Published 11 October 2026
A small business in the quarterly scheme files four GSTR-3B returns a year instead of twelve, but it still pays tax every month. The scheme’s difficulty lies in that split. In the first two months of each quarter there is no return, yet there may be a challan to pay and invoices that customers want to see. The scheme has its own option windows, its own payment methods and a due date that depends on the State. This guide sets out how each step works.
The conceptual background, including what GSTR-1 and GSTR-3B are and why they must agree, is in GSTR-1 and GSTR-3B. Filing the quarter’s GSTR-1 and GSTR-3B is covered in Filing GSTR-1, and Correcting It in GSTR-1A and Filing GSTR-3B and Paying the Tax. This guide adds what is particular to the scheme.
The law in three instruments
The proviso to section 39(1) allows the Government to notify “certain class of registered persons who shall furnish a return for every quarter”. The proviso to section 39(7) requires such persons to pay monthly, either “an amount equal to the tax due” for the month (clause (a)) or, “in lieu of” that, “an amount determined in such manner and subject to such conditions and restrictions as may be prescribed” (clause (b)).
Three instruments, all dated 10 November 2020 and in force from 1 January 2021, fill this in:
- Notification No. 84/2020-Central Tax notifies the class: registered persons “having an aggregate turnover of up to five crore rupees in the preceding financial year”, who have opted in under rule 61A.
- Notification No. 85/2020-Central Tax, issued under section 148, sets out the fixed-sum method of monthly payment.
- Circular No. 143/13/2020-GST explains the scheme, including interest and late fee.
The rules are rule 59 (GSTR-1 and the Invoice Furnishing Facility), rule 61 (GSTR-3B and the monthly deposit) and rule 61A (the option).
Who may opt in
Notification 84/2020 sets the turnover test by the preceding financial year: aggregate turnover of up to Rs 5 crore. The test continues during the current year. Rule 61A(2) provides that a person “whose aggregate turnover exceeds 5 crore rupees during the current financial year” must move to monthly returns “from the first month of the quarter, succeeding the quarter during which his aggregate turnover exceeds 5 crore rupees”. Aggregate turnover is computed on PAN, as section 2(6) defines it, so a business with several registrations counts all of them. The circular says the portal computes the preceding year’s turnover from the returns filed for that year.
Three further limits apply:
- Last return filed. The second proviso to rule 61A(1) makes a person ineligible to opt “in case the last return due on the date of exercising such option has not been furnished”. The circular’s example: a person opting on 27 July must have filed the return for June, due on 22 or 24 July.
- GSTIN by GSTIN. The circular (para 4.7) says the option is exercised per registration. Some GSTINs on a PAN may be in the scheme and others not.
- Who files. The scheme applies to persons who file GSTR-3B. It does not cover composition taxpayers, Input Service Distributors, non-resident taxable persons, or tax deductors and collectors. Rule 61(1) excludes them from GSTR-3B. The portal’s FAQ lists normal taxpayers, SEZ units and developers, persons leaving the composition scheme and new applicants as eligible.
When the option can be exercised
Rule 61A(1) allows the option to be exercised “from the 1st day of the second month of the preceding quarter till the last day of the first month of the quarter for which the option is being exercised”. The circular (para 4.4) applies the same window to opting out. On that rule, the windows are:
| Quarter to which the option applies | Window |
|---|---|
| April to June | 1 February to 30 April |
| July to September | 1 May to 31 July |
| October to December | 1 August to 31 October |
| January to March | 1 November to 31 January |
The option lasts. Under the first proviso to rule 61A(1), a person who has opted in “shall continue to furnish the return on a quarterly basis for future tax periods” unless he becomes ineligible or opts for monthly returns. Nothing has to be renewed each quarter.
A newly registered person, or one leaving the composition scheme, may opt for the quarter whose window is open on the date of the option (circular, para 4.5). The portal’s FAQ gives an example. A person registered in the first month of a quarter can opt for that quarter. One registered in its second or third month files monthly until the next quarter.
What to have ready
| Item | Where it comes from |
|---|---|
| Aggregate turnover of the PAN for the preceding year and the current year to date | Books of every registration on the PAN; the portal displays the preceding year’s figure on the option page |
| ARN of the last GSTR-3B due | Portal, return dashboard |
| Confirmation that no GSTR-1 data is saved for the quarter | Portal; the FAQ says the option is refused while GSTR-1 data is saved |
| Each month: invoices, debit notes and credit notes issued to registered persons | Sales register |
| Each month: tax due, net of credit, if paying on actual liability | Books, with GSTR-2B for the month |
| Each month: balances in the cash and credit ledgers | Portal, electronic ledgers |
| For the quarter: GSTR-2B (monthly and quarterly) and the IMS actions | Portal; see The Invoice Management System and GSTR-2B |
Step 1: opting in or out
The portal’s user manual describes the path as Services > Returns > Opt-in for Quarterly Return. The filer selects the financial year. The page shows each quarter, the quarter open for selection, and the preceding year’s aggregate annual turnover. The filer chooses monthly or quarterly against the open quarter and saves. The manual says an email and SMS go to the primary authorised signatory. Where the turnover exceeds Rs 5 crore, the manual says “the filing preference will be monthly only”.
