New returns regime to benefit most GST assessees

Shishir Sinha | Updated on October 06, 2020

Nearly nine out of 10 GST assessees to benefit from new quarterly return filing from Jan’21

Come January, nearly 93 per cent of GST assessees can breathe easy as they will not have to think about filing two returns (GSTR1 and GSTR3B) every month.

GSTR1 returns show total tax liability and GSTR3B explains how much actual tax has been paid in cash after deducting input tax credit (ITC). As of now, barring Composition Scheme Assessees, every other assessee is required to file these two returns every month taking the total count to 24 every year. From January, the count will drop to eight.

This will happen due to a decision by the GST Council on Monday. It said small taxpayers having the aggregate annual turnover less than ₹ 5 crore will be allowed to file returns on a quarterly basis with monthly payments w.e.f. January 1, 2021. Such quarterly taxpayers would, for the first two months of the quarter, have an option to pay 35 per cent of the net cash tax liability of the last quarter using an auto-generated challan.

“An assessee having turnover below ₹ 5 crore, will have three options now. First, continue with the existing system of filing returns on a monthly basis and pay the tax due. Second, use the quarterly return filing system with payment of a certain percentage of tax due during the first three months and settle the whole amount along with return in the third month. Third, if there is no tax due, then do not pay any amount on a monthly basis and file NIL return in the third month through SMS bases system,” a tax department official explained.

He also mentioned that ITC available can also be used for monthly payment during the current quarter based on 35 per cent of the net cash tax liability of the last quarter. For example, if an assessee has to pay ₹ 35 crore during in January 2021 and he has around ₹ 30 crore of ITC available, so actual monthly payout would be ₹5 crore in January only.

Boosting compliance

Officials say that the new system will boost compliance but the cost of compliance will come down. “Chartered Accounts charge on a per return basis, so if the number of returns is one third, the fee will be reduced in proportion,” the official quoted above said.

It has been clarified that late fee for first two months will not be charged. An assessee will need to file a challan only if he has liability. Also, if he pays flat 35 per cent of the last quarter’s net cash liability, then there will be no interest also for any excess liability at the time of filing return in third month.

Commenting on the development, Harpreet Singh, Partner at KPMG said that doing away with monthly filing and option to pay partial tax liability of last quarter during the first two months of the quarter, usage of auto-generated challan etc. would surely reduce the compliance burden of small taxpayers. However, “it needs to be ensured that quarterly filing does not in any way result in input credit blockages,” he cautioned.

Rajat Bose, Partner, Shardul Amarchand Mangaldas & Co appreciated the relaxation on monthly return filing for small taxpayers and facility to pay GST in instalments is a welcome move. ”It will help small taxpayers to achieve some liquidity,” he said.

Turnover Slabs & Cash Payment Trends

(FY 2019-20)

Turnover slab

(In ₹ crore)


(In %)

Cash Paid

(in ₹ crore)


(In %)

Up to 5




















Source: GSTN

Published on October 06, 2020

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