Running a business involves many moving parts. You have to manage sales, look after your team, handle logistics, and ensure your customers are happy. Amidst all this, handling taxes is a critical task that runs in the background. For many small and medium businesses in India, the introduction of the Quarterly Return Filing and Monthly Payment of Taxes (QRMP) scheme was a welcome change. It was designed to reduce the compliance burden, allowing businesses to focus more on growth and less on paperwork.
However, moving from a monthly routine to a quarterly one does not mean you can forget about GST for two months. The process still requires attention, discipline, and the right tools. If you are eligible for quarterly gst filing, understanding the nuances of the process is essential to maintain a good reputation with the tax authorities and your vendors.
At MYND Integrated Solutions, we work with businesses every day to streamline their finance and compliance functions. We understand that tax technology is not just about filing a form; it is about having a system that works accurately. In this guide, we will break down the quarterly filing process into simple steps, highlight the dates you need to mark on your calendar, and look at how technology can stop common mistakes before they happen.
Who is Eligible for Quarterly Filing?
Before we discuss the process, we must be clear about who can use this scheme. The QRMP scheme is meant for smaller taxpayers. If your aggregate annual turnover is up to ₹5 Crore in the preceding financial year, you are eligible to opt for quarterly gst filing.
This threshold captures a large number of businesses in India. The idea is simple: if your transaction volume is manageable, you do not need to file detailed returns every single month. However, you still need to pay your taxes monthly. This is a distinction that often confuses business owners. You file quarterly, but you pay monthly.
The Process: How Quarterly GST Filing Works
The quarterly cycle is split into three distinct months. Even though the final return (GSTR-3B) goes out once every three months, there are actions required in the first two months. Let us look at how this flow works in a practical scenario.
Month 1 and Month 2: The Invoice Furnishing Facility (IFF)
In a standard monthly setup, you upload your sales invoices (GSTR-1) every month. This allows your buyers to see the Input Tax Credit (ITC) in their GSTR-2B. When you switch to quarterly gst filing, you only file the full GSTR-1 at the end of the quarter.
So, what happens if your big B2B client wants to see their credit in Month 1? If they cannot see it, they might delay your payment.
This is where the Invoice Furnishing Facility (IFF) comes in. It is an optional facility. You can use IFF to upload details of your B2B invoices for the first and second months of the quarter. This ensures your buyers get their credit on time, keeping your business relationships smooth.
- Limit: You can upload invoices up to a value of ₹50 Lakh in each month using IFF.
- Deadline: The 13th of the following month.
Month 1 and Month 2: Payment of Taxes (PMT-06)
Even though you are not filing the full GSTR-3B return, the government requires you to deposit the tax due for the first two months. You do this using Form PMT-06.
There are two ways to calculate this:
- Fixed Sum Method: The portal generates a pre-filled challan. It is usually 35% of the tax paid in cash in the previous quarter. This is simple and requires less calculation.
- Self-Assessment Method: You calculate your actual tax liability on your sales, subtract the Input Tax Credit you have, and pay the balance. This is better if your sales fluctuate significantly.
Month 3: The Final Filing
The third month is when you wrap up the quarter. You will file the GSTR-1 for the third month (and any invoices missed in the first two months). After that, you file the GSTR-3B for the entire quarter. This return will summarize your total liability and adjust the payments you already made in the first two months.
Important Deadlines to Remember
Missing a deadline can lead to late fees and interest penalties. More importantly, it can block your buyers from claiming their credit, which hurts business. Here is a simple calendar view for a typical quarter (e.g., April to June).
- May 13th: IFF for April (Optional but recommended for B2B).
- May 25th: Tax Payment (PMT-06) for April.
- June 13th: IFF for May.
- June 25th: Tax Payment (PMT-06) for May.
- July 13th: GSTR-1 for the full quarter (April-June).
- July 22nd or 24th: GSTR-3B for the full quarter (Date depends on your state).
Keeping track of these dates manually can be difficult. This is why automated alerts and compliance calendars, which are often part of robust finance outsourcing solutions, are so valuable.
Common Mistakes and How to Avoid Them
Even with a simpler scheme, errors happen. In our experience handling finance processes for various organizations, we see specific patterns of mistakes. Being aware of these can save you money and time.
1. Ignoring the 35% Rule Calculation
Many businesses choose the Fixed Sum Method for monthly payment because it is easy. However, if your sales were very low in the current month compared to the last quarter, you might end up paying more tax than necessary. This locks up your working capital. On the other hand, if you choose the Self-Assessment method and calculate wrongly, you might pay less than required and face interest charges later.
