IMS - A new feature on GST Portal

The Goods and Services Tax Network (GSTN) is consistently enhancing its GST portal by implementing new features and improvements to streamline the process of tax compliance for taxpayers. These updates aim to simplify the filing of tax returns, improve transparency, and ensure a more efficient and user-friendly experience for all users interacting with the GST portal. The Invoice Management System (IMS), is also one of the new feature which would be available on common portal from 1st October 2024. The aim behind to implement this new feature is to manage the process of claiming ITC in an efficient manner.

As we know that when the supplier of goods or services files their GSTR 1 by showing the details of supplies made by them, such details are shown in GSTR-2B of their recipients and the recipient has to claim the ITC on the basis of details of the invoices which are reflected in GSTR-2B.  But some times it is seen that in GSTR-2B some invoices are shown which are not yet entered in the books of accounts of the recipient or some invoices are reflected in GSTR-2B but such invoices are not related to that recipient or some invoices are reflected in GSTR-2B but the recipient has to take ITC of such invoices in another month. These types of mismatches between invoices filed by suppliers and returns submitted by recipients are the significant issues which are to be faced by the recipient at time of claiming ITC.

Hence to facilitate the recipient in claiming the ITC, this feature of IMS has been introduced.  This will allow recipient taxpayers to accept, reject, or to keep it pending in the system, which can be availed later.

Let’s discuss the concept of IMS with the help of an example;
Suppose Mr.A has supplied the goods in July of Rs. 10,000/- to Mr. B and charged GST @18% i.e., Rs. 1800/- Now the supplier Mr. A will submit their GSTR 1 upto 11th August.  The said invoice will be appear in the recipient Mr.B's IMS dashboard. The IMS dashboard includes the supplier's GSTIN, trade name, invoice number, and type. Now Mr. B has three options:  Accept, Reject or Pending.  If Mr. B chooses to accept such invoice, the said accepted invoice would become the part of GSTR-2B of Mr.B.  However, if Mr.B decides to reject the invoice. In such case, it would not become part of their GSTR-2B. When the recipient (Mr.B ) decides to keep an invoice pending, the portal does not count it as part of GSTR-2B for that month. The IMS would carry forward such invoice in next month. Suppose Mr. B does not take any action on the invoice. In that case, the system considers it 'deemed accepted' and automatically adds it to the recipient's GSTR-2B. The supplier Mr.A would also be able to see what action his recipient (Mr. B) has taken on invoices in IMS.

In respect of IMS the GSTN has also issued the advisory on IMS. Some take away from the said advisory are summarised as follows;

1. This facility shall be available to the taxpayer from 1st October onwards on the GST portal.

2. As per the said advisory the following supplies will not go to IMS dashboard:

(i) Inward RCM supplies where supplier has reported in the table 4B of IFF/GSTR1 or GSTR1A.

(ii) Supplies where ITC is not eligible due to Section 16(4) of CGST Act or on account of POS rule.

3. 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.

4. The Recipient has three options Accept, Reject or pending. However, the 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.

5. All the accepted, deemed accepted and rejected invoices will move out of IMS dashboard after filing GSTR-3B by recipient. However, Pending records will remain on IMS dashboard and these records can be accepted in future months but not later than the time limit to claim ITC as per Section 16(4) of the CGST Act, 2017.

6. The liability of supplier will be increased in GSTR-3B for the subsequent tax period, for the invoices 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: The IMS would simplify the process of checking the every inward invoice and take individual action on them.  It would not increase any compliance burden, as the system will automatically consider invoices 'deemed accepted' if a taxpayer fails to take action.

Disclaimer: The information given in this article is solely for purpose of understanding the law. It is completely based on the interpretation of the author and cannot be constituted as a legal advise, the author of this article and Lawcrux team is not responsible for any legal issues if arises on the basis of the interpretation given above.