Invoice Management Systems (IMS) in GST Portal Started From Oct-2024

A comprehensive Invoice Management System (IMS) represents a transformative shift in how you handle GST compliance. As GSTN’s newest addition to the GST portal, this system will revolutionize your invoice processing, ITC claims, and overall tax management starting October 2024.

Invoice Management Systems (IMS) in the GST Portal have revolutionized the way businesses in India handle their invoicing processes. With the advent of the Goods and Services Tax (GST), the need for a streamlined, efficient, and compliant invoice management system has become paramount. The IMS not only simplifies the invoicing process but also ensures that businesses adhere to the regulatory requirements set by the Indian government. This article provide you details of Invoice Management Systems in the GST Portal, exploring their features, benefits, and the impact they have on businesses operating in India.

Also Read-GSTR-1A Introduced to Amend Sales (Revise GSTR-1)

Understanding (IMS) Invoice Management System Basics.

Behind this innovative system lies a sophisticated dashboard that will help you manage B2B invoices, credit notes, and debit notes more efficiently. Your IMS dashboard will automatically track and verify all eligible documents, allowing you to accept, reject, or keep them pending through a single window interface.

Implementation Timeline.

For your business planning, it’s important to note that while GSTN will launch IMS on October 1st, 2024, you’ll be able to start taking actions on invoices from October 14th, 2024. The system will generate your first draft GSTR-2B using IMS on November 14th, 2024, marking a significant milestone in automated compliance.

Basics of implementation include the automatic flow of invoices to your IMS dashboard as soon as suppliers save documents in their GSTR-1/1A/IFF. You’ll have until the GSTR-3B filing due date to take action on these documents, with the system treating any unactioned items as ‘deemed accepted’ during GSTR-2B generation.

Step-By Step Guide for Using the Invoice Management System (IMS) in GST Portal.

Step 1: Accessing the IMS.

• Log in to the GST portal.
• Navigate to the IMS section where you will find the dashboard displaying all the invoices received from suppliers.

Step 2: Reviewing Invoices.

• On the IMS dashboard, you will see all the invoices that have been reported by your suppliers in their GSTR-1, IFF, or GSTR-1A.
• Review the details of each invoice to verify their authenticity and correctness.

Step 3: Taking Action on Invoices.

You have three options for each invoice:

1. Accept: If the invoice is valid and you wish to claim Input Tax Credit (ITC) on it.

   • Accepted records will be included in the ‘ITC Available’ section of your GSTR-2B.
   • The GST on accepted records will auto-populate in your GSTR-3B as eligible ITC.

2. Reject: If the invoice is invalid or incorrect.

   • Rejected records will be included in the ‘ITC Rejected’ section of your GSTR-2B.
   • ITC for rejected records will not auto-populate in your GSTR-3B.

3. Keep Pending: If you need more time to verify the invoice.

   • Pending records will not be included in GSTR-2B or GSTR-3B and will remain on your IMS dashboard for future action.

Step 4: Handling Amended Invoices.

• If a supplier amends an invoice before filing GSTR-1, the amended invoice will replace the original in your IMS, regardless of your previous action.
• For invoices amended through GSTR-1A, the amended invoice will also flow to IMS, but ITC will only be reflected in the GSTR-2B for the subsequent month.

Step 5: Filing GSTR-3B.

• You must take action on all invoices before filing your GSTR-3B.
• Once GSTR-3B is filed, all accepted and deemed accepted records will move out of the IMS dashboard.

Step 6: Recomputing GSTR-2B.

• If you take any action on invoices after the draft GSTR-2B is generated (on the 14th of the subsequent month), you must recompute your GSTR-2B to reflect these changes.

Step 7: Managing Pending Records.

• Pending records can be accepted or rejected in future months but must be acted upon before filing GSTR-3B for the respective month.
• Ensure to monitor your IMS dashboard regularly for any pending invoices.

Step 8: Compliance with Section 16(4) of CGST Act.

• Remember that all actions on invoices must comply with the limits prescribed by Section 16(4) of the CGST Act, 2017.

Important Notes:

• No action taken on an invoice will be treated as deemed accepted at the time of GSTR-2B generation.
• Ensure to keep track of the invoices and their statuses to manage your ITC claims effectively.
• For QRMP taxpayers, be aware that GSTR-2B will be generated quarterly, and actions taken on invoices will affect the quarterly filing.

By following these steps, you can efficiently manage your invoices and ensure compliance with GST regulations through the Invoice Management System.

Features of Invoice Management Systems in GST.

1. Automated Invoice Generation: One of the standout features of an IMS is its ability to automate the creation of invoices. Businesses can generate invoices in bulk, saving time and reducing the likelihood of human error. The system pulls data directly from the sales records, ensuring accuracy and compliance with GST regulations.

2. Real-Time Tracking and Reporting: An effective IMS provides real-time tracking of invoices, allowing businesses to monitor their invoicing processes closely. This feature is particularly beneficial for managing cash flow, as it enables businesses to identify outstanding invoices and follow up with customers promptly.

