Introduction
Recently on GST Portal an update has been released on 3rd Sep 2024 about proposed release of new functionality called Invoice Management System (IMS). IMS is a new communication process to enable taxpayers to efficiently address invoice correction / amendments with their suppliers through portal. This facility shall be available to the taxpayer from 1st October onwards on the GST portal.
Enhancement in ITC Ecosystem of GST:
This is a major enhancement in ITC ecosystem of GST. Now, only the accepted invoices by the recipients would become part of their GSTR-2B as their eligible ITC. Once the suppliers save any invoice in GSTR 1 / IFF / 1A /the same invoice would be reflected in the IMS dashboard of the recipient. Options will be provided to recipient to either “Accept the invoice”, “Reject the invoice” or to “Keep it in pending”. These actions can be taken from the time of saving the records in GSTR 1 / IFF / 1A by the supplier taxpayer till the recipient taxpayer files his/her corresponding GSTR-3B. If recipient doesn’t take any action on an invoice in IMS then it will be deemed accepted and will move to GSTR-2B as an accepted invoice. In case, the supplier amends the details of a saved invoices in the GSTR-1 before filling the GSTR-1, in such cases the amended invoice will replace the original invoice in IMS, irrespective of the action taken by the recipient on the original invoice. In case supplier has amended any invoice filed in GSTR-1 through GSTR-1A then same will also flow to IMS, however, ITC corresponding to the same will flow in GSTR-2B of the recipient, generated for the subsequent month only.
All the invoices/ records reported or saved by the supplier taxpayer in their GSTR-1 or IFF or GSTR 1A will be available in the IMS dashboard of the recipient taxpayer for taking the actions. Supplier will also be able to see, what action his recipient has taken on invoices in IMS.
Further, at the time of generation of GSTR-2B only the filed invoices/records by the supplier, will be considered for the computation of ITC. Based on the current cut-off dates and action taken by the recipient, a draft GSTR-2B will be made available to recipient on 14th of the subsequent month as currently being generated. However, the recipient will be free to take actions of accept/reject or keep pending even after generation of GSTR-2B till the filing of GSTR-3B. If recipient taxpayers have taken an action on any invoice after 14th of the month, then he would be required to recompute their GSTR-2B. However, they will not be able to take any action after filing of GSTR-3B for the same month. It may be noted that till GSTR-3B is filed by the taxpayer, GSTR-2B for subsequent month will not be generated.
On the basis of action taken by the taxpayer, invoices/records can be categorized as mentioned below:
i. No action taken: These are the invoices/records where no action has been taken by the recipient these will be treated as deemed accepted at the time of GSTR-2B generation;
ii. Accepted: There are the accepted records and will be part of GSTR-2B generation;
iii. Rejected: These records will not be considered for GSTR-2B generation;
iv. Pending: These records will not be considered for GSTR-2B generation for the month, same will be carried forward in IMS itself for further action in subsequent months.
This functionality is a facilitation for the taxpayers and will not add any compliance burden on the taxpayers as No Action records shall be considered as Deemed Accepted and the taxpayer’s intervention will only be required in case a record need to be Rejected or kept Pending.
For QRMP (Quarterly Return Monthly Payment) Taxpayers:
The records/invoices saved or filed through IFF by a QRMP taxpayer will flow to IMS for the recipient, and will become part of GSTR-2B, as per action taken by the recipient in IMS on the same. The GSTR2B of the recipient will be generated monthly, unless the recipient is a QRMP taxpayer. It may be noted that GSTR-2B will not be generated for Month M-1 and M-2 for QRMP taxpayer. GSTR-2B for a QRMP taxpayer will be generated on Quarterly basis only.
Flow of IMS:
All the outward supplies reported in the GSTR 1 / IFF / 1A shall populate in the IMS of recipients for taking the actions.
1. Accept –Accepted records will become part of ‘ITC Available’ section of respective GSTR 2B. GST on accepted records will auto-populate in GSTR 3B as eligible ITC.
2. Reject –Rejected records will become part of ‘ITC Rejected’ section of respective GSTR 2B. ITC of rejected records will not auto-populate in GSTR 3B.
