“IMS is a communication tool for ease of doing business and need to be welcomed rather than being questioned for its legal backup. It helps in the rollout of prefilled returns in future.” — Akella Prakasa Rao
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So let’s start with…what is Invoice Management System (IMS)?
The Goods and Services Tax (GST) system in India is taking a significant step forward with the introduction of the Invoice Management System (IMS) from October 1, 2024. This new system simplifies how businesses manage invoices and handle input tax credit (ITC).
Our FAQ guide breaks down everything you need to know about IMS and how it will make GST compliance easier and more efficient for your business. For more detailed information on IMS, Read Here
FAQ Contents :
1. Introduction to IMS?
2. Actions & Operations in IMS
3. ITC Related
4. System Operations & Validations
5. GSTR-2B Related
6. Special Cases & Amendments
7. Credit Note Special Cases
8. Liability Adjustments
9. Implementation Timeline
10. Best Practices for IMS Usage
1. Introduction to IMS:
Q: What is Invoice Management System (IMS)?
A: Invoice Management System (IMS) is a facility in GST system where invoices/records saved/filed by the supplier in GSTR-1/1A/IFF can be accepted, rejected, or kept pending by recipients to correctly avail ITC.
Q: How can I access IMS?
A: IMS can be accessed by floTax dashboard, Invoice Management System.for complete guide checkout our demo video Here
Q: Who will have access to IMS functionality?
A: Taxpayers registered as normal taxpayers (including SEZ unit/Developer) and casual taxpayers will be able to access IMS functionality.
1.1 Document Availability & Flow
Q: Which records will be available in IMS for taking an action?
A: All saved or filed original invoices/records and their amendments through GSTR 1/1A/IFF will be available. However, documents where ITC is not eligible due to POS rules or Section 16(4) of CGST Act will not appear and will directly go to ‘ITC Not Available’ section of GSTR-2B.
Q: When will be the documents reflect on IMS?
A: Documents will reflect in IMS as soon as they are saved by the supplier in their corresponding GSTR-1/1A/IFF.
Q: Which documents will not be made available on IMS but will remain a part of GSTR-2B?
A: The following records will not be part of IMS but will directly reflect on the GSTR-2B:
- Documents from GSTR 5 & GSTR 6
- ICEGATE documents
- RCM records
- Documents where ITC is ineligible due to POS rules or Section 16(4) of CGST Act
- Documents where ITC needs to be reversed under Rule 37A
Q: Which invoices are visible on IMS dashboard since 14th Oct 2024?
A: All records eligible for GSTR-2B of Oct’24 return period onwards will be available. Invoices part of GSTR-2B of Sep’24 or older return periods will not reflect in IMS.
2. Actions & Operations in IMS
2.1 Taking Actions
Q: What are the actions that I can take on an IMS?
A: Three actions are allowed:
- Accept
- Reject
- Pending
Note: By default, all records will flow into “No Action” category and will be deemed accepted at GSTR-2B generation.
Q: Can I take actions multiple times on a document?
A: Yes, actions can be taken multiple times before filing GSTR-3B. The latest action will overwrite any previous actions. Actions are frozen when filing the corresponding GSTR-3B.
Q: How to take an action on records available on the IMS dashboard?
A: There are two methods available to record an action on the IMS Dashboard:
- Individual record: Select action via radio button at line-item level and click save
- Multiple records: Select multiple records through checkbox option and use main action buttons
2.2 Impact of Actions
Q: What happens to documents on which taxpayers have taken action on IMS?
A: Documents will be treated as follows:
- Accept: Becomes part of ‘ITC Available’ section in GSTR-2B
- Reject: Goes to ‘ITC Rejected’ section in GSTR-2B
- Pending: Remains on IMS dashboard until accepted/rejected or timeline under Section 16(4) expires
- No Action: Deemed accepted at GSTR-2B generation
Q: What happens if the recipient rejects a record?
A: There are two possible scenarios if the recipient rejects a record:
- If rejected before GSTR-1 filing: Supplier can edit and file with same details.
