INVOICE MANAGEMENT SYSTEM

- BASIC UNDERSTANDING FOR EASY

IMPLEMENTATION
NEED FOR IMS FUNCTIONALITY

Invoice Management System (IMS) is a new communication tool developed by GSTN to facilitate the matching of documents
(tax invoice, CN & DN) between the supplier and the recipient.

IMS shall facilitate communication from the recipient to the supplier through the GSTN portal based on the actions taken by
the recipient on the details furnished by the supplier.

IMS is expected to bring transparency between the actions of the supplier and that of the recipient to reduce the apparent
differences between the data furnished by the counterparties.

The invoices/DN/CN saved by the supplier on the GSTN portal would be reflected on a real-time basis in the IMS dashboard
of the recipient to enable the recipient to take appropriate action.

The recipient has the option to either accept or reject or keep pending the records reflected on the IMS dashboard.

These actions can be taken from the time of saving the records in GSTR 1 / IFF / 1A by the supplier till the recipient files the
corresponding GSTR-3B. Only the accepted invoices by the recipients would become part of GSTR-2B as eligible ITC which
will flow in GSTR-3B. If the recipient doesn’t take any action on an invoice in IMS then it will be deemed accepted and will
move to GSTR-2B as an accepted invoice.
Supplier will also be able to see, what action his recipient has taken on invoices in IMS thereby permitting the desired
communication to enable the supplier to take corrective action, if any.
MANNER OF IMPLEMENTATION

IMS functionality shall be made applicable from the filing of GSTR-3B of Oct’24
onwards.

All the invoices that are part of GSTR-2B of Sep’24 or older tax periods will
not be reflected in IMS.

The GSTN is also planning to implement hard locking of the auto-populated

ITC in GSTR-3B after the rollout of IMS after addressing all the issues,
raised by the trade. Hence it is advisable to implement the IMS functionality
from Oct’24 onwards to make the system at the end of the taxpayer robust in
due course of time.
TIMELINES FOR RECIPIENT ACTION

Stage I – The recipient should take action in the IMS on a real-time basis to enable the supplier to correct the reporting
errors before filing GSTR 1/IFF on the 11th /13th of the succeeding month. In such a scenario, GSTR 2B will reflect correct
information.

Stage II – The recipient can also take action in the IMS after the 11th/13th (i.e. after filing GSTR 1 by the supplier) but before
filing GSTR 3B (20th). In such case, GSTR 2B generated after such action will reflect correct information to the extent of the
information reported by the supplier. The error committed by the supplier and communicated by the recipient after the
11th/13th by way of rejection and subsequently corrected by the supplier by way of GSTR 1A will be reflected only in GSTR 2B
of the next cycle.

Stage III – The recipient will be permitted to take action in the IMS after the filing of GSTR-3B only to the extent of the
documents which have been kept pending.
ACTION IN IMS BY THE RECIPIENT -
VARIOUS SCENARIOS
Documents Status in the records Status in the records Action in IMS
maintained by reflected in IMS
recipient Accept(A)/Reject(R)/Pending(P)
Invoice/DN Correctly recorded Correctly reflected Accept (A) – The details will flow in GSTR 2B and subsequently to GSTR 3B
wherein the ITC available and restricted will have to be reported.
Invoice/DN Correctly recorded Not reflected No action is required in IMS since the document will be missing in the IMS.
Action can be taken in IMS post reporting of the document by the supplier.
Invoice/DN Correctly recorded Incorrectly reflected Reject (R) – The action of rejection by the recipient will flow to the supplier
prompting the supplier to amend the invoice to reflect correct information.
Based on the amendment the recipient can take further action in the IMS.
Invoice/DN Incorrectly recorded Correctly reflected Accept (A) – The details will flow in GSTR 2B and subsequently to GSTR 3B
wherein the ITC available and restricted will have to be reported. Further, the
error in the records is to be corrected by the recipient.
Invoice/DN Not recorded Reflected Pending (P) – If the recipient finds that it has received the document but is
pending booking in the records, the document must be kept pending in the IMS.
The same will have to be accepted for the tax period in which the recipient
records the document.

