GST Compliance: Before IMS vs After IMS

The GST authorities introduced the Invoice Management System (IMS) in October 2024. The system helped the taxpayer review their supplier-reported purchase invoices and credit-debit notes by taking actions such as accepting, rejecting, and pending them before they appeared in GSTR-2B. This article will highlight key compliance differences before and after the implementation of IMS and how IMS has streamlined GST compliance.

GST Compliance Before IMS Implementation

A taxpayer filed GSTR-1 for outward supply or sales. From GSTR-2B, a taxpayer could only view invoices, debit, and credit notes uploaded by their suppliers. 

Taxpayers were involved in manual reconciliations of input tax credits from GSTR-2B with their books of accounts. Typical data entry errors, such as missing invoices, duplicate invoices and incorrect invoice details, become a common problem, as a taxpayer would only view GSTR-2B and couldn’t take action on any error.

It was followed by GSTR-3B for reporting tax liability and input tax credit claims and GST payment.

GST Compliance After IMS Implementation

A taxpayer can access IMS through GST Portal (Services > Returns > Invoice Management System Dashboard), where details of inward and outward supplies are provided on the 14th of each month before filing of GSTR-3B. 

A taxpayer can view invoices under inward supplies to actively verify purchase invoices, debit and credit notes. They can either accept, reject or keep the invoice pending. The input tax credit (ITC) is computed based on actions provided in IMS. 

Taxpayers will also be notified actions of customers in outward supplies. One can click on ‘View’ button in the above screen to view the buyer actions taken on their sales documents under outward supplies.

In case a taxpayer does not provide any input, details present in IMS shall be deemed accepted, and accordingly, tax liability under GSTR-3B will be computed.

Key Benefits of Implementing IMS for GST Compliance

There are numerous benefits of IMS. The introduction of IMS has led to real-time verification and reconciliation of invoices, debit notes, and credit notes on a regular basis. This allows you to reject any incorrect invoices/credit-debit notes and stop them from flowing into your GSTR-2B.

The IMS has significantly improved the accuracy of ITC because a taxpayer must validate such invoices; the risk that any ITC is claimed based on incorrect or duplicate invoices is reduced.

IMS also serves as a communication channel between taxpayers, facilitating prompt correction of errors rather than discovering them during audits or assessments.

The introduction of IMS has played a massive role in shifting manual reconciliation activity to a real-time verification system. This system provides the taxpayers with greater control over ITC claims and prompt resolution of various errors in GST returns. 

A taxpayer will need to allocate resources for managing invoices under IMS. As the GST returns are becoming more system-driven, it is essential to process invoices under IMS carefully and within the compliance calendar.

For FAQs on IMS, click here.