How to Handle Inadvertently Rejected Records in IMS: GSTN Clarifies ITC and Liability Process
GSTN clarifies the process for reclaiming ITC and adjusting liability on inadvertently rejected records in IMS.
The Goods and Services Tax Network (GSTN) has issued a detailed advisory dated June 19, 2025 on the treatment of inadvertently rejected records in the Invoice Matching System (IMS), offering much-needed relief and procedural clarity to taxpayers navigating Input Tax Credit (ITC) and supplier liability complications.
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The clarification outlines how both recipients and suppliers should handle cases where valid invoices, debit notes, or credit notes are mistakenly rejected by the recipient in IMS even after the corresponding GSTR-3B return has already been filed.
Key Highlights of the Advisory
1. ITC Reclaim Process for Recipients
If a recipient wrongly rejects a valid document (invoice, debit note, or ECO-document) in IMS, they can still avail the Input Tax Credit by requesting the supplier to re-report the same document unchanged in either the GSTR-1A of the same tax period or through the amendment table in a subsequent GSTR-1 or IFF.
Once the recipient accepts the re-reported document on IMS and recomputes their GSTR-2B, the full ITC will become available in the period where the amended document is reflected.
2. No Additional Tax Liability for Supplier
In such scenarios, where the supplier re-furnishes an already reported document without any changes, there is no increase in their tax liability. This is because the amendment tables in GSTR-1/IFF only capture the delta value, and since the document values remain the same, the differential liability is zero.
3. Reversal of ITC for Rejected Credit Notes
For credit notes that were wrongly rejected by the recipient, GSTN clarified that the recipient must reverse the previously availed ITC once the supplier re-furnishes the same credit note and it is accepted via IMS. This triggers a reduction in the recipient’s GSTR-2B upon recomputation, ensuring accurate ITC reporting.
4. Impact on Supplier Liability for Credit Notes
Initially, the supplier’s liability increases when a credit note is rejected by the recipient. However, once the supplier re-reports the same credit note again, without any change in GSTR-1A or the amendment table, their liability is reduced accordingly. The net effect ensures there is only a one-time adjustment, maintaining neutrality.
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