In an effort to enhance input tax credit (ITC) ecosystem, an assessee will be able to use Invoice Management System (IMS) from October 1.
This system will allow the recipient taxpayers to either accept or reject an invoice or to keep it pending. Only the accepted invoices by the recipients would become part of their GSTR-2B as their eligible ITC. GSTR-2B is an auto-drafted ITC statement which is generated for every normal taxpayer on the basis of the information furnished by his suppliers. The statement indicates availability and nonavailability of input tax credit to the taxpayer against each document filed by his suppliers.
According to an advisory on GST portal, the system will enable taxpayers to efficiently address invoice corrections/amendments with their suppliers through the portal. This will also facilitate taxpayer in matching of their records/invoices vis a vis issued by their suppliers for availing the correct ITC and shall allow the recipient taxpayers to either accept or reject an invoice or to keep it pending in the system, which can be availed later.
Enhancing ITC ecosystem
The said functionality would be a major enhancement in the ITC ecosystem of GST. At the time of GSTR 2B generation, a record will be considered as ‘deemed accepted’ if no action is taken on that record in IMS. It may be noted that the system will generate GSTR 2B of a return period only if GSTR 3B of previous return period is filed.
The system has many features for assessee, software companies and tax authorities. For example, by reviewing each invoice before it becomes part of their ITC claims, taxpayers can ensure accuracy and avoid issues during audits. Taxpayers can take action on invoices any-time before filing their GSTR-3B. Pending invoices can be addressed in future tax periods.
For those using the quarterly return monthly payment (QRMP) scheme, the IMS will integrate their existing processes, generating GSTR-2B quarterly, in line with their filing schedule.
Software companies will be required to adapt their systems to align with this new functionality. For tax authorities, the IMS provides a more transparent and reliable system for monitoring ITC claims, which could lead to future automation opportunities. Features like AI-driven analysis and automated dispute resolution could become possible.