-to-Business (B2B) transactions. The monthly filing cycle accommodates the complexity and diversity of B2B transactions, allowing businesses to stay on top of intricate invoicing and documentation. Businesses with dissimilar and highly unpredictable patterns of sales also find monthly returns advantageous. The regular monthly assessment ensures a more immediate response to fluctuations in turnover, aiding in strategic planning and resource allocation. Monthly returns enforce a disciplined approach to compliance, compelling businesses to maintain detailed and up-to-date documentation. This meticulous record-keeping fosters transparency and helps in avoiding errors.

Quarterly Returns

The Quarterly Return and Monthly Payment (QRMP) system is particularly beneficial for small businesses involved in Business-to-Consumer (B2C) transactions. The reduced frequency of filing suits businesses with limited transactions and a regular sales pattern. Opting for quarterly returns often translates to lower compliance costs for small businesses. The extended filing deadlines and reduced frequency contribute to a more manageable and cost-effective compliance process. This streamlined approach reduces the monthly hecticity associated with constant return drafting and filing.

The QRMP scheme stands out for its key advantage of allowing quarterly GST return filings, effectively alleviating the cost and burden associated with monthly returns. This feature renders the scheme particularly advantageous for small businesses. Nevertheless, it's important to note that managing returns under the QRMP scheme can be demanding, requiring the simultaneous calculation of sales, purchases, input, and output taxes for three months. In contrast, monthly return filing prompts taxpayers to calculate and draft returns each month, reducing the likelihood of errors in documentation. The difference between monthly and quarterly GST returns lies in their suitability for businesses based on transaction complexity and calculation preferences. Ultimately, businesses should conduct a thorough analysis to determine the method that aligns best with their specific needs.

Conclusion

FAQs

Q1: What is the primary difference between monthly and quarterly GST returns?

The primary difference lies in the frequency of filing. Monthly returns involve submitting GST details every month, while quarterly returns entail a more extended filing period of once every quarter.

Q2: How does the turnover requirement differ between monthly and quarterly GST returns?

The turnover requirement is a key determinant. Monthly returns are mandatory for businesses with an annual turnover exceeding Rs. 5 crores, whereas businesses with turnovers up to Rs. 5 crores can opt for the quarterly return scheme. This is a significant factor when analysing the difference between monthly and quarterly GST returns.

Q3: Are specific business types more suited to monthly returns?

Yes, industries with intricate B2B transactions and highly variable sales patterns may find monthly returns more suitable.

Q4: How does the IFF impact businesses opting for quarterly returns?

The IFF is a notable feature for businesses opting for quarterly returns. It allows them to upload invoices and claim Input Tax Credit in the first two months of the quarter, mitigating the impact of the extended filing period.

Q5: Can businesses switch between monthly and quarterly returns?

Yes, businesses can transition between the monthly and quarterly filing systems based on their evolving circumstances. However, understanding the difference between monthly and quarterly GST returns before opting out or in is crucial for making an informed decision that aligns with the business’s current needs and complexities.

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