Invoice Management System (IMS) under GST

The Goods and Services Tax Network is constantly streamlining its GST portal and introducing new features to simplify compliance and auditing for taxpayers. The latest is the Invoice Management System (IMS), which will go live on 1st October 2024. It aims to help significantly manage the process of ITC claims.

This article discusses the key features and benefits of the Invoice Management System and explains how it works.

1. What is the Invoice Management System (IMS) Under GST?

Ans. The Invoice Management System, or IMS, is a new feature within the GST portal that will allow recipient taxpayers to accept, reject, or keep invoices filed by their supplier taxpayers pending. Mismatches between invoices filed by suppliers and returns submitted by recipients are a significant issue taxpayers face when claiming input tax credits.

Once rolled out, the IMS will allow registered recipients to match their records with invoices issued by suppliers in their GSTR-1. This will streamline recipient taxpayers’ Input Tax Credit (ITC) availing process.  

1. How Does the Invoice Management System Work?

Ans. One of the significant problems that taxpayers face in GST compliance is availing input tax credit (ITC). The IMS functionality is expected to resolve some of the critical bottlenecks in that process.

1. First, suppliers submit and save their GSTR-1 by the 11th of every month or Invoice Furnishing Facility (IFF) or amend the submitted invoice using GSTR-1A in the GST portal. GSTR-1Acan be submitted until the time a taxpayer files the GST return (GSTR-3B) for the relevant tax period.
2. Once the supplier saves and submits the recorded invoice, it will appear in the recipient taxpayer’s IMS dashboard and eventually in the GSTR-2B.
3. The IMS dashboard includes the supplier’s GSTIN, trade name, invoice number, and type.
4. The recipient taxpayers will be given three options: ACCEPT, REJECT, or PENDING, which must be acted upon within the time the supplier uploads the invoice in their GSTR1/IFF/1A and the recipient files their GSTR-3B by the 20th of the corresponding months. To take action on an invoice after the 14th of every month, recipients will need to recompute the draft GSTR-2B.
5. If the recipient chooses to ACCEPT, the accepted invoice becomes part of the recipient’s auto-generated ITC statement or GSTR-2B, which is generated on the 14th of every month.
6. Suppose the recipient decides to REJECT an invoice saved by the supplier. In that case, it does not become part of the recipient’s ITC report or GSTR-2B.
7. When the recipient decides to keep an invoice PENDING, the portal does not count it as part of GSTR-2B for that month. IMS carries it forward to next month.  
8. Suppose a recipient does not take action on an invoice. In that case, the system considers it ‘deemed accepted’ and automatically adds it to the recipient’s GSTR-2B.
9. If the supplier amends an accepted or pending invoice, the amended invoice will replace the old invoice. The recipient must act on the newly updated invoice.
10. When suppliers make amendments in GSTR-1 through a GSTR-1A, the updated information flows through IMS to the recipient’s GSTR-2 B, but only in the subsequent month.
11. Taxpayers can avail of PENDING invoices in any future months subject to a maximum limit as per Section 16(4) of the CGST Act, 2017

Benefits of Invoice Management System

When rolled out, IMS is expected to offer multiple benefits to small and large businesses.

Precision audit: IMS will allow auditors to check each invoice thoroughly without requiring them to access multiple interfaces, helping to avoid audit errors.

Minimal error in GSTR-3B: The system offers a summary view of all inward invoices. So, taxpayers do not need to bother about missing out on any invoice before filing GSTR-3B.

Less complication with pending invoices: Pending invoices get carried forward to upcoming tax periods without affecting GSTR-2B and 3B.

Available for QRMP taxpayers: The new invoice management system will be helpful for small businesses and is also available for QRMP taxpayers. However, it will not automatically populate GSTR-2B for months 1 and 2 in a quarter. For them, GSTR-2B will be generated quarterly.

FAQ’S:

• What are key features of Invoice Management System (IMS) ?

1. Single-window to process auto-generated GSTR-2B.
2. Zero compliance burden .
3. Summary view of inward invoices and Suppliers can now easily amend submitted invoices.

• How does IMS support e-invoicing under GST?

Ans. Invoice management system can support e-invoicing system in multiple ways, such as,

Auto-populate GSTR-1 for suppliers and IMS for recipients.  

Handle amendments in invoices by suppliers automatically.

Keep track of recipient taxpayers’ rejection of invoices

• Are there any specific requirements for IMS under GST?

Ans. IMS requires taxpayers to review and assess each inward invoice through a single-window interface. However, if a taxpayer fails to act on any invoice, the system automatically considers it as ‘deemed accepted’. So, it does not include any compliance burden.

