As the Goods and Services Tax (GST) system evolves, so do the tools available to tax professionals for ensuring compliance.
For small taxpayers filing quarterly returns, the Invoice Furnishing Facility (IFF) plays a key role in simplifying the filing process while improving the efficiency of the entire supply chain.
In this blog, we will explore the core aspects of IFF under GST for quarterly filers, its eligibility criteria, practical insights, and the benefits it brings to both suppliers and recipients.
We will also discuss how the Suvit platform enhances IFF compliance for tax professionals.
1. Understanding IFF in GST: The Basics
1.1 What is IFF?
The Invoice Furnishing Facility (IFF) is a feature introduced under Rule 59(2) of the Central Goods and Services Tax Rules, 2017, designed to ease the reporting burden for taxpayers under the Quarterly Return Monthly Payment (QRMP) scheme.
It allows businesses to upload their B2B outward supply invoices for the first two months of a quarter (M1 and M2) instead of waiting for the third month (M3) to file their quarterly GSTR-1.
This ensures that recipients of goods and services (buyers) can claim Input Tax Credit (ITC) in real-time, thereby improving cash flow for businesses.
1.2 Legislative Background and Objective
Prior to IFF, businesses following the QRMP scheme could face delays in claiming ITC, which could cause disruptions in the cash flow of both suppliers and buyers.
By allowing B2B invoices to be furnished monthly, the IFF enables businesses to maintain a more efficient and transparent supply chain, helping reduce delays in ITC claims.
1.3 Who Can Use the Invoice Furnishing Facility?
- Eligibility: Only taxpayers who are under the QRMP scheme and have an aggregate turnover of up to ₹5 crore in the previous financial year are eligible to opt for the IFF.
- Scope: IFF is applicable exclusively for B2B transactions and cannot be used for B2C supplies, exports, or exempted goods.
- Turnover Threshold: Businesses with an annual turnover of ₹5 crore or less are eligible to opt for the QRMP scheme and, by extension, the IFF.
2. Key Features of IFF: Practical Insights
2.1 How Does IFF Work?
Under the QRMP scheme, businesses need to file their GSTR-1 quarterly. However, the IFF allows businesses to upload their B2B invoices for the first two months of a quarter (M1 and M2) before the due date for GSTR-1.
The information submitted in the IFF will auto-populate in the quarterly GSTR-1. In the final month (M3), businesses only need to file the remaining data, including any invoices not submitted through IFF.
- Timeframe: For M1 (January) and M2 (February) of a quarter, businesses must submit their IFF details by the 13th of the following month. For example, for the January-March quarter, M1 (January) invoices must be submitted by 13th February.
- Invoice Types: Businesses are required to report B2B outward supplies, including GSTIN of the recipient, invoice number, taxable value, and tax amount in the IFF. Credit and debit notes can also be furnished.
2.2 Benefits of Using IFF
- Timely ITC Claims for Recipients: Buyers (recipients) can avail themselves of ITC based on the B2B invoice data furnished via IFF, reducing delays in their credit claims.
- Improved Cash Flow: Suppliers who file through IFF can ease the reconciliation burden at the end of the quarter, ensuring a more efficient workflow and quicker access to funds.
- Reduced Filing Burden: By submitting invoices in advance, the amount of data to be reported in the quarterly GSTR-1 is reduced, making the filing process easier and faster at the end of the quarter.
2.3 Limitations and Risks of IFF
- Value Cap: There is a limit on the amount of outward supply that can be furnished via IFF in a given month, typically ₹50 lakh per month. Any value above this must be reported directly in the quarterly GSTR-1.
- Duplicate Reporting: If an invoice is reported in IFF, it cannot be reported again in GSTR-1 for that quarter. Tax professionals must ensure that invoices are properly classified.
- Data Accuracy: As invoices submitted through IFF are visible to recipients immediately, businesses must ensure that all data is accurate to avoid ITC discrepancies or disputes.
3. Actionable Steps for Tax Professionals
3.1 Pre-Filed Checklist for Clients
Tax professionals should assist their clients in preparing for IFF filing by ensuring the following steps are taken:
- Review Eligibility: Confirm that the client’s turnover is under ₹5 crore and that they are registered under the QRMP scheme.
