GST advisory-IMS norms relaxed for the initial phase!

The Goods and Services Tax Network (GSTN) issued an advisory on November 12, 2024, regarding the initial phase of its newly launched Invoice Management System (IMS). IMS, introduced in October 2024, enables recipients to accept, reject, or keep pending invoices furnished by suppliers on the GST Portal. Based on these actions, recipients’ GSTR-2B is generated monthly, reflecting their input tax credit (ITC) eligibility. Given that IMS is in its early stages, GSTN acknowledges the possibility of user errors while recipients interact with this system. In response, GSTN has allowed taxpayers to adjust and correct auto-populated ITC or liability in their GSTR-3B to reflect accurate data, thus relaxing initial norms for users during this transitional period.

Let’s understand the advisory!

Advisory dated 12^th November 2024

Advisory regarding IMS during the initial phase of its implementation

Nov 12th, 2024

An invoice Management System (IMS) is an optional facility introduced in October 2024 on the GST Portal, on which the invoices/records saved/furnished by the supplier in GSTR-1/1A/IFF, can be accepted, rejected, or kept pending by recipients. Based on the action taken by the recipient on the IMS, the system will generate the GSTR 2B of the recipient on the 14th of the subsequent month.

The Taxpayer can accept/reject/keep pending the invoice/record on IMS after due verification from his accounts. The ITC for the rejected record will not be available to the recipient in the GSTR 2B. Further, the liability and input tax credit is being auto-populated in GSTR 3B of the taxpayer on the portal based on his liability declared in GSTR 1/1A and input tax credit made available in his GSTR 2B. However, the taxpayer can presently edit the said auto-populated details in GSTR 3B before filing the same.

IMS, being a new functionality introduced on the portal, there may be cases where in the initial phase of implementation of IMS, the recipient may make an error/mistake while taking action (like acceptance/rejection/keeping pending) on the IMS in respect of an invoice/record. As GSTR-2B of the recipient will be generated on the portal based on the actions taken by the recipient on the IMS, any mistake in the action taken by the recipient on the IMS could result in incorrect details of available/eligible input tax credit to the recipient being shown in his GSTR-2B, which will also be auto-populated in his GSTR-3B on the portal. In such cases, the recipient can change the action on the IMS in respect of an invoice/record ( e.g. from rejected to accepted or vice versa) and can recompute his GSTR-2B at any time till the filing of GSTR-3B for the corresponding tax period, so that correct ITC is auto-populated in his GSTR-3B.

Despite this, there may still be some cases, where the recipient is not able to correct the action taken on the IMS, resulting in the wrong auto-population of ITC in GSTR-3B of the recipient or the wrong auto-population of liability in GSTR-3B of the corresponding supplier. Therefore, during this initial phase of implementation of IMS, the taxpayers are advised that in such cases, where due to any inadvertent mistake in the action taken on the IMS, if incorrect details of ITC/ liability are auto-populated in GSTR-3B on the portal, the taxpayer may before filing their GSTR-3B return, edit such wrongly populated ITC/liability in their GSTR-3B, to correctly avail ITC or pay correct tax liability based on the factual position as per the documents/records available with him.

ThankingYou,
Team GSTN

Key Highlights of the Advisory

• Relaxation of IMS Norms: The government has temporarily relaxed the  Invoice Management System (IMS) norms for businesses in the early stages of GST implementation.
• Aim for Eased Compliance: The relaxation is designed to offer businesses more time and flexibility, helping them transition smoothly to the new tax system without facing undue compliance challenges.
• Errors in Initial Phase: As IMS is a new feature, recipients may make errors in their actions (accept, reject, or keep pending) on invoices. These mistakes could lead to incorrect ITC or tax liability being auto-populated in GSTR-2B and GSTR-3B.
• Ability to Correct Errors: Taxpayers can modify their actions on the IMS while filing GSTR-3B to correct any mistakes made while submitting a response to the IMS.

Conclusion

The implementation of the Invoice Management System (IMS) marks a positive step toward simplifying the GST compliance process. However, as with any new system, the initial phase may come with its share of challenges, including potential errors in the actions taken by recipients regarding invoice acceptance, rejection, or pending status. The government’s advisory offers crucial guidance, allowing taxpayers to rectify mistakes by editing their GSTR-3B before submission, ensuring that the correct Input Tax Credit (ITC) and tax liabilities are reflected in the return.

‍