This is to inform you about the advisory issued by GSTN regarding the launch of a new ‘Invoice Management System (IMS)’ on the GST portal, effective from October 1, 2024. This system aims to assist taxpayers in reconciling their purchase records (invoices, credit/debit notes) with the documents issued by their suppliers, helping in the formulation of GSTR 2B and the claim of Input Tax Credit (ITC)
Flow of IMS and GSTR-2B generation process
·
All the outward supplies saved/ reported by the
supplier in their GSTR-1/ IFF/ GSTR-1A shall populate into IMS dashboard of the
recipient, for them to take requisite actions such as accept, reject, or
pending in the IMS.
·
Post filing of GSTR-1 by the suppliers, the recipients
will have to take the below mentioned actions on IMS:
a)
Accept: Documents
accepted will form part of ‘ITC Available’ of GSTR-2B and will auto-populate in
GSTR-3B as eligible ITC;
b)
Reject: Documents
rejected will form part of ‘ITC Rejected’ section of GSTR-2B and will not
auto-populate in GSTR-3B
c)
Pending: Invoices
kept as pending will not become part of generated GSTR-2B and GSTR-3B for the
month. The same will remain open on the IMS dashboard till the same is accepted
or rejected.
However, ‘pending’ action will not be allowed for the
below scenarios. The below needs to be either accepted/ rejected in the
same month:
i)
Original credit note
ii)
Upward amendment of credit note - irrespective of
action taken by recipient on original credit note
iii)
Downward amendment of the credit note - where original
credit is rejected by recipient
iv)
Downward amendment of invoice/ debit note - where
original invoice/ credit note is accepted by recipient and respective GSTR-3B
is filed
Note - The liability of the supplier will be increased
in GSTR-3B for subsequent period in case the above transactions are rejected
by the recipient on IMS
d)
No action taken: Documents
(invoices as well as credit and debit notes will be deemed accepted for
GSTR-2B generation, where no action is taken by the recipient.
·
Basis the above actions taken, GSTR-2B will be
generated on 14th of the month. Where no action is taken by
taxpayers until 14th, a draft GSTR-2B containing all invoices and
credit/ debit notes issued to the respective recipients will be generated.
-
In cases where any of the above actions are made by
the recipients post generation of GSTR-2B (as on 14th of the month),
the recipients will have to recompute GSTR-2B for the month.
Key points to be noted:
·
Following invoices will not flow to IMS and will be
directly populated in GSTR-3B:
-
inward RCM supplies where supplier has marked the same
as applicable to RCM;
-
inward supplies where ITC is not eligible due to POS
restrictions or on account of expiry of time limit for credit availment as per
Section 16(4)
·
IMS gets populated with documents as soon as any such
document is saved by the suppliers in GSTR-1/ IFF. Where
supplier amends the details of saved documents before filling GSTR-1, the
amended document will replace the original one in IMS, irrespective of the
action taken on the original document by the recipient.
-
Therefore, it is recommended to take actions for
document reflecting in IMS only after the due date for filing GSTR-1 by
suppliers i.e., after 11th of the month.
-
Such records will auto flow to GSTR-2B only after
GSTR-1/IFF/GSTR-1A is filed by the suppliers.
·
Where any invoice is amended by supplier through
GSTR-1A, the same will flow to IMS for the same month. However, corresponding
ITC on such amended invoice will flow to GSTR-2B generated for the subsequent
month.
·
GSTR 2B will be sequential now. i.e. system will
generate GSTR 2B of a return period only if GSTR 3B of previous return period
is filed.
Comments
·
The said facility provides an opportunity to the
recipient taxpayer to review the transactions reported by their suppliers and
enables them to efficiently address document corrections/amendment related
issues with their suppliers through GSTN portal.
·
We have listed some of the key considerations which
may be noted w.r.t. monthly GST compliances (considering usage of IMS):
-
Reconciliation of IMS dashboard with the purchase
register to be done before filing GSTR-3B to ensure all eligible ITC is
accounted for and rejections/ discrepancies are resolved.
-
Undertake all necessary actions on documents (invoices
and credit notes) before 14th of the month to the extent possible to
avoid recomputing the GSTR-2B again.
-
Rejected invoices will not flow to GSTR-2B and
accordingly credit on the same cannot be taken in GSTR-3B. Therefore, in cases
where invoices are erroneously rejected, recipients may need to contact their
suppliers to amend/ re-issue the invoices. The recipient cannot claim ITC on
that invoice unless recipient issues corrected document – however, the
possibility of such amendment / correction to be explored as per the provision
of GST law.
-
Maintain detail records of actions taken in IMS
including reasons for rejections and communication with suppliers for future
audits by GST authorities.
·
Further, it is also pertinent to note that actions to
be taken with respect to credit notes are very crucial from both
supplier and recipient standpoint:
-
From Suppliers’ perspective - Where
the credit notes are rejected by the recipient, the liability of the supplier
will be increased to that extent in GSTR-3B of the subsequent period.
Therefore, it is essential for suppliers to maintain detailed records with
respect to the original invoices against which such credit notes are issued and
also the reason for issuance of such credit notes, to manage queries received
from recipients and GST authorities.
-
From Recipients’ perspective – The
credit notes populated in IMS cannot be kept ‘pending’ and are required to
accepted/ rejected in the same month, else the same will be deemed accepted and
auto-flow to GSTR-2B for the month. Therefore, it is crucial for
recipients to review the list of credit notes reflecting in IMS immediately
after GSTR-1 is filed by their suppliers, and suitably co-ordinate with them to
decide on the actions to be taken, to avoid future queries with respect to
additional credit notes reflecting in GSTR-2B against which ITC reversal is not
undertaken by the recipients (on such deemed accepted CNs).
Accordingly, where IMS as a reconciliation mechanism
is being envisaged, it is important for businesses to effectively communicate
to their vendors to provide and make available, proper information with respect
to the Credit notes being issued – so that, timely action is taken by
recipients in IMS and unwarranted hassle (in terms of rejection which could
lead to increase in liability of supplier) could be avoided.
Given the above, it is important for businesses to
timely review the records on IMS and transfer relevant invoices to GSTR-2B so
as to manage queries (if any) that may emanate in this regard
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