How to Pay Your Output Tax Liability in QRMP Part 2 GSTR – 1?

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Published Date:  08-12-2023   Author:   deepti-goel
how to pay your output tax liability in qrmp part gstr

Paying your output tax under the QRMP (Quarterly Return Filing and Monthly Payment) Scheme can be challenging. Introduced by the CBIC from January 2021, the QRMP scheme aims to make tax filing simpler for small taxpayers. A key part of this scheme is the timely and accurate Payment of Output Tax in QRMP GSTR-1 Part 2. It’s vital for businesses to understand this process to manage their tax liabilities correctly and avoid any penalties.

Overview of the QRMP Scheme

The QRMP Scheme is a significant step by the Central Board of Indirect Taxes and Customs for registered taxpayers with an annual turnover up to Rs. 5 crore. This scheme allows for filing GSTR-3B returns quarterly while paying taxes monthly. This change reduces the number of returns from 16 to 8 in a year.

It’s important to note that there have been updates to the scheme. For instance, since September 2021, taxpayers cannot file GSTR-1 or use the IFF for a period if they have pending GSTR-3B filings. Staying updated with these changes is crucial.

Understanding Tax Liability in QRMP GSTR-1 Part 2

Managing tax liability under the QRMP scheme requires careful attention. QRMP GSTR-1 Part 2 tax liability settlement involves accurately calculating and paying the tax for the first two months of each quarter. The scheme offers different methods for tax payment, which will be discussed in later sections.

Getting the tax calculation right is about managing your finances wisely. Overestimating can lead to unnecessary cash outflow, while underestimating can result in penalties and interest. Therefore, businesses should use reliable methods and tools for calculating their tax liabilities under QRMP.

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Steps for Accurate Tax Payment in QRMP

Managing your taxes efficiently under the QRMP scheme requires a precise and methodical approach. It’s not just about meeting deadlines; it’s about making sure every payment reflects the actual tax liability your business has incurred. 

This accuracy is crucial in maintaining financial stability and avoiding complications with tax authorities. To ensure the Payment of Output Tax in QRMP GSTR-1 Part 2 is executed correctly, it’s vital to adhere to a systematic and informed procedure. Here are the essential steps:

  • Calculate Accurate Tax Liability: Start by determining your exact tax liability for the first two months of the quarter. This involves assessing your sales invoices and any applicable tax rates.

  • Choose the Right Payment Method: Decide between the Fixed Sum Method and the Self-Assessment Method, based on what suits your business scenario.

  • Timely Payment Submission: Ensure that the tax payment is made by the 25th of the month following the month of liability. For instance, for tax liability of April, ensure payment by 25th May.

This process demands precision and a good understanding of your business transactions to avoid errors in the tax payment process.

Description Fixed Sum Method Self-Assessment Method
Previous Quarter Tax Paid (Example) CGST: ₹1000, SGST: ₹1000 CGST: ₹1000, SGST: ₹1000
IGST: ₹2000 IGST: ₹2000
Calculation for Current Quarter
Month 1 and 2 Payment (each month) CGST: ₹350, SGST: ₹350 CGST: ₹X, SGST: ₹Y
IGST: ₹700 IGST: ₹Z
Basis of Calculation 35% of previous quarter’s tax Actual Tax Liability minus ITC

 

This table demonstrates the fundamental difference between the two methods: Fixed Sum Method relies on past tax payments as a basis, while Self-Assessment Method requires current period calculations based on actual transactions and ITC.

  • Fixed Sum Method: Under the QRMP scheme, the taxpayer is required to pay 35% of the tax paid in cash during the previous quarter. For example, if they paid ₹1000 as CGST in the last quarter, they would pay ₹350 (35% of ₹1000) as CGST in the first two months of the current quarter.

  • Self-Assessment Method: The taxpayer calculates the actual tax liability for the month by considering their outward supplies and available Input Tax Credit (ITC). The exact figures (X, Y, Z) depend on the current month’s business transactions and ITC.

