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Invoice Management System in GST: A Detailed Guide on Features, Benefits, and More

The Goods and Services Tax department often implements changes to its GST interface and adds new capabilities to simplify compliance and auditing for taxpayers. The most recent is the Invoice Management System (IMS), which is scheduled to launch on October 1, 2024. It aims to greatly aid in managing the ITC claims procedure. This article outlines the main characteristics, advantages, and operation of the invoice management system.

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

The latest feature in the GST portal named the Invoice Management System, or IMS, will allow receiver taxpayers to accept, reject, or hold onto invoices received by their supplier taxpayers. Taxpayers frequently encounter discrepancies between supplier invoices and recipient returns when attempting to claim input tax credits. Registered recipients will be able to compare their records with supplier invoices in their GSTR-1 once the IMS is operational. This makes it simpler for recipient taxpayers to submit an application for the Input Tax Credit (ITC).

Latest Updates on IMS

October 14, 2024: IMS has been accessed on the GST portal since October 14, 2024, in line with the most recent GSTN recommendation. The October 2024 GSTR-2B generated on or after November 14, 2024, will be the first to include IMS actions.

September 9, 2024: The Finance Minister acknowledged the improvements made to the current GST return architecture during the 54th GST Council Meeting. The receiving taxpayers would have the choice to accept, reject, or leave the invoice outstanding in order to qualify for the Input Tax Credit (ITC), as per the advice that was released on September 3. This procedure is expected to reduce errors, enhance reconciliation, and lessen the number of warnings sent out due to ITC discrepancies in the returns, even though the capability is now optional.

Features of Invoice Management System (IMS)

Processing auto-generated GSTR-2B through a single window: Recipient taxpayers who have multiple inbound suppliers can manage all of the invoices that are filed by each supplier and generate GSTR-2B automatically with little assistance. To complete auto-generated ITR reporting, the taxpayer must choose ACCEPT, REJECT, or PENDING.
Zero compliance burden: Taxpayers are worried about the most recent compliance burden whenever new features or capabilities are added to the GST portal. IMS will not, however, add to the expense of compliance. An invoice will be automatically 'considered accepted' if the recipient does not reply. IMS will improve the inward invoice management procedure, making ITC reporting easier.
Communication: The GST portal's invoice management system acts as a communication mechanism that connects suppliers and recipients via an integrated dashboard interface and invoice documentation.
An overview of the actions and bills received: A list of all invoices and the actions performed for each is given by the IMS dashboard. This may assist auditing and management decision-making procedures.
Invoices supplied by suppliers can now be readily amended: Suppliers can more easily edit saved invoices thanks to the new capabilities.

Benefits of Invoice Management System (IMS)

IMS provides small and large enterprises with several benefits when it becomes operational.

Precision in audit: By removing the need for several interfaces, IMS will enable auditors to thoroughly examine each invoice, reducing the likelihood of audit errors.
GSTR-3B minimal error: The system provides a summary view of all incoming invoices. Therefore, taxpayers need not worry about missing any invoices before submitting their GSTR-3B.
Reduced complexity with outstanding bills: Unpaid invoices are passed to subsequent tax years without impacting GSTR-2B and 3B.
Attainable to taxpayers under the QRMP: QRMP taxpayers and small enterprises benefit from the new invoice management system. It won't, however, automatically fill out GSTR-2B for the first and second months of a quarter. GSTR-2B will be provided every quarter for them.

How Does the Invoice Management System Work?

Getting an input tax credit (ITC) is one of the primary challenges that taxpayers have when it involves GST compliance. It is expected that some of the main obstacles in that process would be eliminated by the IMS functionality.
By the eleventh of each month, suppliers must first submit and save their GSTR-1 or Invoice Furnishing Facility (IFF) or use GSTR-1A in the GST site to modify the provided invoice. A taxpayer may file GSTR-1A up until the point at which they file their GST return (GSTR-3B) for the applicable tax period.
The supplier's GSTIN, trade name, invoice number, and type are shown on the IMS dashboard.
Three choices will be presented to the recipient taxpayers: ACCEPT, REJECT, or PENDING. These choices are made by the time the supplier uploads the invoice in their GSTR1/IFF/1A and the receiver files their GSTR-3B by the 20th of the relevant month. Receivers have to calculate the draft GSTR-2B to take action on an invoice after the fourteenth of each month.
The accepted invoice appears in the recipient's automatically created GSTR-2B or ITC statement, generated on the fourteenth of each month if the recipient decides to ACCEPT.
Consider a scenario where the recipient chooses to REJECT a supplier-stored invoice. If so, it cannot be included in the recipient's GSTR-2B or ITC return.
The portal lacks an invoice in GSTR-2B for a given month if the recipient chooses to keep it classified as PENDING. IMS extends it to the following month.
Assume that a recipient does not respond to an invoice. The system then right away adds it to the recipient's GSTR-2B after finding that it has been "deemed accepted."
The updated invoice will take the place of the previous one if the supplier makes changes to an accepted or pending invoice. The recipient must take action on the newly amended invoice.
The updated data only moves through IMS to the recipient's GSTR-2 B in the month after suppliers submit changes to GSTR-1 through a GSTR-1A
As per Section 16(4) of the CGST Act of 2017, taxpayers may access PENDING bills in any subsequent months, up to a certain amount.

