Key Functional Enhancements in Invoice Management System (IMS) Effective October 2025

The Goods and Services Tax Network (GSTN) has announced important updates in the Invoice Management System (IMS) that will take effect from the October 2025 tax period. These changes are designed to simplify GST compliance, make Input Tax Credit (ITC) management more accurate, and reduce the overall burden on businesses. Taxpayers should take note of these updates to avoid mistakes while filing GSTreturns.

The key updates cover three main areas:

• Pending action for certain records
• Declaring ITC reduction amounts
• Ability to save remarks

Latest Update:

GSTN has clarified that there is no change in the auto-population of Input Tax Credit (ITC) from GSTR-2B to GSTR-3B, even with the implementation of the Invoice Management System (IMS). GSTR-2B will continue to be generated automatically on the 14th of every month.

Starting from the October 2025 tax period, recipient taxpayers will have the flexibility to keep Credit Notes or related documents pending and adjust ITC reversals only to the extent actually availed.  

Key Functional Enhancements in Invoice Management System

 Taxpayers should take note of these updates to avoid mistakes while filing GST returns.  

1. Pending Action for Specified Records

Previously, taxpayers had to take immediate action on all credit notes, debit notes, invoices, and related documents. This often caused confusion and created compliance pressure, especially for businesses with large volumes of transactions. With the new IMS updates, taxpayers will now have the flexibility to keep certain records pending for a limited period.

Who Can Use This Option?

• Monthly taxpayers: can keep records pending for one tax period (month)
• Quarterly taxpayers: can keep records pending for one tax period (quarter)

Which Records Can Be Kept Pending?

1. Credit notes or upward amendments of credit notes
2. Downward amendments of credit notes where the original credit note was rejected
3. Downward amendments of invoices or debit notes only if:
• The original invoice was accepted, and
• GSTR-3B has been filed
4. Downward amendments of ECO-documents only if:
• The original document was accepted, and
• GSTR-3B has been filed

Note: The due date for keeping records pending will be calculated based on the date or tax period in which the supplier communicated the document.

2. Declaring ITC Reduction Amount

Previously, taxpayers were sometimes required to reverse ITC without clarity on the exact amount, leading to confusion and mistakes. The new IMS updates now provide a facility to declare the ITC reduction amount with precision.

Key Clarifications by GSTN

1. No ITC Availment: If the recipient has not availed ITC on a given invoice, there is no need to reverse ITC.
2. Partial ITC Availment: If ITC has been availed partially, reversal is required only for the amount that has been availed.

How IMS Helps

The IMS now allows taxpayers to:

• Declare the exact ITC amount availed
• Reverse ITC fully or partially, based on actual availment
• Use this feature even if a reversal was made earlier
• Manage cases where ITC was never claimed

Example

Suppose a business has an invoice of ₹1,00,000 with GST of ₹18,000:

• If the recipient has availed only ₹10,000 as ITC, the IMS will allow reversal only of ₹10,000 instead of the full ₹18,000.
• If the recipient did not avail any ITC, no reversal is required.

This ensures that taxpayers pay only what is necessary, reducing compliance risk and making GST filing simpler.

3. Option to Save Remarks

Another important update is the ability to add remarks while taking action on invoices, credit notes, or ECO-documents. This feature is optional but highly useful for businesses to improve communication with suppliers and maintain proper records.

How It Works

• Taxpayers can save remarks while marking a record as pending or rejected.
• These remarks will be visible in GSTR-2B for the recipient’s reference.
• Suppliers will also see these remarks in their Outward Supplies dashboard, enabling them to take corrective actions.

Benefits

• Improves transparency between buyers and suppliers
• Reduces disputes and mismatches in ITC claims
• Helps maintain audit trails and proper documentation

Example

A taxpayer can mark a credit note as pending and add a remark like: "Awaiting supplier confirmation on GST rate change."

This remark will be visible to the supplier, allowing them to respond promptly, thereby reducing delays and miscommunication.

5. Period Allowed for Keeping Records Pending

Taxpayers (recipients) are now allowed to keep specified records in Pending status for a limited period. The duration differs based on whether the recipient is a monthly or quarterly filer.

(a) Monthly Taxpayer

• Permitted to keep a record pending for one month (one tax period).
• Formula:  Due date of GSTR-3B filing of [Applicable GSTR-2B period + 1 tax period]

Example:

• Supplier files GSTR-1 for October 2025 on 10 November 2025.
• Applicable GSTR-2B period: October 2025
• Specified period: 1 month (November 2025)
• Last date to keep record pending: → Due date of GSTR-3B for November 2025 = 20 December 2025

(b) Quarterly Taxpayer (QRMP Scheme)

• Permitted to keep a record pending for one quarter (one tax period).

Example:

• Supplier files GSTR-1 for Oct–Dec 2025 on 10 January 2026.
• Applicable GSTR-2B period: Oct–Dec 2025
• Specified period: 1 quarter (Jan–Mar 2026)
• Last date to keep record pending: → Due date of GSTR-3B for Jan–Mar 2026 = 22nd or 24th April 2026

6. Automatic Action After Pending Period Expires

If no action is taken by the recipient within the allowed period:

• The Pending option will be disabled for that record.
• The taxpayer must then choose to Accept or Reject the record.
• If no response is given, the system will treat the record as “Deemed Accepted”.

This ensures that records are not kept indefinitely in limbo, maintaining data integrity and alignment between supplier and recipient filings.

7. Declaring ITC Amount to be Reversed

Earlier Process:

Previously, on acceptance of a Credit Note or similar record, the entire ITC related to that document was automatically reversed in GSTR-2B — even when the taxpayer:

• Had not availed the ITC of the corresponding invoice, or
• Had already reversed ITC partially in earlier GSTR-3B filings.

New Process (Effective October 2025):

Now, when accepting such records, the system will prompt: “Whether ITC needs to be reduced for the selected record(s)?”

Available Options:

Once submitted, the declared ITC reversal details will automatically:

• Reflect in GSTR-2B, and
• Populate relevant sections in GSTR-3B, ensuring proper compliance alignment.

This granular control allows for more accurate ITC management and prevents unintended reversals.

Effective Date of New ITC Feature

The new Input Tax Credit (ITC) declaration and reversal feature in the Invoice Management System (IMS) will be effective from the October 2025 tax period. 

Applicability of the New ITC Feature

The new ITC declaration and reversal feature in IMS applies only to records filed by suppliers after the production rollout. Older records will not be affected.

Official GSTN notification on Changes in Invoice Management System (IMS) is attached below:

GSTN has released FAQs on the new functionality of IMS, which are attached below for your reference.  

Key Takeaways

• Flexibility in Compliance: Taxpayers can now mark certain records as pending, giving extra time to verify and correct invoices, credit notes, and ECO-documents.
• Accurate ITC Management: The new IMS feature allows precise declaration of Input Tax Credit (ITC) availed, ensuring only the correct amount is reversed, reducing errors and disputes.
• Improved Communication: Optional remarks for pending or rejected records enhance transparency between buyers and suppliers, enabling quicker corrective action.

Action for Businesses

• Review all invoices and credit notes carefully before taking action in IMS.
• Train finance teams to use the new pending, ITC declaration, and remarks features.
• Maintain proper documentation for audit purposes.
• Communicate with suppliers using the remarks feature to ensure corrections are made quickly.

Stay Compliant with IndiaFilings!

To ensure smooth adoption of the new IMS updates and avoid compliance issues, businesses should review their GST records carefully and make use of the latest features.Get professional support today and streamline your GST compliance effortlessly with IndiaFilings.

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