QRMP GSTR-1 Part 2 Tax Payment Process

The tax payment process in QRMP GSTR-1 Part 2 demands careful attention to detail and a thorough understanding of the GST portal’s functionalities. This process is integral to ensuring your business’s compliance with GST regulations and avoiding any potential discrepancies that could arise from incorrect tax payments. 

The process, although straightforward, requires familiarity with the online GST system and adherence to the specified steps. The QRMP GSTR-1 Part 2 tax payment process involves specific steps to be followed on the GST portal, which are outlined as follows:

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  • Log in to the GST Portal: Access your account on the GST portal.
  • Navigate to Payments Section: Here, select ‘Create challan’ under the Payments tab.
  • Choose Payment Type: Select ‘Monthly payment for quarterly return’. Fill in the required details like financial year and period.
  • Select Challan Type: Depending on your chosen method (35% challan or self-assessment), generate the challan.
  • Make Payment: Complete the payment using your preferred mode of payment.

Remember, using the correct challan type is crucial for compliance and avoiding future complications.

Best Practices for Tax Payment in QRMP

Adhering to Best Practices for Tax Payment in QRMP can save businesses from unnecessary financial strain and legal issues. To ensure smooth compliance with the QRMP GSTR-1 Part 2 tax payment process, here are some best practices:

  • Plan Ahead: Mark your calendar with all due dates for tax payments and return filings. This helps in preparing in advance and avoiding last-minute rushes.

  • Leverage Technology: Use reliable GST software for accurate tax calculations, return filings, and to stay updated on any changes in GST laws or rates.

  • Keep Buffer for Payment: To avoid the risk of payment failures due to technical glitches, aim to complete your tax payments a few days before the deadline.

  • Maintain Comprehensive Records: Keep all invoices, receipts, and financial documents well-organized. This not only assists in accurate tax calculations but also comes in handy during audits.

By following these practices, businesses can efficiently manage their Payment of output tax in QRMP GSTR-1 Part 2, thereby minimizing the risk of errors and penalties. Regular updates and a proactive approach towards tax compliance under the QRMP scheme will contribute to a smoother, more predictable financial management process. These practices not only help in ensuring accuracy in QRMP tax settlement, but also streamlines your overall tax compliance strategy.

QRMP GSTR-1 Part 2 Tax Liability Settlement Methods

When it comes to QRMP GSTR-1 Part 2 tax liability settlement, taxpayers have two primary methods to choose from:

  • Fixed Sum Method: This method involves paying a fixed sum or 35% of the tax paid in the previous quarter. For example, if a taxpayer paid ₹1000 as CGST and ₹1000 as SGST in the last quarter, they would pay ₹350 each for CGST and SGST in the first two months of the current quarter.

  • Self-Assessment Method: Here, taxpayers calculate their actual tax liability for the month, considering their outward supplies and the Input Tax Credit available. It requires taxpayers to actively assess their invoices and ITC to determine the exact tax due.

Ensuring Accuracy in QRMP Tax Settlement

Ensuring accuracy in QRMP tax settlement is fundamental to maintaining compliance and avoiding penalties. To achieve this, consider the following:

  • Regular Reconciliation: Regularly reconcile your books with the GST returns filed. This helps in identifying discrepancies early and taking corrective action.

  • Utilize GSTR-2B: Use the GSTR-2B statement as a reference for claiming Input Tax Credit. This statement provides a monthly summary of the ITC available, ensuring that you claim the correct amount.

  • Stay Updated on Tax Rates: Tax rates can change, and it’s essential to stay updated. Applying the wrong tax rate can lead to incorrect tax liability calculations.

  • Avoid Last-Minute Filings: Procrastination can lead to errors. Ensure that you start the settlement process well before the due date to avoid rushed calculations and submissions.

Making Payments Under the QRMP Scheme

Understanding ‘Methods of Making Payments Under the QRMP Scheme’ is important for effective tax management. Remember, timely payment using the correct method and challan is essential to avoid interest and late fees. The payment process involves the following steps:

  • Generating the Challan: Log into the GST portal and navigate to the ‘Create Challan’ section under the Payments tab. Select the correct financial year and tax period.