- Invoice Collection: Ensure that the business captures all B2B invoices accurately each month so that they can be uploaded before the IFF deadline.
- Data Validation: Verify that the business's internal systems can generate accurate invoice data for reporting.
3.2 Filing the IFF
- Log in to the GST portal → Navigate to Returns Dashboard → Select Financial Year and Period (M1 or M2) → Choose "Invoice Furnishing Facility (IFF)".
- Prepare the data for B2B invoices, including the recipient’s GSTIN, taxable value, and taxes.
- Validate the information to ensure it matches your internal records.
- Submit the data by the 13th of the following month.
- For the third month (M3), file the remaining invoices not uploaded via IFF in your quarterly GSTR-1.
3.3 Tips for Seamless IFF Compliance
- Automate Data Capture: Tax professionals should recommend that clients utilize automated software tools to efficiently and accurately capture and classify B2B invoices.
- Monthly Reporting Discipline: To meet deadlines, ensure clients maintain a consistent schedule for invoice collection, review, and submission each month.
- Reconciliation: Use software tools to ensure that invoices reported in IFF are not duplicated in the quarterly return.
4. How Suvit Can Streamline IFF Filing
4.1 Suvit Platform Overview
Suvit is a comprehensive platform designed for tax professionals to enhance data entry automation, GST compliance, including IFF filings. The platform integrates with popular accounting systems such as Tally and Vyapar to automate data capture, reconciliation, and GST return filing.
4.2 Key Features for IFF Compliance
- Automated Invoice Capture: Suvit collects and organizes B2B invoices automatically, reducing manual errors and improving data accuracy.
- Integrated Reconciliation: The platform enables tax professionals to reconcile data between the sales ledger and the GST portal, ensuring accurate IFF filings.
- Deadline Tracking: Suvit provides reminders for IFF deadlines (1st to 13th of the month) and integrates client invoicing data, ensuring a smooth and error-free filing process.
4.3 Practical Benefits of Using Suvit for IFF Compliance
- Reduced Errors: Suvit automates the entire IFF filing process, thereby reducing the likelihood of mistakes and ensuring compliance with GST law.
- Improved Workflow: With Suvit, tax professionals can efficiently manage multiple clients’ IFF filings, streamline invoicing, and handle large volumes of data with ease.
- Client Communication: Suvit maintains constant communication between tax professionals and their clients, ensuring that clients meet all filing deadlines and remain compliant with GST regulations.
Leveraging IFF for Efficient GST Compliance
The Invoice Furnishing Facility (IFF) is a valuable tool for quarterly GST filers, simplifying the filing process, enhancing ITC flow, and alleviating the end-quarter burden. By adopting IFF, businesses can ensure compliance, maintain strong customer relationships, and streamline their overall GST filing process.
For tax professionals managing multiple QRMP clients, using platforms like Suvit can significantly ease the burden of IFF filings, automate processes, and ensure accuracy and compliance.
By leveraging IFF and the right tools, you can deliver enhanced services to your clients, helping them stay ahead of the compliance curve and optimize their GST processes.
If you’re ready to implement IFF in your practice or for your clients, consider integrating Suvit into your workflow. By doing so, you’ll not only enhance your efficiency but also position your firm as a forward-thinking, compliance-driven practice.
FAQs
Q1. What is the Invoice Furnishing Facility (IFF) in GST?
The IFF is a system that allows businesses filing quarterly GST returns to upload their B2B invoices for the first two months of a quarter. This ensures that buyers can claim ITC earlier, thereby improving their cash flow.
Q2. Who is eligible to use IFF under GST?
Only businesses registered under the QRMP scheme with an annual turnover of ₹5 crore or less are eligible to use IFF.
Q3. What is the deadline for submitting invoices via IFF?
Invoices for the first two months (M1 and M2) of a quarter must be submitted by the 13th of the following month.
Q4. What happens if I exceed the ₹50 lakh limit for IFF in a month?
If your B2B supplies exceed ₹50 lakh in a month, you must report the excess invoices directly in the quarterly GSTR-1, not via IFF.
Q5. How can Suvit help with IFF compliance?
Suvit automates the collection, reconciliation, and filing of B2B invoices for IFF, making the process faster, more accurate, and less prone to errors.