- If rejected after GSTR-1 filing: Supplier must amend/add in GSTR-1A or subsequent GSTR-1/IFF
“Input Tax Credit (ITC) is a way to reduce your GST liability. If you’ve already paid GST on purchases, you can use that amount to offset the GST you need to pay on your sales. It ensures you only pay tax on the value you’ve added, making the tax system more fair and efficient.”
3. ITC Related
3.1 Time Limits & Deadlines
Q: What will happen if the recipient rejects the Tax Invoice or Debit Note for FY 23-24 which was eligible for GSTR-2B of Oct’24?
A: Recipients can change from rejected to accepted in IMS and recompute GSTR-2B when filing GSTR-3B to take the corresponding ITC in GSTR-3B for Oct’24.
Q: How can the ITC of erroneously rejected invoices in IMS be taken by the recipient in FY 2023-24?
A: Recipients can accept the invoice in IMS before filing GSTR-3B, recompute updated GSTR-2B, and avail credit in GSTR-3B for FY 2023-24.
Q: As a taxpayer what all will I be able to view on the IMS?
A: IMS offers two views: 1. Recipient view: “Inward supply” view of documents saved/filed by suppliers 2. Supplier view: “Outward supply” view of actions taken by recipients (coming soon)
Q: Can I download all the data available in IMS?
A: Yes, excel download facility is available for IMS data.
Q: Will Reverse Charge documents received from registered suppliers form part of IMS?
A: No, RCM invoices are not part of IMS but will continue to be part of GSTR-2B as currently reflected.
4. System Operations & Validations
4.1 Document Processing
Q: What If I have taken an action on a document in saved status but the same is edited/changed by the supplier before filing his GSTR-1?
A: If a saved record is edited before GSTR-1 filing: – The amended record will replace the saved document in IMS – Previous action taken by recipient will be reset – Edited record will be available for fresh action – If document is deleted before filing, it will be removed from IMS
4.2 Place of Supply Changes
Q: Can the place of supply be changed by the supplier in the GSTR-1 and what will be the impact on the ITC?
A: Yes, place of supply can be changed within GST law time limits. If ITC becomes ineligible due to place of supply change, recipient should reverse ITC in Table 4B1.
“GSTR-2B is a monthly auto-generated statement under GST that helps you easily check your Input Tax Credit (ITC). It shows details of all the invoices uploaded by your suppliers, letting you know how much ITC you can claim and whether any invoices are missing or mismatched.”
5. GSTR-2B Related
5.1 Generation & Computation
Q: What is draft GSTR-2B?
A: GSTR-2B will be generated on 14th of every month with current logic, now considered as draft GSTR-2B. It includes all accepted/deemed accepted and rejected records.
Q: Can I take any action after generation of draft GSTR-2B?
A: Yes, recipients can take action on records in draft GSTR-2B until filing GSTR-3B. GSTR-2B must be recomputed to reflect changes in GSTR-3B.
Q: How many times can I regenerate GSTR-2B?
A: Before filing GSTR-3B, there’s no restriction on number of recomputations.
Q: What about GSTR-2B for quarterly taxpayers?
A: GSTR-2B won’t generate for M1 and M2 of the quarter. GSTR-2BQ for the quarter will generate on 14th of Q+1 month, with recomputation allowed until GSTR-3B filing.
5.2 Special Scenarios
Q: Is there any scenario where draft GSTR-2B will not be generated by system on 14th of subsequent month?
A: Yes, if previous period GSTR-3B is not filed, system won’t generate draft GSTR-2B on 14th of subsequent month. However, taxpayers can generate GSTR-2B from IMS dashboard after filing previous GSTR-3B.
5.3 Mandatory Actions
Q: Is it mandatory to re-compute GSTR-2B?
A: Yes, if any change is made on IMS dashboard after draft GSTR-2B generation, it’s mandatory to re-compute GSTR-2B.
6. Special Cases & Amendments
6.1 Credit Notes
Q: What will happen if the recipient rejects the original Credit Note or upward amended Credit Note?
