Advisory on New Changes in Invoice Management System (IMS)

Advisory on New Changes in Invoice Management System (IMS)

The advisory dated September 23, 2025, outlines updates to the Invoice Management System (IMS) aimed at simplifying taxation and reducing compliance burdens for taxpayers.

Below is a clear explanation of the key changes, their implications, and how they affect taxpayers:

1. Pending Action for Specified Records

What’s New?
Taxpayers can now keep certain records “pending” in the IMS for a limited time period, instead of immediately accepting or rejecting them. The allowed pending period is:

• One tax period (one month for monthly filers, one quarter for quarterly filers).

Which Records Can Be Kept Pending?
The following specific records can be kept in a pending status:

• a. Credit Notes or Upward Amendment of Credit Notes: Taxpayers can delay action on credit notes or their upward amendments (e.g., increasing the credit note value).
• b. Downward Amendment of Credit Notes (if original credit note was rejected): If the original credit note was rejected, taxpayers can keep its downward amendment (e.g., reducing the credit note value) pending.
• c. Downward Amendment of Invoice/Debit Note (DN): This applies only if the original invoice has already been accepted and GSTR-3B (the return summarizing tax liability and ITC) has been filed.
• d. E-Commerce Operator (ECO) Document Downward Amendment: This applies only if the original ECO document was accepted and GSTR-3B has been filed.

Why It Matters:
This flexibility allows taxpayers to delay decisions on certain records without immediate compliance pressure, giving them time to verify details or resolve discrepancies with suppliers.

2. Declaring ITC Reduction Amount

What’s New?
A new feature in the IMS allows taxpayers to declare the Input Tax Credit (ITC) they have actually availed (or not availed) for specific invoices or documents. This helps determine the extent of ITC reversal required, if any.

Key Clarifications:

• No ITC Availed: If the recipient has not claimed ITC on a specific invoice or document, no ITC reversal is required.
• Partial ITC Availed: If only part of the ITC was claimed, the taxpayer only needs to reverse the ITC to the extent it was availed.
• Facility for ITC Reversal: The IMS now provides a tool to:
• Declare the ITC amount actually availed.
• Reverse ITC (fully or partially) by entering the amount to be reversed.
• Record prior reversals (if ITC was reversed earlier) or confirm that no ITC was availed for the relevant invoice/document.

Which Records Are Covered?
This facility applies to the same specified records listed above (credit notes, amendments, etc.).

Why It Matters:
This feature simplifies ITC management by allowing taxpayers to accurately report and reverse ITC only when necessary, reducing errors and disputes with tax authorities.

3. Option to Save Remarks

What’s New?
Taxpayers can now add remarks when taking actions like rejecting or keeping records pending in the IMS. This feature is optional and will be rolled out soon.

How It Works:

• Remarks can be added to explain the reason for rejecting or keeping a record pending.
• These remarks will be visible in:
• GSTR-2B (a statement showing ITC eligibility) for future reference.
• The supplier’s Outward Supplies view dashboard, helping them understand and correct issues.

Why It Matters:
This improves communication between taxpayers and suppliers, ensuring transparency and aiding in faster resolution of discrepancies.

4. Important Dates

• Effective Date: The changes related to keeping credit notes pending and declaring ITC amounts will be effective from the October 2025 tax period.
• Due Date for Pending Records: The deadline for keeping records pending is based on the date or tax period when the supplier communicates the document to the recipient.

Why It Matters:
Taxpayers must align their processes with these timelines to take advantage of the new features and avoid penalties for late actions.

5. Prospective Application

• These changes apply only to records filed by suppliers after the rollout of these updates in the IMS.
• Taxpayers should carefully review the changes before taking actions (e.g., accepting, rejecting, or keeping records pending) and filing their returns (e.g., GSTR-3B).

Why It Matters:
The updates are not retrospective, so they won’t apply to older records. Taxpayers need to ensure compliance with the new system for future filings.

Summary of Benefits

1. Increased Flexibility: The ability to keep specified records pending for one tax period gives taxpayers time to verify details.
2. Simplified ITC Management: The ITC declaration and reversal facility reduces errors and ensures compliance with ITC rules.
3. Improved Communication: The remarks feature fosters transparency between taxpayers and suppliers.
4. Reduced Compliance Burden: These changes streamline processes, making it easier to manage invoices and comply with tax regulations.

Action Points for Taxpayers

• Review the Changes: Understand which records can be kept pending and how the ITC declaration works.
• Update Processes: Ensure your accounting and compliance teams are aware of the new timelines and features.
• Monitor Rollout: Watch for the activation of the remarks feature and the October 2025 tax period changes.
• Check Supplier Records: Verify supplier-filed records in the IMS after the rollout to ensure they align with the new rules.
• File Returns Carefully: Review pending records and ITC declarations before filing GSTR-3B to avoid errors.

Source

Also Read: Recommendations of the 56th Meeting of the GST Council – CA Cult

CA Cult YouTube: Calculation of Income Tax FY 2024-25 | Old vs New Regime | For Salaried Employees

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