Arjuna: Krishna, I heard there’s a new Invoice Management System (IMS) on the GST portal. What’s it all about? It sounds complicated.
Krishna: Arjuna, IMS is indeed a fresh addition, introduced in October 2024, but it’s quite beneficial if understood well. IMS allows recipient taxpayers to take various actions like accept, reject, or keep invoices pending based on the records uploaded by their suppliers in GSTR-1 or IFF. This gives recipients control over their Input Tax Credit (ITC) eligibility before filing GSTR-3B.
Arjuna: So, does this mean every action taken on IMS directly affects ITC?
Krishna: Absolutely. Based on the actions taken on IMS, the GSTR-2B is generated for the recipient on the 14th of the following month. Let’s say you received an invoice from Supplier A for ₹1,00,000 plus 18% GST. By accepting it in IMS, the ₹18,000 ITC will appears in your GSTR-2B. But if you reject this invoice, the ₹18,000 ITC will not reflect, and you cannot claim it in GSTR-3B.
Arjuna: But what if I mistakenly reject an invoice? Can I change it later?
Krishna: That’s a common concern, Arjuna. Yes, IMS allows flexibility. You can change your action whether accepting, rejecting, or keeping pending until the GSTR-3B filing for that period. If an error is made, the IMS provides a “GSTR-2B recompute” option to update ITC eligibility based on the revised action. For example, Suppose you initially reject Supplier B’s invoice of ₹50,000 plus 18% GST, but later realize it’s valid. You can change the status to “accepted,” and the ₹9,000 ITC will then be recomputed in your GSTR-2B.
Arjuna: And how does this affect the suppliers?
Krishna: Good question. The GST portal now includes a “Supplier View” feature in IMS, allowing suppliers to see the action taken by recipients on their invoices. This way, suppliers can track the acceptance or rejection of their invoices and address any mismatches if necessary. It also prevents unintentional actions by recipients from causing issues later. For example Supplier C, who issued a ₹2,00,000 invoice with 18% GST (₹36,000), can view in the “suppliers view” tab if you accepted or rejected this invoice. If rejected, they can proactively reach out to understand the reason and prevent discrepancies.
Arjuna: This sounds useful, but what about invoices with special rules, like those under Reverse Charge Mechanism (RCM)?
Krishna: Excellent point! Invoices under RCM, or those where ITC is not eligible due to Place of Supply (POS) rules or CGST Act conditions, are automatically marked as “No Action Taken.” These do not require any action in IMS from the recipient’s side.
Arjuna: Suppose a mistake still slips through after all these checks. What should I do then?
Krishna: As this is the initial phase of implementation of IMS, the advisory encourages taxpayers to double-check their GSTR-3B filings. If ITC or liabilities are mistakenly auto-populated due to an IMS error, you can edit these entries in GSTR-3B before filing, aligning them with your actual records. For example, if due to an error, an extra ₹5,000 ITC appears in GSTR-3B, correct it before filing. This safeguards compliance and accuracy in your tax records.
Arjuna: That’s great Krishna! Whether this Invoice Management System compliance is mandatory?
Krishna: This facility shall be available to the taxpayer from 14th October onwards on the GST portal. It may be noted that it is not mandatory to accept or reject invoices in IMS dashboard for GSTR-2B generation. If a taxpayer chooses not to take any action on the received invoices then its GSTR-2B would be generated on 14th of the month as being generated today. The invoices where no action would be taken by the recipient would be treated as accepted by the system and a draft GSTR-2B shall be generated including only ‘accepted’ or ‘no action taken’ invoices.
Arjuna: Krishna, could you explain the timeline and steps of how this system will work in easy manner? There seem to be multiple actions required each month.
Krishna: Definitely, Arjuna. Let’s break it down with the hypothe.
1. 11th of the month: The supplier files GSTR-1.
2. 13th of the month: As a recipient, you can start accepting, rejecting, or keeping invoices pending in IMS.
3. 14th of the month: Based on your actions in IMS, the system generates GSTR-2B for you.
4. Let’s say on 18th of the month, If the supplier needs to correct any invoice, they can do so by filing GSTR-1A before the GSTR-3B due date.
5. Further Say on 19th of the month, you can recompute your GSTR-2B if any changes are made in IMS or by the supplier in GSTR-1A, ensuring your ITC and liability are accurate.
6. 20th of the month: Finally, you file your GSTR-3B, and any updates from IMS will reflect in it.
Arjuna: That’s great, Krishna! So, what should taxpayers learn from this?
Krishna: The IMS system represents a step towards better control and transparency over ITC claims. Taxpayers should use it to their advantage by regularly verifying invoices before acceptance. This process helps avoid ITC mismatches, ensures accurate reporting, and strengthens compliance.
Taxpayers should diligently verify and monitor their invoices in the IMS system to ensure correct ITC claim in GSTR-3B. This vigilance will prevent discrepancies, simplify compliance, and ensure that eligible credits are maximized. In short, a small amount of attention can prevent larger compliance issues later!
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