In this article we will discuss about the new invoice management system in GST, The current Goods and Services Tax (GST) structure in India will face alterations from October 1, 2024, which involves the overall efficiency of invoices used to help out in compliance. As Known in the recent amendments, new regulations introduce a much more digital and formalized approach towards invoice creation and submission process. It briefly examines the main characteristics of these trends and the effect they have on companies.

As from October 1, 2024, the GST framework will extend a mandatory use of the Invoice Management System (IMS). This new system will help to standardise the procedure in invoicing, uploading, and validation so that it becomes easier to deal with GST regulations. The IMS is the system to increase the transparency of the tax administration process, decrease the number of errors, and increase productivity.

Date of Implementation of invoice Management System Under GST

From 1 st October 2024, the new IMS feature will be integrated into the GST portal where it is hoped that the system will work as follows:

Key points for new IMS in GST

• It will go online on 1st October 2024. .
• It will make the work easier in as much as to determine the value of every inward invoice and take individual decisions on them.
• IMS will not add any costs in terms of compliance since the system will treat an invoice as deemed accepted’ if the taxpayer does not act on it.
• The former will enhance efficiency in audits of large businesses while the latter will make it easy for small businesses to claim their ITCs.
• It is very easy to use in terms of contact for non-accounting and non-auditing persons.

How Invoice Management System Work, Step by Step Guide

As per the taxpayers and other relevant research scholars, one of the key issues that are existing in GST compliance is the availment of input tax credit (ITC). The IMS functionality is expected to address some of the critical bottle-necks in that process.

1. First, the suppliers who have furnished Form GSTR-1, submit and save the GSTR-1 by the 11th of every month through the GST portal or otherwise use IFF or amend any invoice furnished through GSTR-1 by using GSTR-1A in the GST portal. The GSTR-1A can be filed till the time, the taxpayer files the GST return for the taxable period in GSTR-3B.
2. After the supplier saves and submits the recorded invoice, the same will reflect in the IMS of the recipient taxpayer and finally, in the GSTR-2B. While, IMS dashboard contains supplier’s GSTIN, Trade Name, Invoice No. & Type.
3. The recipient taxpayers will be given three options: It can be ACCEPTED, REJECTED or PENDING status which should be finalized within the duration of time, the supplier uploads the invoice in GSTR1/IFF/1A and the recipient processes the GSTR-3B form before the 20th of the respective months. To take an action on an invoice after the 14 th of every month, then GSTR 2B draft will be recomputed was recomputed.
4. If the recipient opts for ACCEPT then the accepted invoice becomes part of the auto populated ITC statement or GSTR-2B, which is filed on 14th of every month.
5. The following could be the steps followed by the recipient if he or she wants to REJECT an invoice which has been saved by the supplier. In that case, it does not move to the recipient ITC report or the GSTR-2B, as is evident from image-2.
6. If the recipient decides to maintain an invoice under PENDING then the same is not included in GSTR-2B of that particular month. IMS takes forward to next month.
7. If a recipient fails to act on the invoice it has forwarded then it is an indication that there is still work that needs to be done. In that case, the system takes it as ‘deemed accepted’ and uploads the same to the recipient’s GSTR-2B on its own.
8. In the case where the supplier alters an accepted or a pending invoice the altered invoice will take the place of the previous one. The changes in the invoice means that the recipient has to do something with the new invoice that has been issued.
9. When suppliers modify in GSTR-1 through GSTR-1A, such changes reflect in IMS to the recipients’ GSTR-2 B though, in the next subsequent month only.
10. In any form, subsequent months PENDING invoices can be utilized by the taxpayers with certain conditions up to the maximum limit which has provided in section 16(4) of the CGST ACT, 2017.

Main Key Features of New IMS

1. Automated Invoice Upload and Validation:

√Businesses will be required to submit invoices to the IMS portal, in real-time.

√Here, the system shall help in checking the invoices for compliance with the existing GST laws, minimizing on the mistakes that could be generated by the users.

2. Real-Time Invoice Reporting:

Among these changes, the most important one is the demand in reporting invoices in real time. In the new regime, what archaic system had allowed generation of GST return, even without uploading of invoices to the GST portal, businesses will have to upload every invoice that they issue. Others are to reduce cases of invoice mismatches through real-time reporting to, for the purpose of tax administration, aims at achieving timely and accurate data.

3. Integration with E-Way Bill System

Upcoming new IMS system is going to be synchronized with the e-way bill system so the information flow and in invoice generation and goods transportation will be in tandem. This integration will be useful in proper monitoring and control of movement of goods and thus reduce on instances of tax evasion. Companies will require that the systems of invoicing and logistic which they have will be compatible with this integration needed.

4. Mandatory Digital Signature for Invoices

While governmental invoices have been already electronic since January 1 2014, the requirement of new functionality that is having an ability to digitally sign the invoices using a secure digital signature starts since October 1, 2024. This measure needs to be implemented to guarantee the genuineness and the sanctity of the invoices. By so doing the digital signature will act as a safeguard in ensuring that the invoices are not altered with or tampered in any way thereby protecting against fraud.

5. Enhanced Compliance and Penalties

According to the new regulations there will be rigorous definition of compliance and increased punishments for violation of the requirements. Non-compliance with the real-time reporting and digital signature standards may attract severe penalties and fines to the business organizations. This makes it important for businesses to implement changes to their accounting systems and structures to separate with the national and international regulations that relate to them to avoid penalties.

6. User-Friendly Interface:

√The IMS will be equipped with a highly interactive tool bar that will make it’s easy to use and easy to navigate.

√Training resources and support services will be provided in order to assist the users to easily move from the existing network.

That’s How IMS Dashboard looks like:

Below is a screenshot of the IMS Dashboard, showcasing its key functionalities: