GST Invoice Management System changes from 1st October will affect 12 Million+ Businesses

In an important move forward for India’s Goods and Services Tax (GST) ecosystem, the GSTN has launched a new facility known as the Invoice Management System (IMS), which will soon be available through the Goods and Services Tax Portal.

This new feature, which goes live on October 1st, is intended to transform the way over 12 million businesses throughout the country interact with invoices by speeding reconciliation processes and improving GST compliance accuracy.

Supporting Taxpayers with Improved Invoice Control

The IMS (Invoice Management System) enables recipient taxpayers to accept, reject, or hold invoices pending in the system for future action.

This feature helps taxpayers better manage the Input Tax Credit (ITC) by allowing them to:

Accept Invoices: Confirming an invoice’s validity and eligibility for ITC.

Reject Invoices: Disputing an invoice for discrepancies or inaccuracies, which prevents wrong ITC claims.

Pending Invoices: Deferring action on an invoice for a variety of reasons, with the option of responding later.

Adjustments in the Reconciliation Process

By allowing taxpayers to actively manage their received invoices, the IMS significantly decreases errors and inaccuracies in GST returns. It makes sure that only validated and accepted invoices appear on the taxpayer’s GSTR-2B, which is essential to correct ITC claims.

Automatic Acceptance: If no action is made on an invoice, the system will treat it as accepted.

Draft GSTR-2B Generation: On the 14th of each month, a draft GSTR-2B will be prepared, comprising only accepted or ‘no action taken’ invoices.

Flexibility in Action: Taxpayers can amend the status of invoices until they file Form GSTR-3B for the month.

Time Period of Implementation

While interaction with the new system is not required for GSTR-2B preparation, actively managing invoices can result in more accurate ITC claims and simpler GST compliance. IMS will be available on the GST Portal beginning October 1, 2024, and taxpayers will be able to take action on received invoices/records starting October 14, 2024.

To help businesses adapt to the new system, the GST Network (GSTN) released a detailed guide with screenshots on the GST portal. Taxpayers are advised to get familiar with the IMS in order to get the most from its benefits.

Benefits to Businesses or Companies

Improved Accuracy: Reduces the possibility of errors in GST returns by ensuring that only genuine invoices are evaluated for ITC.

Increased Efficiency: Simplifies the reconciliation process, saving both resources and time.

More Transparency: Enables transparent communication between suppliers and recipients regarding invoice acceptance.

Business Considerations

Actions Required: While not required, taking action on invoices might help prevent future inconsistencies.

Updates: Companies should ensure that their accounting software is compatible with IMS functions.

Provide Training to Staff: Businesses may need to teach accounting individuals how to operate the new system efficiently.