The introduction of the Invoice Management System ( IMS ) on October 1, 2024, has significantly changed the process of claiming Goods and Services Tax ( GST ) Input Tax Credit ( ITC ) in GSTR-3B returns. Previously, taxpayers could claim ITC based on the GSTR-2B without detailed reconciliation.
Read More: GSTN issues Advisory regarding GST IMS during Initial Phase of Implementation
However, with the IMS, a two-step reconciliation process is now mandatory:
1. Reconciling Books with GSTR-2B:
Match the ITC recorded in your books with the ITC reflected in the GSTR-2B.
2. Reconciling with IMS Data:
Align the ITC from the first reconciliation with the data available on the IMS dashboard.
Read More: GST Annual Return Form GSTR-9: All You Need to Know
To claim ITC effectively, follow these steps:
1. Access the Services (Returns) tab:
Log in to the GST portal and navigate to the Services (Returns) tab.
2. Accept Eligible Invoices:
Mark invoices that meet the conditions of Section 16 of the CGST Act as eligible for ITC.
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3. Flag Ineligible Invoices:
Mark invoices that do not meet the eligibility criteria as “Pending.” Avoid rejecting them, as this can lead to the loss of ITC.
4. Compute GSTR-2B:
Use the “Compute GSTR-2B” feature on the IMS dashboard to transfer invoice data into the GSTR-3B return.
5. File GSTR-3B:
Navigate to the Return Dashboard, select the filing period, and input the necessary figures.
Follow the standard procedure to file GSTR-3B.
Avoid Rejecting Invoices: Keep ineligible invoices marked as “Pending” to preserve the potential for future ITC claims.
Exercise Caution: Do not blindly accept all invoices. Claiming ITC on ineligible invoices can result in penalties and interest.
Timely Action: Address discrepancies and missing invoices promptly.
Communicate with Suppliers: Use the “Communicate with Taxpayer” feature to notify suppliers about missing invoices.
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Leverage IMS: Utilize the IMS to streamline the reconciliation process and minimize errors.
While the IMS adds complexity to the ITC claiming process, it offers significant benefits. By enforcing stricter reconciliation rules, the IMS aims to reduce tax evasion and ensure that only eligible ITC is being claimed by businesses.
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