GST Advisory on the Invoice Management System (IMS)
GSTN is in the process of developing a new functionality called Invoice Management System (IMS) which will allow the recipient taxpayers to either accept or reject an invoice or to keep it pending in the system, which can be availed later.This facility shall be available to the taxpayer from 1st October onwards on the GST portal.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.
What is the Advisory About?
The new Invoice Management System (IMS) is an enhancement to the GST portal, designed to streamline the process of handling invoices between suppliers and recipients. Starting from October 1st, this system allows recipients to accept, reject, or keep invoices pending before they are included in GSTR-2B, which determines the eligible Input Tax Credit (ITC). This update is aimed at improving the accuracy and authenticity of ITC claims by enabling better communication and verification of invoices between parties.
Key Points to Check and Benefit From:
• Review Invoices Carefully: Recipients should utilize IMS to verify the genuineness of each invoice. Only accepted invoices will be considered for ITC in GSTR-2B.
• Timely Actions: If no action is taken on an invoice before filing GSTR-3B, it will be deemed accepted. It's crucial to address any discrepancies early to avoid issues later.
• Impact of Amendments: If a supplier amends an invoice, the updated version will automatically replace the original in IMS. Recipients must review any amendments promptly.
• Deemed Acceptance: If an invoice is left unaddressed, it will automatically be treated as accepted during GSTR-2B generation, emphasizing the importance of timely actions.
• How to Use This Update:
• For ITC Optimization: Businesses can now ensure that only legitimate invoices are included in their ITC calculations, thereby optimizing their GST returns.
• Tracking Amendments: The system provides a clear track of any amendments made by suppliers, enabling recipients to stay updated on changes that may affect their tax credits.
• Simplified Compliance: The IMS is designed to simplify compliance without adding a burden. By acting on invoices promptly, businesses can avoid any potential issues during GST return filing.
Key points about the Invoice Management System (IMS), explained with examples based on the October 2024 GST Return:
1. Deemed Accepted:
At the time of GSTR-2B generation, if no action is taken on a record in IMS, it will be considered as ‘Deemed Accepted.’
Example: Suppose a supplier uploads an invoice in October 2024, and the recipient does not accept, reject, or keep it pending before the GSTR-3B filing. In this case, the invoice will automatically be deemed accepted and included in the GSTR-2B for October 2024.
2. Mandatory Recalculation of GSTR-2B:
If any action on a record is changed after 14th of the month (the date of Draft GSTR-2B generation), it is mandatory to recompute the GSTR-2B from the IMS dashboard.
Example: If a recipient accepts an invoice on October 10, 2024, but later decides to reject it on October 20, 2024, after the draft GSTR-2B is generated, the recipient must recompute the GSTR-2B to reflect this change.
3. Exclusions from IMS:
Certain supplies will not go through IMS and will be directly populated in GSTR-3B. These include:
Inward supplies under Reverse Charge Mechanism (RCM) reported in Table 4B of IFF/GSTR-1 or GSTR-1A.
Supplies where ITC is not eligible due to Section 16(4) of the CGST Act or based on Place of Supply (POS) rules.
Example: If a recipient receives inward supplies under RCM in October 2024, these will directly populate in GSTR-3B and will not appear in the IMS dashboard for action.
4. Flow of Records to IMS:
Records will appear in the IMS dashboard when the supplier saves them in the relevant form. The recipient can take action on these records, which will then be populated in GSTR-2B after the supplier files GSTR-1/IFF/1A.
Example: If a supplier saves an invoice on October 5, 2024, it will appear in the recipient's IMS dashboard immediately. The invoice will only reflect in the recipient's GSTR-2B after the supplier files GSTR-1 for October 2024.
5. Movement of Records Out of IMS:
Once the respective GSTR-3B is filed, all accepted, deemed accepted, and rejected records will move out of the IMS dashboard.
Example: If a recipient accepts an invoice on October 10, 2024, and files GSTR-3B on October 20, 2024, that invoice will no longer appear in the IMS dashboard after the filing.
6. Pending Records in IMS:
Invoices kept pending will remain on the IMS dashboard and can be accepted or rejected in future months.
Example: If a recipient keeps an invoice pending in October 2024, it will stay on the IMS dashboard and can be acted upon in November or any later month, within the allowable period.
7. Action on Original and Amended Records:
It is mandatory to take action on the original record and file the respective GSTR-3B before acting on an amended record if they belong to two different GSTR-2B periods. If both records are from the same period, only the amended record will be considered for ITC.
Example: If a supplier issues an original invoice in October 2024 and later amends it in November 2024, the recipient must take action on the original invoice in October before addressing the amendment in November.
8. Reset of Record Status in IMS:
Any change made to a record/invoice by the supplier before filing GSTR-1/1A/IFF will reset the status of that record on the recipient's IMS dashboard.
Example: If a supplier saves an invoice on October 5, 2024, but makes a change to it on October 15, 2024, before filing GSTR-1, the record’s status in the recipient’s IMS dashboard will reset, requiring the recipient to review the amended invoice.
9. Sequential Generation of GSTR-2B:
GSTR-2B will be generated sequentially, meaning the GSTR-2B for a return period will only be generated if the GSTR-3B for the previous period is filed.
Example: If a recipient has not filed GSTR-3B for September 2024, the GSTR-2B for October 2024 will not be generated until the September return is filed.
10. Supplier's Liability Increase for Rejected Records:
The supplier’s liability will increase in the GSTR-3B for the subsequent tax period for invoices/records rejected by the recipient. This applies to the following scenarios:
• Original credit note rejected by the recipient.
• Upward amendment of the credit note rejected by the recipient.
• Downward amendment of the credit note if the original credit note was rejected.
• Downward amendment of an invoice/debit note rejected by the recipient where the original was accepted and the corresponding GSTR-3B was filed.
Example: If a recipient rejects a credit note issued in October 2024, the supplier’s liability will increase in the GSTR-3B filed for November 2024, reflecting the rejected note.
Conclusion: The introduction of the Invoice Management System (IMS) marks a significant step forward in ensuring accurate and efficient GST compliance. As GST laws and systems continue to evolve, it's crucial for businesses and professionals in the field to stay updated. Regularly checking for such updates and understanding their implications will help in maintaining seamless compliance and avoiding any last-minute surprises.
You can access and read further by clicking the link below
https://tutorial.gst.gov.in/downloads/news/revised_advisory_on_ims.pdf
Disclaimer: This material and the information contained herein is intended for clients and other Chartered Accountants to provide updates and is not an exhaustive treatment of such subject. We are not, by means of this material, rendering any professional advice or services. It should not be relied upon as the sole basis for any decision which may affect you or your business.
