Key focus areas for suppliers in the wake of new Invoice Management System

[CA ShivKumarBhasin]

Process Flow of IMS:

Invoice Management System (‘IMS’) has been introduced on the GST Portal from October 2024 returns. Following the implementation of the IMS, the recipient needs to take action on invoices, debit notes and credit notes as appearing in their IMS dashboard. The recipient can either accept or reject or keep the records pending. After that, the GSTR-2B will be recomputed by the recipient. Notably, only the accepted and deemed accepted (records on which no action is taken) will route through GSTR-2B in GSTR-3B. Apart from recipient, the IMS dashboard is also made available to the supplier of the transaction to keep an eye on the action taken by the recipient on its invoices.

Initially, this functionality has been kept optional. Still, the supplier has to bear certain consequences if the recipient using the IMS facility rejects any of the records furnished by the supplier in GST Returns. In this Article, we delve into understanding the key action points for a supplier after roll out of IMS.

Role of Supplier:

Suppliers play a vital role in the initiation of transactions. Therefore, it is important for them to comply with relevant laws and regulations, as well as to accurately furnish necessary returns to ensure a smooth process for recipients so that there genuine ITC does not get barred due to any fault of supplier.

Recently, Supplier view of IMS has now been made available on the Portal where the action taken by their recipients, will be visible to the suppliers in ‘Supplier View’ functionality.

Notably, the below mentioned records/invoices are not available in IMS for taking any kind of actions by the recipient but are visible in supplier view with the status as ‘No Action Taken’:

1. Documents where ITC is not eligible either due to POS rule or Section 16(4) of the CGST Act

2. Records attracting RCM Supplies

Cases where rejection by recipient can increase liability of supplier:

As a supplier you need to be careful and keep a check especially on rejections made by recipient in following cases:

1. Original Credit note rejected by the recipient  
2. Upward amendment of the credit note rejected by the recipient irrespective of the action taken by recipient on the original credit note 
3. Downward amendment of the credit note rejected by the recipient if original credit note was rejected by him
4. Downward amendment of Invoice/ Debit note rejected by the recipient where original Invoice/ Debit note was accepted by him and respective GSTR 3B has also been filed.

As per the Advisory issued by GSTN, the above 4 entries will be part of the supplier's outward supply in GSTR-3B in the next month. In other words, based on the rejection of records by the recipient, the outward liability of the supplier will be increased.

So, effective and prompt communication with the recipient is essential to avoid unnecessary mismatches and last-minute rush.

Possible ways to fix errors made in Returns:

GSTR-1A is an effective way for suppliers to amend any incorrect information they may have submitted in their returns. By using this form, suppliers can correct any mistakes before filing their GSTR-3B for the same tax period. This also ensures that the Input Tax Credit (ITC) is accurately updated in the recipient's IMS dashboard during the same tax period. Accurate corrections can help avoid unnecessary working capital losses.

Also, in case the supplier or the recipient wish to communicate with each other but does not possess communication details of each other then they can utilise the communication functionality available on GST Portal also. It can be used by the supplier to communicate with the recipient regarding actions taken by them on the records furnished by it in GSTR-1. Similarly, the recipient can use this functionality to communicate with the supplier regarding any missing or incorrect invoices as populated in its IMS Dashboard. Refer the following advisory by GSTN on how to use the said functionality: Communication between Recipient and Supplier Taxpayers on GST Portal

Apart from this, effective reconciliation, timely training to the staff and staying updated with the new developments on the GST Portal will also help in smooth follow of compliances in the era of IMS.

All Relevant Material on IMS:

For ready reference, all the relevant advisories from GSTN are compiled herein:

• Advisory on Invoice Management System
• Draft Manual on Invoice Management System
• Advisory on effective date for IMS implementation
• Frequently Asked Questions on IMS 
• Additional FAQs on IMS
• Advisory for Hard-Locking of auto-populated liability in GSTR-3B
• Advisory regarding IMS during initial phase of its implementation
• Advisory on IMS on Supplier View