  • Choosing the Challan Type: Depending on your preferred method (Fixed Sum or Self-Assessment), select the appropriate challan type.

  • Filling in the Challan Details: For the Fixed Sum Method, the challan will auto-generate based on previous payments. For the Self-Assessment Method, manually enter the tax amount based on your calculations.

  • Making the Payment: Choose your payment mode (e.g., net banking, credit/debit card) and complete the transaction.

Applicability of Interest Under the QRMP Scheme

Understanding the ‘Applicability of Interest Under the QRMP Scheme’ is crucial to avoid additional charges. Interest is charged under two main scenarios:

  • Late Payment of Tax: If the tax due for the first two months of the quarter is not paid by the 25th of the following month, interest is applicable. For instance, if the tax for April is not paid by 25th May, interest accrues from the due date until the payment is made. The interest rate is typically 18% per annum.

  • Delay in Filing GSTR-3B: Filing the quarterly GSTR-3B after the due date attracts interest on the tax liability, net of ITC. This interest is also charged at 18% per annum from the due date of the return till the date of filing.

Additionally, a late fee is applicable for delayed filing of GSTR-3B/GSTR-1. It’s usually ₹50 per day (₹20 for nil returns), subject to a maximum of ₹5,000.

Conclusion

Mastering the QRMP GSTR-1 Part 2 tax payment process is essential for businesses. It’s not just about following rules; it’s about ensuring financial accuracy and stability. Keeping up with these practices means avoiding penalties and reinforcing a company’s commitment to responsible financial management. As the taxation system keeps evolving, staying precise and proactive with tax obligations is key to a business’s ongoing success and reliability. This dedication to effective tax management marks a business as both dependable and forward-looking.

Frequently Asked Questions (FAQs)

  • What is QRMP GSTR-1 Part 2?

QRMP GSTR-1 Part 2 is a system under the QRMP scheme for small taxpayers to file GSTR-1 returns quarterly while paying output tax monthly.

  • How do I pay my output tax in QRMP GSTR-1 Part 2?

Payment of output tax in QRMP GSTR-1 Part 2 is done through the GST portal using either the Fixed Sum Method or the Self-Assessment Method.

  • What are the steps for accurate tax payment in QRMP?

Accurate tax payment in QRMP involves calculating the correct tax liability, choosing the right payment method, and submitting payments by the 25th of the following month.

  • What is the QRMP GSTR-1 Part 2 tax payment process?

The QRMP GSTR-1 Part 2 tax payment process involves logging into the GST portal, creating a challan in the Payments section, and making the payment via your preferred method.

  • What are the best practices for tax payment in QRMP?

Best practices for tax payment in QRMP include maintaining accurate records, staying informed about GST updates, and using reliable software for calculations.

  • How can I ensure accuracy in QRMP tax settlement?

Ensuring accuracy in QRMP tax settlement involves regular reconciliation of records, utilizing GSTR-2B for ITC claims, and staying updated on tax rates.

  • What happens if I delay the QRMP GSTR-1 Part 2 tax liability settlement?

Delaying QRMP GSTR-1 Part 2 tax liability settlement can lead to interest charges at 18% per annum and possible late fees.

  • Is it mandatory to use the self-assessment method for QRMP tax payments?

No, you can choose between the self-assessment method and the fixed sum method for QRMP tax payments based on your business needs.

  • What if I make an error in the QRMP GSTR-1 Part 2 tax payment?

In case of an error, you should rectify it in the subsequent tax period to avoid penalties and ensure accurate tax settlement.

  • Are there any tools to assist in the QRMP GSTR-1 Part 2 tax payment process?

Yes, various GST software tools are available that can assist in the QRMP GSTR-1 Part 2 tax payment process by automating calculations and filings.

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Deepti Goel

Deepti is an MBA Post- Graduate who transitioned into content writing last 5+years ago. She has a penchant for breaking down complex financial subjects into digestible content. Besides writing, Deepti consults clients on marketing strategies and brand growth strategies, through her Content, knack for explaining intricate financial matters in a straightforward manner makes her writings accessible for readers. In her downtime, Deepti enjoys exploring the outdoors and is an avid traveler.

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