A: If the recipient rejects the Credit note and files GSTR-3B, the corresponding liability will be added to supplier liability in subsequent tax period’s GSTR-3B.
Q: Can the Credit Note be kept as pending in IMS?
A: No, Credit Notes cannot be kept pending as the supplier has already reduced outward tax liability at issuance.
6.2 Amendments & Corrections
Q: What happens to the original record if the same record is amended by the supplier?
A: If original and amended records belong to different GSTR-2B periods, action must be taken on original record and GSTR-3B filed before acting on amended record. For same-period records, action on amended records prevails.
Q: Can a supplier amend FCM invoice to RCM invoice and what will the impact on the ITC?
A: Yes, suppliers can amend from FCM to RCM within legal time limits. System will reduce ITC of amended FCM Invoice if accepted by recipient. RCM invoice will flow to recipient’s GSTR-2B.
7. Credit Note Special Cases
7.1 Handling Wrong Invoices
Q: What to do in case wrong invoice is corrected by issuance of Credit Note by the supplier instead of amending the same and such Credit note has been rejected by the recipient?
A: Due to no linkage between Credit Notes and corresponding invoices, system cannot determine if original invoice was accepted or rejected. It’s advisable to rectify mistakes through invoice amendments in GSTR-1 rather than issuing Credit Notes.
7.2 Credit Note Acceptance
Q: How can recipient accept a genuine credit note issued by supplier in IMS when recipient had reversed ITC corresponding to invoice itself?
A: In cases where recipient had already reversed ITC (due to 17(5), Rule 42, 38, 43 etc.), they can accept the credit note in IMS. No additional ITC reversal is needed for such credit notes.
8. Liability Adjustments
8.1 Credit Note Rejections
Q: Whether liability can be added in the same GSTR-3B in case where credit note has been rejected by the recipient before filing of GSTR-3B by the supplier?
A: No, when a credit note is rejected: – Supplier’s liability increases on the portal – Increased liability reflects in GSTR-3B of subsequent tax period – Not in GSTR-3B of same tax period
9. Implementation Timeline
9.1 First Returns
Q: Which is the first GSTR2B prepared using actions taken on IMS?
A: The first draft GSTR-2B based on IMS actions will be: – Generated on 14th Nov 2024 – For return period Oct’24
9.2 Action Timeline
Q: Can taxpayer take action after 14th Nov,2024 and regenerate GSTR-2B of Oct’24 return period?
A: Yes, taxpayers can: – Take action on invoices/records in IMS dashboard – Recompute GSTR-2B of Oct’24 return period – Continue until filing their GSTR-3B.
9.3 GSTR-2A Status
Q: What will happen to GSTR 2A?
A: GSTR-2A shall continue to be generated as it currently is, without any changes to its functionality or generation process.
9.4 Upward Amendments
Q: What action shall be available on upward amended invoice/debit notes, where the upward amended invoice/debit notes is Saved by supplier and not filed?
A: For upward amended invoice/debit notes: – No action available if only saved by supplier – Action possible only after supplier files the record – Applies to records in GSTR-1/GSTR-1A/IFF
This comprehensive FAQ covers all aspects of IMS implementation, operation, and special scenarios. Users should refer to these guidelines while operating the system and stay updated with any new announcements or changes from the GST authorities.
Note: For specific scenarios not covered in these FAQs, it’s advisable to:
- Consult your tax professional
- Contact flotax helpdesk
- Refer to latest GST circulars and notifications
- Maintain proper documentation of all actions taken
10. Best Practices for IMS Usage
10.1 Invoice Rejection Guidelines
Q: When should an invoice/debit note be rejected?
A: Rejection should be done carefully as it results in no ITC for recipient. Consider rejection when: – Document doesn’t pertain to the recipient – Details are erroneous beyond CN/DN correction capability
10.2 Optional Actions
Q: Is it mandatory to act on IMS? What happens if no action is taken?
A: No, acting on IMS records is not mandatory: – Records with no action are treated as accepted by system – GSTR-2B generates as per current process – System applies deemed acceptance.