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Faster ITC claim: Now suppliers can see & take action on whether buyer rejected the invoice or accepted it on the new IMS portal of GST

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Business News'Wealth'Tax'Faster ITC claim: Now suppliers can see & take action on whether buyer rejected the invoice or accepted it on the new IMS portal of GST

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Faster ITC claim: Now suppliers can see & take action on whether buyer rejected the invoice or accepted it on the new IMS portal of GST

By
, ET Online

Synopsis

Goods and services tax (GST): The goods and services tax network (GSTN) has implemented a new feature inside the invoice management system (IMS) on the GST portal where suppliers can see whether the buyer has accepted or rejected the invoice saved by them. Experts say this is positive for buyers as now they will be able to claim input tax credit faster due to faster rectification of errors.

Faster ITC claim: Now suppliers can take faster action based on real time feedback given by buyers on the IMS portal about the invoiceGetty Images
Faster ITC claim: Now suppliers can take faster action based on real time feedback given by buyers on the IMS portal about the invoice

The Goods and Services Tax Network (GSTN) has introduced a new feature where suppliers can see whether the buyer has accepted or rejected the invoice saved by the supplier on the GST portal. This feature is implemented inside the newly introduced Invoice Management System (IMS) on the GST portal from October 14, 2024. GST registered sellers or suppliers should note that since the introduction of IMS portal, GST registered buyers can accept or reject (or take no action) against invoices saved by sellers on the GST portal.

Accepting the invoice saved by sellers on the GST portal will enable the buyers (recipients) to claim input tax credit and at the same time help the seller file a correct GST return. Only when the invoice is accepted then the seller's GST return can be filed in accordance with the law and the correct amount of output tax liability can be calculated.

"To further facilitate the taxpayers, the Supplier View of IMS has also been made available where the action taken by their recipients on the records/invoices reported in GSTR-1/1A/IFF, will be visible to the suppliers in 'Supplier View' functionality. This will help a supplier taxpayer to see the action taken on their reported outwards supplies and will help to avoid any wrong action taken by the recipient taxpayer," said GSTN in an advisory dated November 13, 2024.


New GSTN feature to correct mistakes in GST invoice matching process for claiming input tax credit; Know how it works

How the new supplier view feature of invoice management system (IMS) may help buyers in claiming input tax credit faster

Back in the old days when a supplier or seller made any error in the invoice and filed a GST return based on this wrong invoice it caused issues with the buyer namely in regard to claiming input tax credit and other issues. This is because the invoice has to reflect the true and correct view of the transaction between the buyer and seller otherwise the GST return cannot be filed without errors.
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"In this situation the error could only be solved by filing an amended GST return either in the next month or next to next month depending upon when the error was caught. This months' time or more depending upon when the error in invoice was detected was a time lag during which period the buyer could not have claimed his input tax credit for this particular wrong invoice. However now with the introduction of this new feature (supplier view) on the IMS system, a supplier can know the error in real time if the buyer detects it and rejects the invoice on the IMS portal. This will help in faster rectification of errors in invoice and hence the invoice can now be accepted faster by the buyer resulting in the buyer claiming ITC faster," says Chartered Accountant Bimal Jain, founder, A2Z Taxcorp LLP.

According to Divya Momaya, founder, MentorMyBoard, "The IMS feature could facilitate faster ITC claims by buyers. Here's how:

  • Enhanced Communication: With IMS, buyers can now view and provide feedback directly on the supplier's invoices if there are any discrepancies, such as incorrect values or missing invoices.
  • Quick Rectification: Suppliers receive prompt notifications regarding buyer feedback, allowing them to correct errors in real-time. This means fewer delays due to mismatches and errors that previously went unnoticed until the filing period.
  • Improved ITC Matching: Since ITC claims depend on accurate data alignment between buyers and suppliers, IMS helps ensure faster matching, reducing the chances of errors during GSTR-2B reconciliation and leading to quicker ITC processing.
"The IMS feature is likely to support more efficient ITC claims as it streamlines and speeds up the invoice verification and correction process," she says.

