What is Invoice Management System (IMS) under GST: Key Features, Benefits & How Does It Work

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 went live on 14th 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. Stay with us. 

Latest Updates

21st December 2024

The GST Council in its 55th meeting recommended the following*:

1. To amend section 38 of CGST Act, 2017 and rule 60 of CGST Rules, 2017 to provide a legal framework in respect of generation of FORM GSTR-2B based on the action taken by the taxpayers on the Invoice Management System (IMS).
2. To amend section 34(2) of CGST Act, 2017, to specifically provide for the requirement of reversal of input tax credit as is attributable to a credit note, by the recipient, to enable the reduction of output tax liability of the supplier.
3. To insert a new rule 67B in CGST Rules, 2017, to prescribe the manner in which the output tax liability of the supplier shall be adjusted against the credit note issued by him.
4. To amend section 39 (1) of CGST Act, 2017 and rule 61 of CGST Rules, 2017 to provide that FORM GSTR-3B of a tax period shall be allowed to be filed only after FORM GSTR-2B of the said tax period is made available on the portal.

14th October 2024
As per the latest GSTN advisory, IMS is made available on the GST portal since 14th October 2024. The first GSTR-2B with IMS actions would be the one generated for October 2024 that is generated on or after 14th November 2024.

9th September 2024
In the 54th GST Council Meeting, the Finance Minister acknowledged the enhancements to the existing GST return architecture. As stated in the advisory issued on 3rd September, the recipient taxpayers, for the purpose of availing Input Tax Credit (ITC), will be provided options to either accept, reject, or keep the invoice pending. Though, as of the moment, the facility stands optional, this process is expected to reduce errors, improve reconciliation, and reduce notices issued on account of ITC mismatch in the returns.

*The same would be given effect through the relevant circulars/ notifications.

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

The Invoice Management System, or IMS, is a new feature within the GST portal in the late 2024 to allow recipient taxpayers accept, reject, or keep invoices pending when saved or filed by their supplier taxpayers. 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.  

Date of Implementation of Invoice Management System Under GST

The new IMS feature was implemented within the GST portal from 14th October 2024. 

Watch the video to under the complete workflow of IMS:

How Does the Invoice Management System Work? 

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. 

• 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-1A can be submitted until the time a taxpayer files the GST return (GSTR-3B) for the relevant tax period. 
• 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.
• The IMS dashboard includes the supplier's GSTIN, trade name, invoice number, and type. 
• 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.
• 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.
• 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. 
• 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.  
• 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. 
• 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. 
• 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.
• 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.

Key Features of Invoice Management System (IMS)

• Communication functionality: The invoice management system is a communication functionality within the GST portal that connects suppliers and recipients through invoice documentation and a single dashboard interface. 
• Single-window to process auto-generated GSTR-2B: Recipient taxpayers with multiple inward suppliers can manage all invoices submitted by all suppliers and auto-generate GSTR-2B with minimal interventions. The taxpayer must select either ACCEPT, REJECT or PENDING to finalise auto-generated ITR reporting. 
• Zero compliance burden: Any new functionality or feature within the GST portal often worries taxpayers about the latest compliance workload. However, IMS will not create any additional compliance burden. If a recipient fails to respond to an invoice, it will be automatically considered 'deemed accepted'. IMS will simplify ITC reporting by streamlining the inward invoice management process. 
• Summary view of inward invoices and actions: The IMS dashboard offers a summary view of all invoices and actions taken for each invoice. This can help management decision-making and auditing processes. 
• Suppliers can now easily amend submitted invoices: The new functionality also makes it easier for suppliers to amend the saved invoices through GSTR-1A.

Invoice Management System (IMS) Dashboard

The new system has not yet been rolled out, but as per the advisory issued by GSTN , the Invoice Management System dashboard looks like - 

How to Use IMS on the GST Portal?

As a buyer or vendor, you can find the IMS functionality on the GST portal after logging into it using your credentials.

Step 1: Login to the GST portal

Login to the GST portal. Go to Services > Returns > click on ‘Invoice Management System (IMS)’.

Access both supplier dashboard (outward supplies) and recipient dashboard (inward supplies) by clicking on the ‘View’ button on the respective tiles.