3. Integration with Accounting Software: Many IMS solutions offer seamless integration with popular accounting software. This integration ensures that all financial data is synchronized, simplifying the reconciliation process and providing a holistic view of the business’s financial health.

4. Compliance with GST Regulations: The IMS is designed to keep up with the evolving GST regulations. It automatically updates tax rates and compliance requirements, ensuring that businesses remain compliant without the need for constant manual updates.

5. User -Friendly Interface: Most IMS solutions feature intuitive interfaces that make it easy for users to navigate the system. Training staff on how to use the system is often straightforward, reducing the time and resources spent on onboarding.

The Importance of IMS in GST Compliance.

For businesses operating in India, compliance with GST regulations is non-negotiable. The IMS plays a pivotal role in ensuring that businesses meet their tax obligations. The system automatically generates GST-compliant invoices, which include essential details such as the GSTIN (Goods and Services Tax Identification Number), HSN (Harmonized System of Nomenclature) codes, and the applicable tax rates.

Failure to comply with GST regulations can result in severe penalties, including fines and interest on unpaid taxes. By utilizing an IMS, businesses can significantly reduce the risk of non-compliance. The system’s automated features ensure that all necessary information is included in the invoices, minimizing the chances of errors that could lead to compliance issues.

Benefits of Implementing an IMS in the GST Portal.

1. Enhanced Efficiency: The automation of invoicing processes leads to increased efficiency. Businesses can generate and send invoices in a matter of minutes, freeing up valuable time for other critical tasks.

2. Improved Cash Flow Management: With real-time tracking and reporting features, businesses can manage their cash flow more effectively. They can quickly identify outstanding invoices and take appropriate action to follow up with clients.

3. Cost Savings: By reducing the time spent on manual invoicing and minimizing errors, businesses can achieve significant cost savings. The automation provided by an IMS eliminates the need for extensive administrative resources dedicated to invoicing.

4. Better Record-Keeping: An IMS provides a centralized repository for all invoices, making it easier for businesses to maintain accurate records. This is particularly important during audits, as businesses can quickly access historical invoices and related documentation.

5. Scalability: As businesses grow, their invoicing needs become more complex. An IMS is scalable and can adapt to the changing requirements of a growing business, ensuring that invoicing processes remain efficient.

System Access and Eligibility.

For businesses planning to use the Invoice Management System, access is granted exclusively to GST-registered entities, including normal taxpayers, SEZ units/developers, and casual taxpayers. Your ability to interact with the system depends on your registration status and compliance history, with access being restricted if your GSTR-3B filing is pending for the previous period.

User Categories.

By design, the IMS recognizes two primary user categories that shape your interaction with the system. As a recipient, you’ll have access to the Inward Supplies view where you can take actions on incoming documents. As a supplier, your access focuses on the Outward Supplies view, allowing you to monitor the status of documents you’ve submitted and track recipient actions.

Access Methods.

Behind the IMS interface lies a streamlined access protocol that you can initiate through your GST portal dashboard. Your primary entry point is through the Services > Returns > Invoice Management System (IMS) Dashboard pathway, designed to provide secure and direct access to your document management functions.

Methods of accessing the system are structured to ensure data security and user authentication at every step. You can manage your documents from October 2024 onwards, with the system allowing document uploads starting from October 14th, 2024. The platform enables you to view, accept, reject, or mark documents as pending until you file your GSTR-3B.

Document Management.

Some of your key business documents need efficient handling within the Invoice Management System (IMS). The system provides a streamlined approach to managing various document types, allowing you to process and track your business transactions effectively. Your document management experience is enhanced through automated validation checks and real-time status updates.

Eligible Documents.

Across your business operations, IMS accommodates various document types including B2B invoices, debit notes, credit notes, and their respective amendments. Your eco-system [9(5)] invoices and related amendments are also managed through the system. These documents form the foundation of your ITC claims and compliance requirements.

Excluded Documents.

Eligible documents flowing from specific forms like GSTR 5 and GSTR 6, along with ICEGATE documents and RCM records, are not processed through IMS but directly flow to your GSTR-2B. This separation ensures proper categorization and handling of different document types in your tax compliance process.

Considering your compliance requirements, documents where ITC is ineligible due to POS rules or Section 16(4) of CGST Act, and documents requiring ITC reversal under Rule 37A are automatically segregated from IMS processing. This helps you maintain accurate ITC claims and reduces the risk of compliance errors in your tax filings.

Dashboard Features.

Despite the complexity of GST compliance, the IMS dashboard provides you with a streamlined and user-friendly interface to manage your invoice-related activities. Your dashboard serves as a central hub where you can efficiently handle both inward and outward supplies, making invoice management more organized and error-free.

Inward Supplies View.

After logging into your IMS dashboard, the inward supplies section presents you with a comprehensive view of all documents received from your suppliers. This view enables you to track and manage incoming invoices, debit notes, and credit notes efficiently. You can take immediate action on these documents, whether accepting, rejecting, or marking them as pending, all from a single screen.

Outward Supplies View.