The portal’s FAQ adds that a GST practitioner can view the option but cannot exercise it for the taxpayer.
Step 2: invoices in the first two months (IFF)
A quarterly filer files GSTR-1 once a quarter. Its customers would then see invoices of the first two months only after the quarter ends. The Invoice Furnishing Facility (IFF) under rule 59(2) addresses this. It allows details of supplies “to a registered person, as he may consider necessary” to be furnished for the first and second months:
- Window. “from the 1st day of the month succeeding such month till the 13th day of the said month”.
- Limit. “up to a cumulative value of fifty lakh rupees in each of the months”.
- Content. Rule 59(5) limits IFF to invoice-wise supplies to registered persons, and debit and credit notes on such invoices. The portal’s FAQ lists the GSTR-1 tables available in IFF: 4A, 4B, 4C, 6B and 6C (B2B invoices), 9B (credit and debit notes to registered persons) and the amendment tables 9A and 9C.
- No repetition. Rule 59(3) provides that details furnished in IFF “shall not be furnished in FORM GSTR-1 for the said quarter”.
IFF is optional. The circular (para 5.2) gives the example of ten invoices in a month, two of which a customer wants credited at once. The two go in IFF and reach the customer’s GSTR-2B for that month. The other eight go in the quarter’s GSTR-1. Sales to unregistered persons are not reported in IFF at all; they go in the quarterly GSTR-1.
The portal’s FAQ says an IFF not submitted by the 13th “will expire”, and that no late fee applies to IFF. The FAQ also says an IFF already submitted can still be filed after the 13th. Saved but unsubmitted records can be moved to the next month’s IFF or the quarter’s GSTR-1 within the same quarter, but not across quarters. Where the cumulative value exceeds Rs 50 lakh, the FAQ says the portal shows “Error in submission” until records are moved to a later period.
IFF is filed with DSC or EVC, like GSTR-1. Rule 59(6)(b) blocks both GSTR-1 and IFF where the GSTR-3B for the preceding tax period has not been filed.
Step 3: paying for the first two months (PMT-06)
Rule 61(3) requires the tax due for each of the first two months to be deposited “in FORM GST PMT-06, by the twenty fifth day of the month succeeding such month”. The deposit goes to the electronic cash ledger, under rule 87. There are two ways to work out the amount.
The fixed-sum method. Notification 85/2020 allows a deposit equal to:
- “thirty five per cent. of the tax liability paid by debiting the electronic cash ledger in the return for the preceding quarter where the return is furnished quarterly”, or
- “the tax liability paid by debiting the electronic cash ledger in the return for the last month of the immediately preceding quarter where the return is furnished monthly”.
The base is the cash paid, not the total liability. Credit used does not count. The circular illustrates this. Central tax of Rs 100 paid in cash for January to March gives a central tax deposit of Rs 35 for each of April and May, and each other head is worked out the same way. The portal generates this challan, and its manual says the amount cannot be edited. Under the second proviso to the notification, a person is not eligible for the method “unless he has furnished the return for a complete tax period preceding such month”. The notification defines a complete tax period as one in which the person was registered from its first day to its last.
The self-assessment method. The person works out the actual tax due for the month, net of credit, and deposits it. The circular points to the monthly GSTR-2B as the means of ascertaining the credit available.
The circular (para 6.2) allows either method in either month. Under the proviso to Notification 85/2020 and para 6.3 of the circular, no deposit is needed for the first month where the ledger balances cover that month’s liability, or there is none. For the second month, no deposit is needed where the balances cover the first and second months together. The third proviso to rule 61(3) allows the cash ledger balance to be taken into account. For the second month this excludes “the tax due for the first month”.
The portal’s user manual for creating a challan describes the steps. The filer selects the reason “Monthly payment for quarterly return”, the financial year and period, and the challan type. That type is either “35% Challan” or “Challan on self-assessment basis”. The challan is then paid by any mode the portal offers.
Rule 61(4) ties the deposit to the quarter. The amount “shall be debited while filing the return for the said quarter”, and a refund of any balance is allowed “only after the return in FORM GSTR-3B for the said quarter has been filed”.
When the monthly payment is short or late
The circular (para 8) sets out the consequences:
- Fixed sum paid on time. No interest arises even if the actual liability for the month was higher. The condition is that the system amount is deposited for each month and the whole quarter’s liability is discharged in GSTR-3B by its due date. In the circular’s illustration, Rs 35 is deposited for each month against actual liabilities of Rs 40 and Rs 42. No interest is due on the Rs 5 and Rs 7.
