Invoice Management System May Add Compliance for GST Assessees, Say Tax Experts
By: Admin | October 21, 2024
Category: GST Recent News
Read Time: 4 Minutes
The newly introduced Invoice Management System (IMS) aims to enhance the Input Tax Credit (ITC) ecosystem for taxpayers under the Goods and Services Tax (GST) regime, but tax experts caution that it may add an additional compliance burden for assessees.
The GST portal explains that the IMS helps taxpayers match their invoices with those issued by suppliers, ensuring accurate ITC claims. This system allows taxpayers to accept, reject, or defer invoices for later reconciliation. The first GSTR-2B generated from IMS activities will be available on November 14 for the return period of October.
Increased Compliance Burden
While the IMS is expected to reduce ITC mismatch notices, tax experts highlight that it will create additional compliance tasks. Taxpayers already perform ITC reconciliations before finalizing their GSTR-3B, and the current version of IMS does not offer the flexibility to partially accept or reject transactions. Moreover, the system is currently recipient-centric, which limits suppliers’ visibility and control.
One tax expert noted, “IMS may offer benefits in managing ITC better, but it adds another layer of compliance for taxpayers who are already conducting reconciliations for GSTR-3B.”
Concerns Over Credit Notes
Credit notes (CN) are another significant feature of IMS, and experts warn that the system’s handling of CNs could cause issues for taxpayers. If a supplier issues a CN reversing GST liability, the recipient must either accept or reject it without the option to defer. This can lead to discrepancies if, for example, the CN is issued on October 31 but accounted for by the recipient on November 2, requiring rejection of the CN for October.
Failure to manage CNs properly can result in suppliers paying GST they are not liable for. Experts believe that GSTN (the IT backbone of GST) must address this financial implication soon to prevent taxpayer hardship.
Deemed Acceptance and Committee Formation
Under the current system, if recipients take no action in IMS, transactions are considered deemed accepted. This could lead to unintended ITC reversals or inflated tax liabilities. To address these concerns, GSTN plans to form a committee of trade representatives to provide feedback and resolve open issues related to IMS.
Reverse charge and import-related entries will bypass IMS and flow directly to Form GSTR-2B from ICEGATE and DGFT portals, ensuring smooth processing.
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