Managing Invoices and Claiming Input Tax Credit (ITC) as a Taxpayer

Managing inbound bills, balancing them, and claiming ITC based on settled invoices require taxpayers to do several processes. These actions are:

Gather information from the buy register: The receiver taxpayer is required to gather the information in their purchase register first.
Get GSTR-2A: The recipient taxpayer's GSTR-2A form provides the information about the inward invoices once suppliers file their GSTR-1 with all the required supporting documentation.
Download GSTR-2B: Every month on the fourteenth, the portal creates GSTR-2B. As part of their ITC application, taxpayers have to get this automatically created ITC statement.
GSTR-2A and purchase register reconciliation: A taxpayer checks each entry in the purchase register records with the pre-filled GSTR-2A form they receive for a month.
Verify supplies: The taxpayer will verify the accuracy of outgoing supplies by reconciling their GSTR-1 with the sales register
Determine GST liability: Correctly determining GST liability is aided by the reconciliation of GSTR-3B and GSTR-1. The proper application of ITC when releasing the GST liability can be guaranteed by matching GSTR-2B with GSTR-3B.

Reconciling e-way bills and invoices is also essential for large firms to prevent inconsistencies and potential compliance problems.

IMS Impact in GSTR-2B and GSTR-3B

Draft GSTR-2B Generation: Each month, on March 14th, the system will generate a draft GSTR-2B for the taxpayer containing the invoices that were accepted and those that were not picked for action. If no other actions occur, the same draft can be considered the final GSTR=2B.
Recalculating GSTR-2B: To display the updated ITC information, the assesses must recalculate their GSTR-2B before filing their GSTR-3B if any actions are performed on the invoices after the draft is created.

Conclusion

An effective tool for making sure your files are in order and that you aren't claiming ITC on incorrect invoices is the IMS. Once you grasp it, it can save you time and hassle when submitting your returns, though it could initially appear like just another feature. You are in charge of what goes into your GSTR-2B, regardless of whether you accept, reject, or leave invoices outstanding. Thus, file GSTR-3B, take time, and make wise decisions.

FAQ

Q1. What is an Invoice Management System (IMS) under GST?

This new communication tool in the GST portal enables taxpayers to examine, evaluate, and respond to each incoming invoice.

Q2. Who has to use the Invoice Management System under GST?

All recipient taxpayers, including QRMP taxpayers, have access to IMS capability.

Q3. What is the implementation date of IMS under GST?

The GST portal launched the new IMS feature on October 1st, 2024.

Q4. When will IMS be made available to taxpayers?

The IMS function will be launched by GSTN on the web on October 1. However, clients will take action on invoices and CDNs starting on October 14, 2024.

Q5. Which invoices can be seen on the IMS dashboard since 14th Oct 2024?

IMS was introduced by GSTN on October 1st, 2024. However, users could begin uploading papers on October 14th. Thus, from the October 2024 return period, all invoices and records for the GSTR-2B period can be accessed on the dashboard. It would be impossible for users to view records or invoices for any GSTR-2B period (such as September 24, August 24, etc.) before October 2024.

Q6. Are there specific requirements for IMS under GST?

Through a single-window interface, IMS mandates that taxpayers examine and evaluate every incoming invoice. However, the system automatically considers an invoice to be "deemed accepted" if the taxpayer does not take any action. Therefore, it excludes any burden of compliance.

Q7. How does IMS support e-invoicing under GST?

E-invoicing systems can be facilitated by invoice management systems in several ways, including:

Auto-populate IMS for recipients and GSTR-1 for suppliers.
Automatically handle supplier invoice modifications.
Record the number of invoice rejections by recipient taxpayers.

Q8. How are amended invoices handled on IMS?

Invoices from suppliers may occasionally be changed after they have been uploaded. The updated bill will then automatically replace the previous one in your IMS dashboard. Then, as with any other invoice, you may accept, reject, or leave the updated invoice pending. One important thing to remember is that the invoice status will be reset and you will need to examine it again if an amendment occurs before the supplier files their GSTR-1/IFF.

Q9. Which is the first GSTR-2B made using actions taken on IMS?

On November 14, 2024, the IMS will automatically generate the first draft of GSTR-2B for all users. It will be created based on every action a user did starting on October 14, 2024, during the October 2024 GSTR-2B period.

Q10. Can a taxpayer take act after 14th Nov 2024 and regenerate GSTR-2B of this return period?

Yes. After November 14, 2024, a taxpayer may revise their GSTR-2B via the portal and adjust their invoices or records for the October 24 GSTR-2B return period. Until the taxpayer submits their GSTR-3B for the return period ending on October 24, this is permitted.

Q11. Is it mandatory to act on IMS? What happens if no action is taken?

If users don't take any action in the IMS within a GST return period for the GST portal to automatically generate GSTR-2B for taxpayers, records and invoices are deemed "accepted." For the purpose of automatically generating GSTR-2B for taxpayers, the GST portal views records and invoices as "deemed accepted" if users do not take any action in the IMS within a GST return period.

Q12. Who will have access to IMS functionality?

Regular taxpayers with GST registrations;
SEZ units and developers
Casual taxpayers registered with the GST

Q13. As a taxpayer, what will I be able to view on the IMS?

Within the IMS, as a taxpayer, you will have two distinct view options:

Inward Supplies: This reflects the view of the recipient. This section will contain all of the choices for taking action on record.
Outward Supplies: This represents the point of view of the supplier. In this section, suppliers can review the actions on their filed or stored data.