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The Goods and Services Tax Network is constantly streamlining its GST portal and introducing new features to simplify compliance and auditing for taxpayers. The latest is the Invoice Management System (IMS), which will go live on 1st October 2024. It aims to help significantly manage the process of ITC claims.

This article discusses the key features and benefits of the Invoice Management System and explains how it works.

1. What is the Invoice Management System (IMS) Under GST?

Ans. The Invoice Management System, or IMS, is a new feature within the GST portal that will allow recipient taxpayers to accept, reject, or keep invoices filed by their supplier taxpayers pending. Mismatches between invoices filed by suppliers and returns submitted by recipients are a significant issue taxpayers face when claiming input tax credits.

Once rolled out, the IMS will allow registered recipients to match their records with invoices issued by suppliers in their GSTR-1. This will streamline recipient taxpayers’ Input Tax Credit (ITC) availing process.  

1. How Does the Invoice Management System Work?

Ans. One of the significant problems that taxpayers face in GST compliance is availing input tax credit (ITC). The IMS functionality is expected to resolve some of the critical bottlenecks in that process.

1. First, suppliers submit and save their GSTR-1 by the 11th of every month or Invoice Furnishing Facility (IFF) or amend the submitted invoice using GSTR-1A in the GST portal. GSTR-1Acan be submitted until the time a taxpayer files the GST return (GSTR-3B) for the relevant tax period.
2. Once the supplier saves and submits the recorded invoice, it will appear in the recipient taxpayer’s IMS dashboard and eventually in the GSTR-2B.
3. The IMS dashboard includes the supplier’s GSTIN, trade name, invoice number, and type.
4. The recipient taxpayers will be given three options: ACCEPT, REJECT, or PENDING, which must be acted upon within the time the supplier uploads the invoice in their GSTR1/IFF/1A and the recipient files their GSTR-3B by the 20th of the corresponding months. To take action on an invoice after the 14th of every month, recipients will need to recompute the draft GSTR-2B.
5. If the recipient chooses to ACCEPT, the accepted invoice becomes part of the recipient’s auto-generated ITC statement or GSTR-2B, which is generated on the 14th of every month.
6. Suppose the recipient decides to REJECT an invoice saved by the supplier. In that case, it does not become part of the recipient’s ITC report or GSTR-2B.
7. When the recipient decides to keep an invoice PENDING, the portal does not count it as part of GSTR-2B for that month. IMS carries it forward to next month.  
8. Suppose a recipient does not take action on an invoice. In that case, the system considers it ‘deemed accepted’ and automatically adds it to the recipient’s GSTR-2B.
9. If the supplier amends an accepted or pending invoice, the amended invoice will replace the old invoice. The recipient must act on the newly updated invoice.
10. When suppliers make amendments in GSTR-1 through a GSTR-1A, the updated information flows through IMS to the recipient’s GSTR-2 B, but only in the subsequent month.
11. Taxpayers can avail of PENDING invoices in any future months subject to a maximum limit as per Section 16(4) of the CGST Act, 2017

Benefits of Invoice Management System

When rolled out, IMS is expected to offer multiple benefits to small and large businesses.

Precision audit: IMS will allow auditors to check each invoice thoroughly without requiring them to access multiple interfaces, helping to avoid audit errors.

Minimal error in GSTR-3B: The system offers a summary view of all inward invoices. So, taxpayers do not need to bother about missing out on any invoice before filing GSTR-3B.

Less complication with pending invoices: Pending invoices get carried forward to upcoming tax periods without affecting GSTR-2B and 3B.

Available for QRMP taxpayers: The new invoice management system will be helpful for small businesses and is also available for QRMP taxpayers. However, it will not automatically populate GSTR-2B for months 1 and 2 in a quarter. For them, GSTR-2B will be generated quarterly.

FAQ’S:

• What are key features of Invoice Management System (IMS) ?

1. Single-window to process auto-generated GSTR-2B.
2. Zero compliance burden .
3. Summary view of inward invoices and Suppliers can now easily amend submitted invoices.

• How does IMS support e-invoicing under GST?

Ans. Invoice management system can support e-invoicing system in multiple ways, such as,

Auto-populate GSTR-1 for suppliers and IMS for recipients.  

Handle amendments in invoices by suppliers automatically.

Keep track of recipient taxpayers’ rejection of invoices

• Are there any specific requirements for IMS under GST?

Ans. IMS requires taxpayers to review and assess each inward invoice through a single-window interface. However, if a taxpayer fails to act on any invoice, the system automatically considers it as ‘deemed accepted’. So, it does not include any compliance burden.

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