Understanding the Invoice Furnishing Facility (IFF) in GST for Small Taxpayers

The Invoice Furnishing Facility (IFF) enables small taxpayers to submit their business-to-business (B2B) invoices on a monthly basis. The Central Board of Indirect Taxes & Customs (CBIC) officially introduced this facility on November 10, 2020, through notification number 82/2020-Central Tax.

What is the Invoice Furnishing Facility?

The IFF is a system where taxpayers who file quarterly GSTR-1 returns, particularly those under the QRMP (Quarterly Return Monthly Payment) scheme, can voluntarily upload their B2B invoices each month. Governed by Rule 59(2) of the CGST Rules, this facility is accessible to regular taxpayers with an annual aggregate turnover up to Rs. 5 crore.

Key aspects to remember when using the IFF include:

• The IFF is entirely optional, and no late fees are incurred for non-usage.
• Invoices pertaining to the final month of a quarter must be uploaded solely in the GSTR-1 return.
• There is no need to re-upload invoices in GSTR-1 if they have already been submitted via the IFF.
• The total value of invoices that can be uploaded monthly is capped at Rs. 50 lakh.
• Details submitted through the IFF will automatically appear in the recipients’ GSTR-2A and GSTR-2B forms.
• The Invoice Furnishing Facility became effective from January 1, 2021, with the initial deadline for January 2021 invoices being February 13, 2021.

Who Can Utilize the Invoice Furnishing Facility?

Small taxpayers who have opted for the QRMP scheme and file their GSTR-1 returns quarterly are eligible to use the IFF. If a taxpayer chooses not to use the IFF, they must upload all invoice details for the entire three months of the quarter when filing their GSTR-1 return.

What is the Purpose of the Invoice Furnishing Facility?

Taxpayers with an aggregate turnover of less than Rs. 5 crore in the previous financial year can opt to file their GSTR-1 and GSTR-3B quarterly under the QRMP scheme, reducing their compliance burden. However, this arrangement could pose challenges for buyers seeking to claim Input Tax Credit (ITC) on purchases made from QRMP taxpayers.

For instance, a buyer purchasing goods from a QRMP taxpayer might face delays in claiming ITC, as the small taxpayer would only upload invoices and complete their GSTR-1 filing after the quarter concludes. This process defers ITC claims, as buyers can only claim full ITC once the invoice is reflected in their GSTR-2B.

The IFF was therefore introduced under the QRMP scheme to alleviate these difficulties. It allows QRMP taxpayers to upload selected or all B2B invoices on the GST portal during the first two months of a quarter, thereby enabling buyers to claim ITC promptly.

Which Details are Submitted in the Invoice Furnishing Facility?

Small taxpayers utilizing the Invoice Furnishing Facility are required to submit the following information:

• B2B invoice details for sales transactions (both inter-state and intra-state) – these correspond to tables 4A, 4B, 4C, 6B, and 6C of GSTR-1.
• Debit and credit notes related to B2B invoices issued during the month (CDNR) – corresponding to table 9B of GSTR-1.
• Relevant amendments to B2B invoices (B2BA) and/or debit and credit notes (CDNRA) – corresponding to tables 9A and 9C of GSTR-1.

It is crucial to remember that all B2C invoices for the quarter must be uploaded when filing the quarterly GSTR-1.

How to Use the Invoice Furnishing Facility?

Since the Invoice Furnishing Facility is optional for QRMP scheme taxpayers, the GST portal provided a specific window for opting into or out of the scheme, for example, until January 31, 2021, for the January-March 2021 quarter. Once taxpayers are enrolled in the scheme, this facility becomes available for the first two months of each quarter. B2B invoices should be uploaded through the IFF between the 1st and the 13th of the month following the relevant reporting month (applicable only for the first two months of the quarter).

Advantages of Utilizing the Invoice Furnishing Facility

The IFF offers several benefits:

• Unlike GSTR-1, late uploads of B2B invoices beyond the 13th of the subsequent month (the monthly deadline) will not incur late fees. However, registered buyers might experience a deferral of their Input Tax Credit (ITC) to the following month.
• The IFF is flexible and optional. Choosing to use it in the first month of a quarter does not obligate its use in the second month.
• Buyers purchasing goods from small taxpayers can claim ITC on a monthly basis.
• B2B sales data uploaded to the IFF is automatically populated into the corresponding quarterly GSTR-1, eliminating the need for manual re-entry.
• It encourages monthly data reconciliation, simplifying the quarterly return filing process.
• Small taxpayers can enhance their business relationships by facilitating faster ITC claims for their buyers.
• If a QRMP taxpayer submits B2B data to the IFF by the 13th of the subsequent month but forgets to finalize the IFF filing, they can still file it after the 13th, provided the data was submitted on or before the deadline.
• It reduces the compliance burden by decreasing the volume of invoices that need to be uploaded at the end of the quarter.

This facility is a positive step to assist both small taxpayers and their buyers. While it can help small taxpayers improve their business by enabling quicker ITC claims for their buyers, it might also lead to increased compliance costs. Data must be accurately categorized into B2B and non-B2B transactions for IFF reporting. Once invoices are uploaded and filed via IFF, they are auto-populated into the quarterly GSTR-1 and become uneditable or undeletable.

Therefore, taxpayers should weigh the advantages of using the IFF against the associated costs. Opting for this facility is advisable if a QRMP taxpayer generates a comparatively higher volume of B2B invoices than B2C invoices within a quarter. Furthermore, understanding its impact on business relationships with registered customers is essential.