Step 2: View summary of invoices on the IMS Dashboard

As a buyer, you can view all the purchase/inward supplies invoices reported by your GST-registered suppliers through their GSTR-1/ GSTR-1A or IFF on the IMS dashboard.

All invoices will be classified into headings such as B2B invoices, CGST Section 9(5) invoices by the e-commerce operator, credit notes and debit notes, both original and amended. It will show the number of records/documents against each such heading based on your actions- ‘No action’, ‘Accepted’, ‘Rejected’, and ‘Pending’. Below is a glimpse of the same-

Click on any one of the headings to view the list of invoices to take one of the actions as shown below.

Step 3: Time to take actions 

Select one of the buttons to take action - A (Accept), R (Reject) or P (Keep it Pending). If you do not mark any button, then it will be considered as no action taken. Click on the ‘Save’ button to save your actions. 

Choose the relevant filters or search option to look for any particular invoice while you can also download the records with their status in the form of Excel sheet.

Use the checkboxes against the records to make multiple selection or take bulk actions.

Note: Beware! No action up until the filing of GSTR-3B leads to deemed acceptance of invoices.

Step 4: Do you choose to keep invoices waiting? Then Inform.

You must take action by selecting ‘P’ to keep any particular invoices/CDN as pending for later review and action. You can skip a few months, but make sure to take accept or reject the invoice/CDN on or before the deadline to claim input tax credit defined under the CGST Section 16(4). Note that the more you delay, your working capital continues to be blocked!

Step 5: Generate GSTR-2B/ Recompute GSTR-2B

Usually, you can access GSTR-2B after 14th of every month for the previous month. If you (buyer) do not take action in IMS after the 14th of the month, then it will be the final GSTR-2B for claiming ITC in your GSTR-3B.

However, if you change or take any action after 14th of the month for the previous month, then the system enables the ‘Compute GSTR-2B’ button to recompute GSTR-2B.

Step 6: File GSTR-3B

After all the necessary actions on the IMS, GSTR-2B will have the details flowing into it based on those IMS actions. Accepted invoices/debit notes will fall under the ‘ITC Available’ section of GSTR-2B. Details from here will flow in the respective sections of Table 4 of the GSTR-3B. Review the same, edit for any discrepancies you may find and then proceed to file GSTR-3B.

For detailed guide, visit our exclusive article for all the steps- ‘Step-by-step guide to use IMS’.

How Taxpayers Manage Invoices and Claim Input Tax Credit

Currently, taxpayers need to follow multiple steps to manage inward invoices, reconcile them, and claim ITC based on reconciled invoices. These steps are: 

1. Collecting records from purchase register: A recipient taxpayer must first collect all the records in their purchase register.  
2. Download GSTR-2A: Once suppliers file their GSTR-1 with all the supporting documents, the details of the inward invoices appear in the recipient taxpayer's GSTR-2A form. 
3. Download GSTR-2B: The portal generates GSTR-2B on the 14th of every month. Taxpayers also need to get this auto-generated ITC statement as part of their ITC claim. 
4. Reconciling GSTR-2A and purchase register: Once a taxpayer receives a pre-filled GSTR-2A form for a month, they compare the GSTR-2A with each entry in the purchase register records. 
5. Reconciling the taxpayer's GSTR-1 with the sales register helps the taxpayer verify the accuracy of outward supplies. 
6. Reconciling GSTR-3B and GSTR-1 - This step helps to calculate GST liability accurately. 
7. Matching GSTR-2B with GSTR-3B helps ensure proper utilisation of ITC while discharging the GST liability.

Large businesses also require reconciling e-way bills and invoices to avoid discrepancies and future compliance issues. 

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. 

Key Points of the New Invoice Management System (IMS)

• It will go online on 1st October 2024. 
• The system will simplify the process of assessing every inward invoice and take individual action on them. 
• IMS will not increase any compliance burden, as the system will automatically consider invoices 'deemed accepted' if a taxpayer fails to take action. 
• This will improve audit efficiency in large companies and simplify the ITC claiming process for smaller businesses. 
• The interface is simple to follow and requires no accounting or auditing expertise.

Also Read-
FAQs on Invoice Management System (IMS) in GST 
Invoice Management System (IMS) Process Flow