"IMS is an optional facility designed to automate and streamline input tax credit (ITC) management. Opting for IMS can benefit taxpayers by enhancing control over ITC claims and simplifying compliance, though it requires careful verification of invoices," says Kamal Aggarwal, Senior Advisor, Singhania & Co.

Karthik Mani, Indirect Tax Partner at BDO India says, "The Invoice Management System (IMS) will allow the buyers to verify e-invoices uploaded by the sellers on the portal for verification and take actions such as 'Accept', or 'Reject', or 'Pending', depending on the matching of details. This would enable the buyers to claim credits, on a timely basis, by allowing them to address the instances of mismatch between documents and records. The system is likely to have teething troubles due to the manual processes, hence taxpayers should evaluate automation options using technology solutions to reap the intended benefits of this system. One feature, which is currently missing, is the ability of the buyer to add the invoices which are not reported by the supplier, so that credits are not missed in such cases. One would hope that this feature is added once the current system stabilises."

The first GSTR 2B on the basis of buyer's action on the IMS will be generated on November 14, 2024

According to the advisory by GSTN, "Invoice Management System (IMS) has been made available on the GST Portal from 14th October 2024 wherein the recipient taxpayer can accept, reject or keep the invoices pending which are saved/filed by their suppliers in their respective GSTR-1/1A/IFF. This is to further inform you that the first GSTR-2B on the basis of such actions taken in IMS by the recipient taxpayers will be generated on 14th November 2024 for October-2024 period."

Chartered Accountant Aniket Kulkarni says, "The recipient taxpayer (buyer) would be rejecting the invoices, where supply has either been not received by them or where Input tax credit is not available to the recipient. If a supplier has made mistakes while uploading the invoice details, it can be pointed out to him online itself. Moreover this advisory by GSTN has advantages for suppliers or sellers as well. Since the mistakes can be pointed out the supplier can make necessary amendments in GSTR 1 and so correct the invoice details and thereby comply with the law."

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These invoices are not available in IMS for taking any kind of action by the buyer

GSTN said: "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':

  • Documents where ITC is not eligible either due to POS rule or Section 16(4) of the CGST Act,
  • Records attracting RCM Supplies."
"Further, this is to be reiterated again that any action taken on records can be changed by the recipient taxpayer till the filing of GSTR-3B of the return period. In case the taxpayer changes any action after the generation of GSTR-2B, they need to click the GSTR-2B recompute button to recompute their GSTR-2B based on the new actions taken," sain GSTN on the advisory.

Impact of this feature for GST registered suppliers

According to Momaya, "The IMS feature brings several implications for GST-registered suppliers:

  • Increased Accountability: Suppliers will be under greater pressure to ensure timely and accurate invoicing, as buyers now have visibility into invoice details and can request changes directly.
  • Prompt Action on Feedback: Suppliers must stay vigilant to respond to buyer feedback in a timely manner. This will require improved internal processes and regular monitoring of the IMS notifications to avoid unnecessary delays in rectifications.
  • Strengthened Buyer-Supplier Relationship: By enhancing communication and transparency, IMS can lead to better trust and collaboration with buyers, fostering long-term business relationships.
  • Streamlined Operations: While initially, suppliers may need to adapt to this new feature, IMS could eventually reduce the administrative burden caused by invoice discrepancies and ITC-related issues, saving time and resources.
"Overall, the IMS feature could improve transparency and compliance for suppliers but requires them to be proactive and responsive to buyer feedback," she says."The introduction of the new system will put the onus on suppliers to ensure correctness of the invoice details captured for e-invoicing or GSTR-1 return filing. In an instance where the supplier has uploaded erroneous data, the same may be rejected by the buyers which will result in additional compliances for the sellers and possible risk of higher tax payments for a month (impacting working capital), for e.g., when credit notes are rejected," says Mani from BDO India.