- Fixed sum paid late. Interest runs “from the due date of furnishing FORM GST PMT-06 till the date of making such payment”.
- Self-assessed amount short or late. Interest under section 50 runs on the tax “which remains unpaid / paid beyond the due date”.
- Quarterly GSTR-3B late. Interest is due on the tax net of credit. In the second illustration, the quarter’s liability is Rs 125 and Rs 70 was deposited. Interest runs on Rs 55 from the due date of the quarterly return.
Interest is paid through GSTR-3B (circular, para 8.3). Late fee is a separate matter. The circular (para 9) states that “no late fee is applicable for delay in payment of tax in first two months of the quarter”. Late fee under section 47 attaches to the quarterly GSTR-1 and GSTR-3B. The amounts and caps are in Late Returns: Late Fee, Interest, the Three-Year Bar and Notices.
Step 4: the quarterly GSTR-1 and GSTR-3B
The quarter’s GSTR-1 is due by “the thirteenth day of the month succeeding such tax period”. This is the proviso to Notification No. 83/2020-Central Tax, which extends the time under section 37(1). It carries the quarter’s supplies not already reported in IFF.
The quarterly GSTR-3B is due under rule 61(1)(ii) on a date fixed by the State or Union territory of the principal place of business:
| Principal place of business | Due date |
|---|---|
| Chhattisgarh, Madhya Pradesh, Gujarat, Maharashtra, Karnataka, Goa, Kerala, Tamil Nadu, Telangana, Andhra Pradesh; the Union territories of Daman and Diu and Dadra and Nagar Haveli, Puducherry, Andaman and Nicobar Islands, Lakshadweep | 22nd day of the month after the quarter |
| Himachal Pradesh, Punjab, Uttarakhand, Haryana, Rajasthan, Uttar Pradesh, Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam, West Bengal, Jharkhand, Odisha; the Union territories of Jammu and Kashmir, Ladakh, Chandigarh, Delhi | 24th day of the month after the quarter |
These are the dates in the rule. The Commissioner may extend them by notification under section 39(6), and extensions are often limited to particular States or districts. The CBIC notification list is the place to check for a given quarter.
The circular (para 7) says GSTR-3B declares the whole quarter’s supplies and credit. The amounts deposited in the first two months are debited against that quarter’s liability. The portal’s QRMP FAQ says credit for the quarter is made available in a quarterly GSTR-2B, in addition to the monthly ones. Where a registration is cancelled during the first two months of a quarter, the circular says GSTR-3B is still required “for the relevant tax period”.
Both returns are signed with DSC, or verified by EVC. Rule 26 requires a company to use DSC. They are filed in the same order as for monthly filers. GSTR-1A for the quarter is available after the quarterly GSTR-1 and before the GSTR-3B. The portal’s GSTR-1A FAQ says records furnished through IFF for the first two months can be amended there.
What cannot be undone
A deposit in PMT-06 sits in the cash ledger. Rule 61(4) prevents a refund of it until the quarter’s GSTR-3B is filed, and the circular (para 6.4) says the deposit “cannot be used by the taxpayer for any other purpose till the filing of return for the quarter”. IFF records once submitted cannot be deleted. The portal’s FAQ says they can be changed only in a later IFF or GSTR-1, or in GSTR-1A for the quarter. Errors in a filed GSTR-1 or GSTR-3B are corrected in later periods, within the limits explained in Correcting Mistakes in Returns.
A proposal not yet in force
The GST Council at its 57th meeting on 8 October 2026 approved in principle a concept note for an optional “Annual Return Quarterly Payment” scheme. It would be for taxpayers with aggregate turnover up to Rs 5 crore in the preceding year “engaged exclusively in supplies to unregistered persons”. This comes from the Council’s press release. It is a recommendation, not law, and nothing in this guide depends on it.
The procedure in order
- Check that the PAN’s aggregate turnover was up to Rs 5 crore in the preceding year and has not crossed it this year (Notification 84/2020; rule 61A(2)).
- File the last GSTR-3B due, and clear any saved GSTR-1 data for the quarter.
- Opt in on the portal within the rule 61A window: from the first day of the second month of the preceding quarter to the last day of the first month of the quarter.
- For each of the first two months, report B2B invoices in IFF between the 1st and the 13th of the next month if customers need the credit, up to Rs 50 lakh a month (rule 59(2)).
- For each of those months, deposit the 35 per cent challan or the self-assessed tax in PMT-06 by the 25th, unless the ledgers already cover the liability (rule 61(3); Notification 85/2020).
- After the quarter, file GSTR-1 by the 13th, use GSTR-1A if needed, and file GSTR-3B by the 22nd or 24th, according to the State. Pay any balance and interest in GSTR-3B.
- Move to monthly returns from the next quarter if aggregate turnover crosses Rs 5 crore during the year.
The next guide covers nil returns, filed by SMS or on the portal, which many quarterly filers use in quarters without business.