Important Keyword: Notification No. 85/2020 – Central Tax, QRMP Scheme GST, 35% tax payment rule GST, Section 148 CGST Act, Section 39(7) GST Act, GST quarterly return payment, PMT-06 challan, GST return filing India, Finodha GST compliance, CBIC notification 2020,
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[F. No. CBEC 20/06/04/2020-GST]
Government of India
Ministry of Finance
(Department of Revenue)
Central Board of Indirect Taxes and Customs
New Delhi, the 10th November, 2020
Notification No. 85/2020 – Central Tax: Seeks to notify special procedure for making payment of 35% as tax liability in first two month
[To be published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i)]
G.S.R………(E). — In exercise of the powers conferred by section 148 read with sub-section (7) of section 39 of the Central Goods and Services Tax Act, 2017 (12 of 2017), (hereinafter referred to as the said Act), the Central Government, on the recommendations of the Council,
Hereby notifies the registered persons, notified under proviso to sub-section (1) of section 39 of the said Act, who have opted to furnish a return for every quarter or part thereof, as the class of persons who may, in first month or second month or both months of the quarter, follow the special procedure such that the said persons may pay the tax due under proviso to sub-section (7) of section 39 of the said Act, by way of making a deposit of an amount in the electronic cash ledger equivalent 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:
Provided that no such amount may be required to be deposited-
- for the first month of the quarter, where the balance in the electronic cash ledger or electronic credit ledger is adequate for the tax liability for the said month or where there is nil tax liability ;
- for the second month of the quarter, where the balance in the electronic cash ledger or electronic credit ledger is adequate for the cumulative tax liability for the first and the second month of the quarter or where there is nil tax liability:
Provided further that registered person shall not be eligible for the said special procedure unless he has furnished the return for a complete tax period preceding such month.
Explanation- For the purpose of this notification, the expression “a complete tax period” means a tax period in which the person is registered from the first day of the tax period till the last day of the tax period.
2. This notification shall come into force with effect from the 1st day of January, 2021.
(Pramod Kumar)
Director,
Government of India
📚 Frequently Asked Questions (FAQs): Notification No. 85/2020 – Central Tax
Q1: What is Notification No. 85/2020 – Central Tax about?
Answer:
This notification lays down a special procedure for taxpayers who have opted to file quarterly returns (under the QRMP Scheme).
Such taxpayers can pay their monthly tax liability by depositing either:
35% of the tax paid in cash in the previous quarter, or
The actual tax liability for the last month of the preceding quarter.
This facility simplifies monthly tax payments without needing to file GSTR-3B every month.
Q2: What is the QRMP Scheme under GST?
Answer:
The QRMP Scheme (Quarterly Return, Monthly Payment) allows registered taxpayers with a turnover of up to ₹5 crore to file GSTR-3B quarterly instead of monthly.
However, they must pay tax monthly using either:
The Fixed Sum Method (35%), or
The Self-Assessment Method (actual liability).
Q3: What is the “35% rule” introduced by this notification?
Answer:
Under the 35% rule, eligible taxpayers must pay:
35% of the tax paid in cash during the previous quarter, or
The actual tax paid in the last month of the preceding quarter, if they were filing monthly returns earlier.
This ensures timely revenue collection while reducing compliance burden.
📊 Example:
If a business paid ₹1,00,000 in cash tax in the last quarter, it can deposit ₹35,000 each for the first two months of the next quarter.
Q4: From when does this new system come into effect?
Answer:
The notification came into force on 1st January 2021.
Hence, the first applicable quarter was January–March 2021.
Q5: Who can avail of this special 35% payment procedure?
Answer:
Eligible taxpayers are those:
Registered under GST,
Having aggregate turnover up to ₹5 crore, and
Opting to furnish quarterly GSTR-3B returns under the QRMP Scheme.
Taxpayers must also have filed all preceding tax returns to avail of this benefit.
💼 Apply for GST registration today with Finodha GST Registration.
Q6: When can taxpayers skip monthly deposits?
Answer:
Taxpayers are not required to make deposits if:
✅ The electronic cash ledger or credit ledger balance is sufficient to cover monthly tax liability, or
✅ There is no tax liability (Nil return).
This is detailed under the first and second provisos of the notification.
Q7: What happens if a taxpayer fails to deposit the 35% amount?
Answer:
If a taxpayer does not deposit the required amount by the due date, it may attract:
Interest liability under Section 50 of the CGST Act, and
Restriction on filing GSTR-3B for the quarter.
Stay compliant with reminders and automation using Finodha GST Return Filing.
Q8: What is Section 148 of the CGST Act, 2017?
Answer:
Section 148 empowers the Central Government to prescribe special procedures for certain classes of taxpayers, including:
Return filing,
Payment of tax,
Registration, and
Maintenance of records.
Notification No. 85/2020 – Central Tax was issued using this authority.
Q9: What is Section 39(7) of the CGST Act?
Answer:
Section 39(7) deals with tax payment timelines, stating that the tax due for each period must be paid by the due date of furnishing returns.
The proviso to this section allows the government to notify alternate procedures — which this notification implements.
Q10: What is meant by “a complete tax period” in this notification?
Answer:
A complete tax period means a period during which the taxpayer was registered for the entire duration—from the first to the last day of the month or quarter.
Only taxpayers with a complete tax period record can avail of this 35% payment facility.
Q11: What are the advantages of the 35% payment scheme?
Answer:
✅ Reduces monthly compliance burden
✅ Simplifies tax payments for SMEs
✅ Ensures timely revenue collection for government
✅ Eliminates repetitive GSTR-3B filings
This aligns with India’s ease of doing business reforms under GST.
Q12: How should the 35% payment be made?
Answer:
The payment should be deposited in the Electronic Cash Ledger through the GST PMT-06 Challan available on the GST portal.
Q13: What if the taxpayer pays more than 35%?
Answer:
If excess tax is paid, the balance remains in the electronic cash ledger and can be adjusted against future tax liabilities.
No refund application is required unless you wish to claim a refund under Section 54 of the CGST Act.
Q14: How can businesses benefit practically from this notification?
Answer:
By opting for this 35% payment mechanism, small businesses can:
Focus on core operations,
Reduce compliance workload, and
Avoid missing deadlines.
🧾 Example:
A small manufacturer paying ₹2 lakh tax last quarter can pay ₹70,000 each month in the next quarter and file a consolidated GSTR-3B at quarter-end.
📌 Simplify GST filing with Finodha GST Compliance.
🏁 Conclusion
Notification No. 85/2020 – Central Tax marks a significant step toward simplifying India’s GST system for small taxpayers.
By introducing a special 35% tax payment method, it ensures ease of compliance, cash flow efficiency, and timely tax collection.
💡 Stay compliant and file your returns effortlessly. Start with Finodha GST Return Filing Today!
Download PDF: Notification No. 85/2020 – Central Tax
More Information: https://taxinformation.cbic.gov.in/
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