How to Claim Input Tax Credit Using IMS?

Are last minute inconsistencies in your GSTR-2B causing you pain?

That chaos is eliminated with Invoice Management System (IMS). With IMS, you have 100% control over watching your supplier invoices in real time and can accept, reject or hold them to avoid any unintentional impacts on your returns. As a result, you will gain mastery over your ITC claims. Now we’ll explain how to claim ITC with IMS academically, so put on your thinking caps step by step.

Step 1: Your supplier needing provisioning of invoices

The initiation of an Input Tax Credit (ITC) claim starts off when a supplier equips his GSTR-1 or OFF with invoice details and the requisite documents. GSTR-1 uploads occur by the 11th of each month. Post these uploads, invoices are available in IMS and allow the user to monitor their invoice dashboard which shows invoices linked submitted against the GSTIN in GSTR1 for real time updates.

Let’s consider an example where a supplier begins on 10th April and uploads an invoice of 10,000 with a GST of 1800, that invoice would hypothetically show in IMS for affiliate view and interaction before the GSTR-2B is generated.

Stage 2: Proceed with Accessing the IMS Dashboard

In order to look at the invoices which have been uploaded by your suppliers, kindly follow the given procedure –

Login to GST Portal → Services → Returns → Invoice Management System (IMS) Dashboard.

You will be able to see all the invoices listed for each of the suppliers along with relevant information such as:

Supplier GSTIN

Invoice Number

Trade Name

Invoice Type (Regular, Credit Note, etc.)

This is the hub from which all the ITC activities can be initiated.

Stage 3: Review and Execute Invoice Actions

As a buyer, you control what happens with every invoice in terms of ITC:

Action

When It Should Be Used

Accept / No Action

The invoice is correct and ITC can be claimed.

Reject

This invoice isn’t yours or has vitiating details.

Pending

You require some form of explanation, or goods/service to be delivered.

(Tip: If you mark the invoice as pending, it allows you to investigate without the risk of claiming an ineligible ITC.)

Step 4: Assess the consequences of your actions

Your actions have consequences towards what is populated in your GSTR-2B and subsequently GSTR-3B.

Considered for ITC computation

Carried forward for future action

No action

Yes

Yes

Considered as deemed acceptance for ITC computation

Step 5: What if No Action Is Taken?

If no further steps are taken regarding invoices before GSTR-3B is filed, then the invoices in the system are considered “deemed accepted”. Thus,

In your GSTR-2B, they will appear.

In GSTR-3B, they will be in ITC calculation.

Note: This is fine for correct invoices, but very dangerous if the supplier uploaded an incorrect one!

Step 6: If Action Was Taken After The 14th: Adjust GSTR-2B Again!

GSTR-2B is auto-generated on the 14th of the month. If invoices and other documents are accepted or rejected after this date but before GSTR-3B is filed, GSTR-2B will need to be recalculated to reflect the accepted changes.

(Tip: Try to do everything before the 14th to minimize recalculation and last-minute panic.)

ITC calculation formulas in IMS

This is how your ITC is computed based on what you do:

Situation

Formula for ITC Eligibility

Nothing is rejected and no pending

Accepted No Action

With rejections/ pending

(Accepted No Action) – (Rejected Pending)

If pending invoices are accepted

(Accepted No Action Pending) – Rejected

Best practices for claiming ITC via IMS

Check IMS regularly

Do not wait for the 14th or the date of filing. Regular reviews allow you to stay in control of the process.

Take action early

Changes should be made early to remove the risk of a last-minute rush and ensure the correct invoices are in GSTR-2B.

Stay in sync with suppliers

Note discrepancies in real-time and obtain approvals for changes if necessary.

Maintain proper documentation

Retain control of tax invoices and check that they comply with GST requirements.

In summary

IMS provides the functionality to simplify the process of claiming ITCs by empowering effective invoice management and accurate reporting. With timely actions on received invoices, the potential for GST mismatches is minimized and smoother GST reconciliation is improved.