The entire taxation system of India has been streamlined through implementation of the Goods and Services Tax (GST), and has led to the introduction of several facilities to ease tax payment. The Invoice Furnishing Facility (IFF) is one such new facility introduced under the GST laws, which came into effect on January 1, 2021. IFF is a facility available for those businesses who have to file under GSTR-1 guidelines. Through the facility of IFF in GST, businesses can easily upload their business-to-business (B2B) invoices on a monthly basis. Available currently only under the Quarterly Return Monthly Payment of Taxes (QRMP) scheme, the IFF GST facility is governed by Rule 59(2) of the CGST Rules, which makes it accessible for taxpayers with an aggregate turnover of Rs. 5 Crores annually.
The IFF has been introduced under GST laws for the convenience of small taxpayers, whose annual aggregate turnover is less than Rs. 5 Crores. Previously, they could opt into the QRMP scheme and file GSTR-1 and GSTR-3B forms each quarter. While this does reduce compliance for small taxpayers, it proves inconvenient for those who buy products from QRMP taxpayers in claiming their input tax credit (ITC).
Since QRMP taxpayers are only uploading invoice details once every quarter, their buyers can only claim ITC once the invoice appears as part of their GSTR-2B. Through the IFF, small taxpayers can easily upload invoice details each month, which ensures no delay for their buyers in claiming ITC.
Before you opt to utilise the IFF, there are a few things you should be aware of. Read on to learn more about these.
The IFF in GST is intended to ease taxation processes for small taxpayers who opt for filing GSTR-1 returns under the QRMP scheme each quarter. By not availing the IFF, the taxpayer must instead upload invoice details for the three months of the entire quarter at once through the GSTR-1 return.
IFF is an optional facility, and not using it will not attract any penalties.
IFF is only for the first two months of a quarter, while the taxpayer must upload invoices for the quarter’s last month through GSTR-1 return only. If they have availed the IFF for uploading invoices for the first two months of the quarter, there is no need for them to do it again through the GSTR-1.
Each month, the IFF is restricted to submission of invoices amounting to a total value of Rs. 50 Lakhs.
For buyers whose sellers upload invoices through IFF, the details will be reflected on their GSTR-2A and GSTR-2B forms.
Small taxpayers opting for IFF can submit the following documents through it;
Details for B2B sales transactions both within a state and between states, pertaining to tables 4A, 4B, 4C, 6B and 6C of GSTR-1
Debit and credit notes issued toward B2B invoices, pertaining to table 9B of GSTR-1
Any amendments made to the B2B invoices or the debit/credit notes, pertaining to the tables 9A and 9C, respectively, of GSTR-1.
Today, with the GST tax regime evolving to include all taxpayers, whether big or small, under its umbrella, many software services are available in the market which allow for digitalisation of your financial records and even aid with operations, such as uploading invoices using the invoice furnishing facility in GSTR-1.
Additionally, the GST system has also been digitised to a large extent, which allows taxpayers to easily upload invoices through the GST portal, where you can log in using your API or GST portal credentials.
Also, learn about what is the purpose of a pro forma invoice?
There are several advantages available to small taxpayers through use of the IFF. Read on to learn more about these.
IFF in GST offers immense flexibility. Even if you have opted to use the facility in the first month of the quarter, there is no compulsion that you must utilise it in the second quarter too.
Through IFF, monthly reconciliation of accounts and data between buyers and sellers can be achieved, thus, making quarterly filings easier.
Small taxpayers can enhance their popularity with customers by offering faster ITC claims.
You can also learn about GSTR-4
IFF in GSTR-1 is just one of the provisions introduced to make GST filing easier and more convenient for small businesses. Being GST compliant makes business dealings easier in a lot of ways, including for availing business loans. Business loans, available on Bajaj Markets, can be availed without the need for any collateral, and repaid over a flexible repayment tenure.