IMS – Accept, reject and keep invoice on hold

In order to facilitate the taxpayer in matching their invoices with the invoices issued by their supplier for availing the input tax credit a matching system called Invoice Management System (IMS) is being introduced in GST Portal. And it would be available to the taxpayer from 1st October onwards on the GST portal for taking action.

In this matching process the recipient taxpayers will have to either accept, reject an invoice or keep the invoice pending for taking action at later time. The accepted invoice will flow to GSTR-2B and then to GSTR-3B as eligible ITC.

This is a major change in the Input tax credit claim process. Since 2017 there has been continuous change in the method of computing input tax credit. Initially, in 2017, it was allowed to the taxpayer to claim ITC as per their books. Later GSTR-2A was introduced in 2018 and subsequently in 2019 a concession was introduced to allow the claim of certain percentage of ITC on invoices missing in GSTR-2A as additional claim. Later on that provision was removed when GSTR-2B a static ITC statement was introduced on 01.01.2022. Along with that a condition was prescribed whereby taxpayer was allowed to claim credit of only those invoices that are appearing in GSTR-2B.

Then, Circular 170 was issued in July, 2022 to provide the condition to mandatorily furnish full and correct ITC details – claimed and reversal both in appropriate column of GSTR-3B. Till then various method was followed by taxpayer. Since the heading of Table 4 of GSTR-3B states as ‘Eligible ITC’ most of the taxpayer have only mentioned the net eligible ITC.

GST Department issued various notices and did phone calls to taxpayer and asked them to follow the aforesaid circular as the furnishing of net ITC was impacting their fund settlements. 

Thereafter the permanent reversal, temporarily reversal etc. was brought in. For that purpose a new ledger called ‘Electronic credit reversal and reclaim statement’ was also introduced in 2023.

Now, in series of initiatives of Govt in ITC part, the recent (2024) one is IMS – Invoice Management System. This is in fact the same as GSTR-1A, 2, 2A process consisting of accepting, reject and on hold provision which was thought of initially but could never bring it into reality and finally was scrapped.

Now, to comply IMS, taxpayers need to roll up their sleeves, as accepting, rejecting, keeping pending action on each and every invoices is tough and even if done through system offered by software company or GSPs challenges would be there.

Technical glitch is a ought to come in any compliance in GSTN. So, lot of tickets are expected to be raised by taxpayer with the GST helpdesk via Self service portal and rigorous correspondence is going to begin between taxpayer, GSP, GST Helpdesk, supplier and management in resolving the issues. 

Most important task would be to adhere to the return filing timeline. 

Let us get ready to accept IMS as we don’t have option to either reject it or keep it on hold.