Reject (R) – If the recipient finds that it has not received such supply and the
invoice has been incorrectly reflected in IMS, the same is required to be
rejected so that the supplier will be prompted to take necessary action in terms
of amending the invoice or cancelling the invoice by issuing a CN.
ACTION IN IMS BY THE RECIPIENT -
VARIOUS SCENARIOS
Documents Status in the records Status in the records Action in IMS
maintained by recipient reflected in IMS
Accept(A)/Reject(R)
CN Correctly recorded Correctly reflected Accept (A) – The details will flow in GSTR 2B and subsequently to GSTR 3B
wherein the ITC will be netted off.
CN Correctly recorded Not reflected No action is required in IMS since the document will be missing in the IMS.
However, if ITC has been availed, the same will have to be reversed to the extent of
the tax-adjusted in the CN. The action of accepting the CN can be taken in IMS
post-reporting of the document by the supplier but the reversal of ITC shall not be
required if the same has already been done in the previous tax period.
CN Correctly recorded Incorrectly reflected Reject (R) – The action of rejection by the recipient will flow to the supplier
prompting the supplier to amend the CN to reflect correct information. Based on
the amendment the recipient can take further action in the IMS.
CN Incorrectly recorded Correctly reflected Accept (A) – The details will flow in GSTR 2B and subsequently to GSTR 3B
wherein the ITC will have to be reversed. Further, the error in the records is to be
corrected by the recipient.
CN Not recorded Reflected Accept (A) – If the recipient finds that the CN has been correctly reflected, then it
must be accepted and the details will flow in GSTR 2B and subsequently to GSTR
3B wherein the ITC will have to be reversed. It is advisable to book the CN in the
records in the same tax period.

Reject (R) – If the recipient finds that it has not received such supply and the CN
has been incorrectly reflected in IMS, the same is required to be rejected.
EFFECT IN GSTR-2B AND GSTR-3B
• Based on the action of the recipient on the IMS, the GSTR-2B for the respective period shall be generated and accordingly
ITC data will be auto-populated in the table of GSTR-3B. The effect based on the action of the recipient on the IMS
dashboard in GSTR-2B and GSTR-3B is summaries as under:

Action on IMS Effect in GSTR-3B and GSTR-2B

Accept Accepted records will become part of the ‘ITC Available’ section of respective GSTR 2B. The same will auto-populate in GSTR 3B.
The said ITC shall have to be further reported in accordance with Circular No. 170/02/2022-GST dt. 06/07/2022.
Reject Rejected records will become part of ‘ITC Rejected’ section of respective GSTR 2B. ITC of rejected records will not auto-populate
in GSTR 3B.
Pending Pending records will not become part of GSTR 2B and GSTR 3B. Such records will remain on the IMS dashboard till the time the
same is accepted or rejected. ‘Pending’ action shall not be allowed in the 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.
No Action Where no action has been taken by the recipient then it will be treated as deemed accepted at the time of GSTR-2B generation.
The said ITC shall have to be further reported in accordance with Circular No. 170/02/2022-GST dt. 06/07/2022.
EFFECT IN GSTR-3B
• The liability of the supplier will be increased in GSTR 3B for the subsequent tax period, for the invoices/records which
have been rejected by the recipient in the IMS for the following transactions:
• Original Credit note rejected by the recipient
• Upward amendment of the credit note rejected by the recipient irrespective of the action taken by the recipient on
the original credit note
• Downward amendment of the credit note rejected by the recipient if the original credit note was rejected by him,
• 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
TRANSITIONAL EFFECT
• For the documents already reflected in GSTR 2B for the tax period upto September 2024, the recipient
must follow the reporting directions as indicated in Circular No. 170/02/2022-GST dt. 06/07/2022.
RESOURCES RELATED TO IMS ISSUED BY
GSTN
• Advisory on Invoice Management System dated 14.09.2024
• Draft Manual on Invoice Management System dated 17.09.2024
• Frequently Asked Questions on IMS dated 22.09.2024
• FAQ on IMS dated 17.10.2024
 THANKS
[email protected]
[email protected]