The Goods and Services Tax (GST) portal's recently launched Invoice Management System (IMS) is set to significantly decrease the number of notices issued over Input Tax Credit (ITC) discrepancies, potentially easing compliance burdens and reducing litigation, according to tax experts and Chartered Accountants.
Currently, around 10% of all notices issued by the GST department relate to ITC discrepancies, primarily caused by mismatches in invoices filed by suppliers and those reported by recipients. The IMS, which will be available on the GST portal starting November 14, 2024, introduces a feature allowing recipient taxpayers to either accept, reject, or keep invoices pending, enhancing accuracy and reducing common errors in ITC claims.
"This new functionality will address longstanding issues in reconciling ITC claims between suppliers and recipients," noted a Chartered Accountant. "Prior to this, there was no structured method for verifying supplier invoices, resulting in frequent inconsistencies and subsequent notices."
Experts highlight that IMS offers a robust solution for aligning ITC entries with GSTR-2B, facilitating smoother credit claims. Since the GST framework's inception, provisions for ITC matching have existed but were previously hindered by technical challenges. Now, the IMS framework has been reintroduced, allowing taxpayers to manage ITC through Form 2B by directly responding to credits displayed.
The first IMS-enabled GSTR-2B will be for October 2024 and generated on or after November 14, 2024. This system aims to streamline ITC claims, ultimately minimizing the compliance burden for taxpayers and ensuring better alignment between GST and Income Tax records.
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