As part of the continuous efforts to enhance the Goods and Services Tax (GST) system, the GST Network (GSTN) is introducing the Invoice Management System (IMS). This new system is designed to streamline the process of managing invoices between suppliers and recipients, ensuring better accuracy and efficiency in the availing of Input Tax Credit (ITC). The IMS will officially be available on the GST portal starting 1st October 2024.
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Key Features of the Invoice Management System (IMS)
The IMS is a significant upgrade to the ITC ecosystem under GST. Here’s a detailed look at how it will work:
- Enhanced Communication Process: IMS introduces a new communication process between suppliers and recipients for invoice corrections and amendments. This feature allows taxpayers to easily rectify any discrepancies in invoices directly through the GST portal.
- Seamless Matching of Invoices: With IMS, taxpayers can match their records/invoices with those issued by their suppliers. This ensures that the invoices recorded are genuine, helping recipients to avail of the correct ITC.
- Actions on Invoices:
- Accept: Accepted invoices will automatically become part of the recipient’s GSTR-2B as eligible ITC and will auto-populate in GSTR-3B.
- Reject: Rejected invoices will be excluded from GSTR-2B, and their ITC will not auto-populate in GSTR-3B.
- Pending: Invoices marked as pending will not be included in GSTR-2B or GSTR-3B for that month but will remain on the IMS dashboard for future action.
- Impact on GSTR-2B: Only the invoices accepted by the recipient will be included in their GSTR-2B. This ensures that taxpayers can review the authenticity of the invoices before they form part of their ITC claims.
- Time Frame for Actions: Recipients can take action on invoices from the time the supplier saves them in GSTR-1/IFF/1A until the recipient files their corresponding GSTR-3B. If no action is taken, the invoice will be deemed accepted and included in GSTR-2B.
- Invoice Amendments: If a supplier amends an invoice in GSTR-1 before filing, the amended invoice will replace the original one in IMS, regardless of the action taken by the recipient on the original invoice. However, if the amendment is done through GSTR-1A, it will only affect the GSTR-2B of the subsequent month.
- Deemed Acceptance: Invoices that receive no action will be considered as deemed accepted at the time of GSTR-2B generation. This will reduce the compliance burden on taxpayers, as intervention is only needed if a record needs to be rejected or kept pending.
- QRMP Taxpayers: For taxpayers under the Quarterly Return and Monthly Payment (QRMP) scheme, invoices saved or filed through the IFF will flow to IMS, and their GSTR-2B will be generated quarterly. The system will not generate GSTR-2B for months M-1 and M-2 for QRMP taxpayers.
How IMS Enhances the ITC Ecosystem
The introduction of IMS is poised to significantly improve the ITC claim process under GST. By enabling real-time verification and action on invoices, the system ensures that only genuine transactions are claimed for ITC. This not only helps in reducing fraudulent claims but also provides transparency and accuracy in the overall GST process.
Implementation and Compliance
IMS is designed to facilitate taxpayers without adding additional compliance burdens. The system’s automatic features, such as deemed acceptance of invoices, mean that taxpayers need only intervene when necessary. This streamlined approach ensures that taxpayers can focus on their business operations while maintaining compliance with GST regulations.
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