3. Pending –Pending records will not become part of GSTR 2B and GSTR 3B. Such records will remain on IMS dashboard till the time same is accepted or rejected. ‘Pending’ action shall not be allowed in following scenarios:
a. Original Credit note
b. Upward amendment of the credit note irrespective of the action taken by recipient on the original credit note
c. Downward amendment of the credit-note if original credit note was rejected by recipient,
d. Downward amendment of Invoice/ Debit note where original Invoice/ Debit note was accepted by recipient and respective GSTR 3B has also been filed.
Sub Section 4 of Section 16 of CGST Act, 2017:
As per Sec 16(4) “A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the thirtieth day of November following the end of financial year to which such invoice or debit note pertains or furnishing of the relevant annual return, whichever is earlier.”
IMS works in line with Sub Section 4 of Sec 16 – which means the recipient will not be able to “accept the invoice” which he has kept pending after the 30th November following the end of Financial year to which the invoice pertains.
Ex: Supplier Invoice date 31st Jan 2025, this invoice has been marked as pending in IMS. Recipient must accept the invoice on or before 30th November 2025. If recipient fails to do so, he will not be able to accept the invoice post 30th Nov 2025.
Key points on IMS:
1. Deemed accepted: At the time of GSTR 2B generation, a record will be considered as ‘Deemed Accepted’ if no action is taken on that record in IMS.
2. It is mandatory to recompute GSTR 2B from IMS dashboard in case of any change in action already taken on concerned records or any action is taken after 14th of the month i.e. date of generation of Draft GSTR-2B.
3. Following supplies will not go to IMS and will be directly populated in the GSTR 3B –
a. Inward RCM supplies where supplier has reported in the Table 4B of IFF / GSTR 1 or GSTR 1A and
b. supplies where ITC is not eligible due to section 16(4) of CGST Act or on account of POS rule.
4. Records will flow to IMS dashboard at the time of saving of record by supplier in respective form and recipient can take action on such record in IMS. However, such records will be populated in the GSTR 2B after filling of return in GSTR-1/IFF/1A by the supplier.
5. All the accepted/ deemed accepted/ rejected records will move out of IMS dashboard after filing of respective GSTR 3B.
6. Pending records will remain on IMS dashboard and these records can be accepted or rejected in future months.
7. It is mandatory to take action on original record and file the respective GSTR 3B before taking action on amended record (amended through GSTR-1A/GSTR-1) when original and amended record belongs to 2 different GSTR 2B return period. If both the records belong to same period’s 2B, only amended record will be considered for ITC calculation of GSTR 2B.
8. Any change made in a record/invoice before filing GSTR-1/1A/IFF by the supplier will reset the record’s status on recipient’s IMS dashboard.
9. GSTR 2B will be sequential now. i.e. system will generate GSTR 2B of a return period only if GSTR 3B of previous return period is filed.
10. The liability of supplier will be increased in GSTR 3B for the subsequent tax period, for the invoices/records which have been rejected by the recipient in the IMS for the following transactions
a. Original Credit note rejected by the recipient
b. Upward amendment of the credit note rejected by the recipient irrespective of the action taken by recipient on the original credit note
c. Downward amendment of the credit note rejected by the recipient if original credit note was rejected by him,
d. Downward amendment of Invoice/ Debit note rejected by the recipient where original Invoice/ Debit note was accepted by him and respective GSTR 3B has also been filed.
Conclusion:
To conclude, this facility enables opportunity to review the genuineness and authenticity of the received invoice.
*****
Disclaimer: This article is for informational purposes only and is not a professional advice. The author, his associates, and any third parties mentioned are not liable for any damages, losses, or liabilities that may arise in any form or manner. The information (interpretation of Acts, rules, and regulations, facts, figures, opinions, views, bare acts, rules, etc,.) provided in this article is subject to errors, omissions and misstatement. The author makes no warranties regarding the accuracy, completeness, or suitability of the information. Readers should seek professional advice and conduct their own research before making decisions based on the information provided. By using the information in this article, readers agree that the author and his associates are not responsible for any consequences, financial or otherwise.
Author Bio