The Fix: Use accounting software that provides real-time visibility into your tax liability. Don’t guess. Base your payments on actual data whenever possible.
2. Mismatch Between Books and Portal (Reconciliation)
This is perhaps the most common issue. Your accountant records a purchase invoice as ₹10,000 + 18% GST. But the vendor uploads it as ₹10,000 + 12% GST, or perhaps they forget to upload it entirely. When you file your quarterly gst filing, your data does not match the GSTR-2B generated by the government.
If you claim credit that is not reflecting in GSTR-2B, you are inviting a notice from the tax department.
The Fix: Reconciliation tools. You cannot manually match thousands of line items in Excel effectively. You need a system that automatically compares your purchase register with the downloaded GSTR-2B and highlights the mismatches.
3. Forgetting IFF for Major Clients
We see cases where a small supplier opts for quarterly filing to save time. They sell to a large corporate client in Month 1. They decide not to use IFF because it is “optional.” The large corporate client closes their books for the month and sees no credit from this supplier. They hold the payment. The supplier faces a cash crunch.
The Fix: Treat IFF as mandatory for your B2B customers. It builds trust. If your volume is high, use bulk upload tools to make this quick.
4. Reporting B2C as B2B
In the rush to file, data entry operators sometimes classify a sale to an unregistered consumer (B2C) as a sale to a registered business (B2B), or vice versa. This messes up the GSTR-1 data. Correcting this later is a long process and can lead to discrepancies in your liability.
The Fix: Validation at the source. Your ERP or invoicing system should have checks in place. For instance, if a GST number is entered, the system should validate it immediately before the invoice is even generated.
The Role of Technology in GST Compliance
At MYND, we believe that compliance should be a byproduct of good processes, not a separate headache. The complexities of quarterly gst filing are best handled through technology. If you are relying solely on manual data entry and spreadsheets, the risk of error is high.
Here is why technology and specialized platforms matter for decision-makers and IT teams:
Data Security and Integrity
Financial data is sensitive. Emailing spreadsheets back and forth between branches and consultants is not secure. A cloud-based platform ensures that your data is encrypted and stored centrally. It also ensures that once an invoice is “locked” for filing, no one can change it without an audit trail.
Seamless Integration (API)
Modern tax solutions do not work in isolation. They connect directly with your ERP (like SAP, Oracle, or Tally) and the GSTN portal. This means data flows automatically. You do not have to type the same invoice details twice. This reduces “fat finger” errors where a user might type 1000 instead of 100.
Automated Reconciliation
As mentioned earlier, matching your books with the government records is the hardest part of GST. Technology can do this in minutes. It uses logic to match invoices even if invoice numbers differ slightly (e.g., “INV/001” vs “INV-001”). This saves hundreds of man-hours for the finance team.
Vendor Management
Technology allows you to communicate with vendors directly from the system. If a vendor has not uploaded an invoice, the system can send them an automated email reminding them to file. This proactive approach ensures you get your Input Tax Credit on time.
Making the Right Choice for Your Business
Choosing between monthly and quarterly filing is a strategic decision. While quarterly filing reduces the number of main returns, it requires discipline in monthly payments and IFF uploads. It suits businesses that have stable cash flows and organized record-keeping.
However, the key to success in either method is accuracy. The GST system is becoming more automated and interlinked. The government systems can now spot differences between your e-way bills, your GSTR-1, and your GSTR-3B instantly. Therefore, your internal systems must be just as smart.
For IT professionals and Finance heads, the goal is to implement a solution that requires minimal manual intervention. The less you touch the data, the more accurate it remains.
Conclusion
Quarterly GST filing is a great facility for small and medium businesses to reduce their compliance workload. It allows you to focus on your core business activities for two months of the quarter, provided you handle the monthly payments and IFF correctly. The process is straightforward: calculate, pay, and then file.
Yet, the simplicity of the scheme relies on the accuracy of your data. Mistakes in categorization, calculation, or reconciliation can lead to penalties that erase the benefits of the scheme. In today’s digital age, relying on manual methods is no longer a viable strategy.
At MYND Integrated Solutions, we help businesses navigate these complexities through a blend of expert process management and advanced technology. By ensuring your data is accurate, secure, and integrated, we help turn a mandatory compliance task into a smooth, background process. When your tax filing is accurate and on time, you have the peace of mind to focus on what truly matters—growing your business.
