Businesses gear up for invoice management system under GST from Oct 1

Businesses will have to quickly get prepared for the new invoice management system under the goods and services tax that will be introduced from October 1. The new functionality will help taxpayers efficiently address invoice corrections and amendments with their suppliers through the GST Network portal.

“This will also facilitate taxpayer in matching of their records/invoices vis a vis issued by their suppliers for availing the correct Input Tax Credit (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,” said the GSTN in a recent advisory, adding that this will be a major enhancement in the ITC ecosystem of GST.

“Now, only the accepted invoices by the recipients would become part of their GSTR-2B as their eligible ITC. Therefore Invoice Management System (IMS) will provide the taxpayers an opportunity to review the genuineness and authenticity of the received invoices,” it said.

Experts believe that this will bring more efficiency and transparency in compliance procedures for taxpayers under GST. “The launch of the IMS, coupled with the forthcoming Input Service Distributor integration, unequivocally demonstrates the government's commitment to advancing GST 2.0. This transformative enhancement is set to revolutionise the GST framework by streamlining compliance and optimizing the claim process for ITC,” said Saurabh Agarwal, Tax Partner, EY.

While GSTN has long advocated for a system of invoice matching since GST's inception, recent amendments to the CGST Act have led to the omission of enabling provisions. Nonetheless, advanced technological solutions will be essential for businesses to adeptly manage these crucial transitions, he underlined.

A note by PwC also highlighted that considering October 1, 2024 as the implementation date, companies will have to revisit their compliance processes and gear up their systems to quickly adhere to this new requirement. “The IMS is expected to facilitate transparency between recipients and suppliers and streamline the reconciliation of ITC, which has been a challenging process since the introduction of GST,” it said, adding that the practical benefits of the system to taxpayers will become clearer as it is implemented.