Dashboard functionality for outward supplies gives you real-time visibility into the status of documents you’ve issued to your recipients. You can monitor which invoices have been accepted, rejected, or are pending action, allowing you to take prompt corrective measures if needed.

View detailed information about each document’s journey through the system, including timestamps of actions taken by recipients and the current processing status. From 14th October 2024 onwards, you’ll be able to track all B2B invoices, credit notes, and debit notes that you’ve saved or filed through GSTR-1/1A/IFF, helping you maintain accurate records and ensure compliance.

GSTR-2B Integration.

After implementing the Invoice Management System, your GSTR-2B will be automatically generated based on your actions in IMS. The system ensures seamless integration between invoice management and return filing, allowing you to maintain better control over your input tax credits. This integration helps you avoid discrepancies between supplier and recipient data while reducing the risk of ITC-related compliance issues.

Generation Process.

At the core of GSTR-2B generation, the system processes your accepted and deemed accepted invoices on the 14th of every month. You can review and modify your GSTR-2B multiple times until you file your GSTR-3B. For quarterly return filers under the QRMP scheme, your GSTR-2B will be generated as a combined statement for all three months on the 14th of the subsequent quarter.

Recomputation Rules.

Across the IMS platform, you must recompute your GSTR-2B if you make any changes after the initial draft generation on the 14th. This requirement ensures that your final GSTR-2B accurately reflects all your latest actions on invoices and credit/debit notes. The recomputation feature gives you flexibility while maintaining data accuracy.

It’s worth noting that your ability to recompute GSTR-2B remains available until you file your GSTR-3B or reach the filing due date. This feature allows you to make necessary adjustments and ensure all eligible ITC is properly claimed within the compliance timeline.

Action Limitations.

For your compliance requirements, certain restrictions apply to the PENDING action status. You cannot mark original credit notes as pending, nor can you use this status for upward amendments of previously rejected credit notes. These limitations help prevent misuse of the ITC claim process.

Hence, you should note that your action capabilities in IMS are tied to specific document types and their previous status. The system will automatically remove processed documents from IMS once you file your GSTR-3B, except for those with PENDING status which remain visible until the timeline prescribed by section 16(4) of the CGST Act, 2017.

Timeline Management.

Once again, managing timelines effectively in your IMS becomes crucial for maintaining GST compliance. Your IMS dashboard provides a structured approach to handle invoice-related activities within specified timeframes, helping you avoid penalties and ensure smooth tax credit flow.

Filing Deadlines

Across the GST compliance calendar, you’ll need to follow specific deadlines for invoice management. From October 14th, 2024, you can start taking action on invoices/CDNs through the IMS. The system will generate your first draft GSTR-2B on November 14th, 2024, based on your actions from the previous month.

You have the flexibility to modify your GSTR-2B multiple times until you file your GSTR-3B, which is due by the 20th of each month. For QRMP scheme taxpayers, the system generates a combined quarterly GSTR-2B on the 14th of the subsequent quarter.

Record Retention.

With the IMS implementation, your accepted and rejected records will remain accessible until you file your GSTR-3B. The system automatically removes these records after filing, except for those marked as pending, which stay available within the timeline prescribed under Section 16(4) of the CGST Act.

In addition, your IMS maintains a comprehensive audit trail of all actions taken on invoices and documents. This feature protects you from potential disputes and provides clear visibility into your invoice management history. The system retains records of rejected invoices at the supplier’s end, enabling them to make necessary amendments through GSTR-1 or GSTR-1A.

Mandatory Actions.

Before filing your GSTR-3B, you must review and take appropriate action on all documents in your IMS dashboard. Failure to act on documents will result in “deemed acceptance”, which could potentially impact your tax liability. The system requires you to complete document verification between the 14th and 20th of each month for monthly filers, ensuring proper ITC claim processing.

Default Procedures.

Against your inaction, the system implements automatic “deemed acceptance” of all documents when generating your GSTR-2B on the 14th of every month. This automatic acceptance applies to all unactioned documents, including potentially incorrect or duplicate invoices that could affect your tax compliance status.

Due to the automated nature of the IMS, you should be aware that all accepted documents will automatically flow into your GSTR-2B under the ‘ITC Available’ section. The system provides you with multiple opportunities to recompute your GSTR-2B until the GSTR-3B filing deadline, allowing for corrections and adjustments as needed.

C.K. Gupta

Hello, I am C.K. Gupta Founder of Taxgst.in, a seasoned finance professional with a Master of Commerce degree and over 20 years of experience in accounting and finance. My extensive career has been dedicated to mastering the intricacies of financial management, tax consultancy, and strategic planning. Throughout my professional journey, I have honed my skills in financial analysis, tax planning, and compliance, ensuring that all practices adhere to the latest financial regulations. My expertise also extends to auditing, where I focus on maintaining accuracy and integrity in financial reporting. I am passionate about using my knowledge to provide insightful and reliable financial advice, helping businesses optimize their financial strategies and achieve their economic goals. At Taxgst.in, I aim to share valuable insights that assist our readers in navigating the complex world of taxes and finance with ease.