How Invoice Management System enhances GST compliance and Input Tax Credit claims

The introduction of the Invoice Management System (IMS) by the GST Network has brought a shift in how businesses manage Input Tax Credit (ITC) claims and compliance. This new system allows taxpayers to address invoice discrepancies directly on the GST portal.

This replaces the earlier cumbersome processes involving manual coordination with suppliers.

Experts see IMS as a step towards a more efficient and transparent tax compliance system.

“IMS empowers businesses to streamline ITC claims, minimise errors, and improve audit readiness,” says Archit Gupta, Founder and CEO of Clear.

How IMS improves ITC management

IMS simplifies ITC tracking by enabling granular, invoice-level management.

Recipients can now accept invoices to confirm details, reject them for supplier corrections, or defer action by marking them as pending.

This real-time functionality eliminates delays and errors associated with offline processes.

Gupta explains, “With IMS, taxpayers can proactively manage discrepancies and ensure accurate ITC claims, significantly reducing compliance risks.”

Challenges in adopting IMS and how automation helps

While IMS offers numerous advantages, businesses face challenges such as increased liability for inaccurate ITC actions and the effort-intensive task of coordinating internally between tax and accounts payable teams.

Automation tools address these issues.

Gupta adds, “With Clear, businesses can ensure compliance without the added effort. Our intuitive platform minimises errors and streamlines compliance workflows.”

The future of GST compliance in India

GST compliance is evolving towards real-time data exchange and stricter regulations. IMS represents a step towards dynamic tax processes, with potential future features like hard-locking GSTR-3B values based on IMS actions.

Gupta predicts, “Automation will become indispensable for businesses.”

Early adoption and its benefits

Though IMS is currently optional, early adoption offers advantages.

Businesses can achieve accuracy, reduce compliance risks, and stay ahead of potential penalties.

Gupta advises, “IMS adoption, coupled with automation, helps businesses stay compliant and audit-ready with minimal effort.”