Summary: The Invoice Management System (IMS) in India was introduced to enhance the tracking and reporting of Input Tax Credit (ITC) for businesses. IMS enables suppliers to upload invoices, which then reflect in the recipient’s system with options to accept, reject, or keep pending. Accepted invoices automatically populate the recipient’s GSTR-2B, though recipients must meet conditions under Section 16 of the CGST Act to claim ITC. Pending invoices allow ITC claims until November 30th of the subsequent financial year, while rejections remove ITC eligibility for that invoice. If no action is taken, the system treats invoices as accepted, and ITC is added to GSTR-2B. Any amendments made by suppliers in GSTR-1 or GSTR-1A before filing will auto-update in the recipient’s IMS and affect subsequent GSTR-2B reports. The IMS also addresses previous reconciliation challenges faced by tax authorities, as pre-IMS systems lacked invoice-level ITC details, making it difficult to track accurate ITC claims. By providing real-time visibility into ITC eligibility, IMS reduces the risk of mismatch notices and improves ITC reconciliation, benefiting both taxpayers and authorities. Recipients are advised to avoid rejecting invoices to retain ITC eligibility, as keeping invoices pending preserves the option to claim ITC within the allowed timeframe. Through streamlined ITC tracking, IMS contributes to a smoother, more accurate tax filing experience, supporting compliance and transparency across India’s tax framework.
Before starting, let’s understand the need for Invoice Management System (IMS).
IMS is introduced to track the reporting requirements regarding the eligible ITC available to the taxpayer which in turn strengthen the overall ITC system. The invoices uploaded by the supplier starts reflecting in the IMS of the recipient, through which the recipient has three options:
Accept the invoice, reject the invoice or simply keep it pending in the system.
The accepted invoices get auto populated in the GSTR-2B of the recipient, however the recipient still need to satisfy all the conditions for availing the ITC as prescribed in Section 16 of the CGST Act, 2017 to claim the ITC in GSTR-2B. Also, the time limit for availing the ITC still remains the same i.e . 30th November of the subsequent Financial Year meaning that the invoices which are marked as pending, the ITC of which can be claimed till 30th November of the subsequent Financial Year. Non-acceptance of the invoices shall lead to be deemed acceptance on the IMS portal and the ITC will be auto-populated in the GSTR-2B. The actions to be taken by the supplier till the date he files his GTSR-3B return. Any amendments made by the supplier in the invoices shall be auto amended in the IMS portal (before filing the GSTR-1). However one should note that if the supplier has amended the return 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 .
It is very much advisable to the taxpayer not to reject any invoices, since it would result in rejection of the ITC too, simply keep it pending.
Through IMS, government is making it much easier for the recipient to report the ITC and the reconciliation would be far better than ever before. Before introduction of IMS it was not easy for the government also to reconcile the figures as reported by the tax payers since the invoice wise itc details were not filed with the department and there were no records available to the department with which they could know whether the tax payer has correctly availed the ITC or not. With introduction of IMS, the mismatch notices would be relatively lower as compared to the current scenarios.
The IMS would be a great tool to reduce the notices which arise due to mismatch in ITC. The action taken by the implementation of the IMS if of great help to the taxpayers only and they should support the smooth implementation of the same as well.
10 FAQs based on the Invoice Management System (IMS) overview
Q1. What is the purpose of the Invoice Management System (IMS)?
Answer: The IMS is designed to streamline the tracking and reporting of Input Tax Credit (ITC) by ensuring invoices from suppliers are accurately reflected in the recipient’s records. It helps in maintaining transparency, reducing mismatches, and making ITC reconciliation easier for both taxpayers and the government.
Q2. How does IMS help with ITC reconciliation?
Answer: IMS automatically reflects supplier-uploaded invoices in the recipient’s system, allowing the recipient to review and accept, reject, or keep the invoice pending. Accepted invoices populate in the recipient’s GSTR-2B, making ITC reconciliation simpler and reducing the chances of mismatches or errors.
Q3. What are the options available to the recipient in IMS when viewing an invoice?
Answer: The recipient has three options: (1) accept the invoice, (2) reject the invoice, or (3) keep it pending. Accepted invoices get auto-populated in the recipient’s GSTR-2B, while pending invoices can still be claimed for ITC until November 30th of the following financial year.
Q4.What happens if a recipient rejects an invoice in the IMS?
Answer: If a recipient rejects an invoice, the corresponding ITC is also rejected. This could result in the inability to claim the ITC, which is why it is advisable to keep invoices pending rather than rejecting them.
Q5.Will invoices marked as pending affect ITC claims?
Answer: No, pending invoices do not prevent ITC claims. The recipient has until November 30th of the subsequent financial year to claim ITC on pending invoices.
Q6.When is ITC automatically populated in GSTR-2B?
Answer: ITC is automatically populated in the recipient’s GSTR-2B when an invoice is accepted. If an invoice is not actively rejected, it is treated as accepted and will also auto-populate in GSTR-2B.
Q7.What should the recipient do if the supplier makes amendments to the invoice?
Answer: If a supplier amends an invoice before filing GSTR-1, the amended invoice information will update in IMS. Any changes made through GSTR-1A will also flow to IMS but will only affect the GSTR-2B generated for the following month.
Q8.What is the deadline for claiming ITC on invoices?
Answer: ITC can be claimed on invoices until November 30th of the subsequent financial year, regardless of whether an invoice is marked as pending.
Q9.Why is it not advisable to reject invoices in IMS?
Answer: Rejecting an invoice in IMS results in a rejection of the ITC associated with that invoice. It is generally recommended to keep the invoice pending if there is any uncertainty, as this preserves the option to claim ITC within the allowed timeframe.
Q10.How does IMS reduce mismatch notices for taxpayers?
Answer: By reflecting accurate invoice and ITC information in the IMS, the system helps align supplier and recipient records, reducing discrepancies that could trigger mismatch notices from the tax department. This streamlining minimizes errors and supports smoother ITC reconciliation.
Author Bio
very detail oriented and helpful article