GST Relief for MSMEs 2026: Proposed Annual Return and Quarterly Payment Scheme
The 57th GST Council approved in principle a simplified Annual Return Quarterly Payment (ARQP) scheme for micro, small, and medium enterprises with aggregate turnover up to ₹5 crore that deal exclusively in B2C transactions. Eligible businesses will make quarterly tax remittances while filing a single comprehensive annual return. Additionally, late-fee relief was approved for returns filed within the original due month.
Published Date: 8 October 2026
Editorial Review: Akash P R, Business Consultant (10 Years+ Experience in Startup Consultancy, Direct Tax, Indirect Tax and Compliances), D BIZ CONSULTANCY PVT. LTD.
News Summary & Quick Answer
Frequent return preparation cycles place heavy compliance costs on micro and small enterprises that sell solely to end-consumers. Addressing this long-standing request, the 57th GST Council granted in-principle approval for the Annual Return Quarterly Payment (ARQP) scheme. Targeted at registered businesses with annual turnover up to ₹5 crore engaged exclusively in B2C supplies, this optional framework reduces return filings to once a year while maintaining quarterly tax payment discipline.
Highlights of the Proposed ARQP Scheme
| Scheme Parameter | Existing QRMP / Regular Regimes | Proposed ARQP Framework |
|---|---|---|
| Turnover Eligibility | Up to ₹5 Crore (B2B and B2C mixed) | Up to ₹5 Crore (Exclusively B2C supplies) |
| Return Filing Frequency | Monthly or Quarterly (GSTR-1 & GSTR-3B) | Single Annual Return |
| Tax Payment Frequency | Monthly (via self-assessment or 35% challan) | Simple quarterly tax payment |
| Target Beneficiaries | Broad trading community | Neighborhood retailers, restaurants, individual service providers |
| Late-Fee Relief | Strict daily accrual under Section 47 | Relief for returns filed within the due month |
Strategic Advantages for Local MSMEs
1. Significant Reduction in Professional Accounting Overhead
Small business owners will no longer need to prepare detailed monthly transaction disclosures, lowering ongoing accounting and consulting costs.
2. Predictable Quarterly Cash Management
Paying tax quarterly allows business owners to manage working capital smoothly, matching cash outflows to seasonal consumer trade cycles.
3. Grace Period on Late Fees
The Council's recommendation to waive or cap late fees under Section 39(1) when returns are submitted by the close of the original due month shields small operators from penal burdens caused by short banking delays.
Practical Example: Kochi Retail Boutique
A boutique clothing store in Kochi generates an annual turnover of ₹85 Lakhs, selling exclusively to walk-in consumers (B2C):
- Current Position: Must prepare and file quarterly GSTR-1 and GSTR-3B returns alongside monthly tax payments, requiring ongoing professional bookkeeping.
- Under Proposed ARQP Scheme: Can opt to pay tax once every quarter via a simple payment challan and file just one consolidated annual return at year-end, drastically reducing monthly administrative work.
Explore Related Coverage:
Frequently Asked Questions
Practical answers to common business questions regarding this statutory update.
Akash P R
Business Consultant
10 Years+ Experience in Startup Consultancy, Direct Tax, Indirect Tax and Compliances
D BIZ CONSULTANCY PVT. LTD.
Have questions about this compliance update or require assistance with filing before the due date? Connect directly with our advisory desk:
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