GSTN is developing a new functionality viz., the Invoice Management System (IMS) to streamline the process of invoice reconciliation for taxpayers. This functionality will facilitate the matching of invoices received from and reported by the suppliers. IMS would enable a taxpayer to accept, reject, or keep it pending for subsequent availment of ITC. This functionality will be available to the taxpayer from 1 October 2024 onwards.

The salient features of the IMS functionality are as under:
1. Once the suppliers save any invoice in Form GSTR-1/ Invoice Furnishing Facility (IFF)/ Form GSTR-1A, the same will be reflected in the IMS dashboard for further action by the recipient.

2. The recipient may either accept or reject an invoice or keep it pending in the system. This action can be taken from the time of saving records in Form GSTR-1/ IFF/ Form GSTR-1A (by the supplier) till the time the recipient files Form GSTR-3B. If no action is taken on an invoice in IMS, then it will be deemed to be accepted and will move to Form GSTR-2B as an accepted invoice.

3. Amendment of saved invoices:

• If the supplier (before filing Form GSTR-1) amends the details of the saved invoice, the amended invoice will replace the original invoice irrespective of the action taken by the recipient on the original invoice.
• If the supplier (after filing Form GSTR-1) amends the details of the saved invoice through Form GSTR-1A, then the same will also flow to the IMS. However, the corresponding ITC in respect of the amended invoice will flow to Form GSTR-2B of the recipient in the subsequent month.

4.  Actions in respect of the invoices:

• No action is taken: These invoices will be deemed to be accepted at the time of Form GSTR-2B generation.
• Accepted: These invoices will be a part of Form GSTR-2B generation.
• Rejected: These invoices will not be part of Form GSTR-2B generation.
• Pending: These invoices will not be part of Form GSTR-2B generation for the relevant month. However, they will be carried forward in IMS itself for further action in subsequent months. ITC on such invoices can be claimed in subsequent months, subject to the time limit prescribed under Section 16(4) of the Central Goods and Services Tax Act, 2017 (CGST Act). However, in the following scenarios, ‘Pending’ action will not be allowed:

  • Original Credit Note;

  • Upward amendment of Credit Note irrespective of the action taken by a recipient on the Original Credit Note;

  • Downward amendment of Credit Note if the Original Credit Note was rejected by the recipient;

  • Downward amendment of an Invoice/ Debit Note if the original Invoice/ Debit Note was accepted by the recipient and respective Form GSTR-3B has also been filed.

All accepted, deemed accepted and rejected invoices will move out of the IMS dashboard after filing respective Form GSTR-3B.

5. The following supplies will not go to IMS and will be directly populated in Form GSTR-2B:

• Inward supplies attracting GST under reverse charge mechanism from registered suppliers;

• Supplies where the recipient is not eligible to claim ITC on account of Section 16(4) of the CGST Act or where the place of supply is different from the state where the recipient is registered.

6. The liability of the supplier will be increased in the subsequent tax period for the following invoices/ records which have been rejected by the recipient:

• Original Credit Note;

• Upward amendment of Credit Note (irrespective of the action taken on the Original Credit Note);

• Downward amendment of Credit Note (if the Original Credit Note was rejected by the recipient);

• Downward amendment of invoice/debit Note (where Original Invoice/ Debit Note was accepted by the recipient and respective Form GSTR-3B has also been filed).

7. It is mandatory for a recipient to take action on the original record and file respective Form GSTR-3B before taking action on an amended record.

8. All the invoices/ records reported or saved by the supplier in their Form GSTR-1/ IFF/ Form GSTR-1A / Form GSTR-5 / Form GSTR-6 will be reflected in the IMS dashboard of the recipient. However, at the time of generation of Form GSTR-2B, only the filed invoices/records will be considered. Further, a supplier would be able to see the actions taken by its recipients.

9. Based on the current cut-off dates and actions taken by the recipient, a draft Form GSTR-2B will be made available to a recipient by the 14^th of the subsequent month. However, if a recipient undertakes actions (accept/ reject/ pending) on any of its invoices after the 14^th, the recipient will be required to recompute their Form GSTR-2B. However, no actions can be carried out after filing Form GSTR-3B for the same month.

10. It may be noted that till Form GSTR-3B is filed by the taxpayer, Form GSTR-2B for the subsequent month will not be generated.

BDO in India Comments

The introduction of the IMS functionality is a move towards ensuring invoice-wise reconciliation on a real-time basis, similar to Form GSTR-2 functionality which was proposed to be introduced during the initial stage of GST implementation. While the said functionality could not be implemented, the IMS functionality seems to implement the same in a phased manner.

[Source: GSTN update dated 3 September 2024]