Invoice Management System (IMS) under GST: Complete guide with how it works in a Swipe Businesses’ method of receiving and submitting invoices under the GST has been transformed by the implementation of an Invoice Management System (IMS). Before IMS, businesses would claim input GST credits (ITC) IMS requires businesses to ensure that all invoices are accurate prior to being able to claim ITC, resulting in more accurate invoices, but also a responsibility to manage and monitor these invoices for action by the business.
Using IMS, businesses can: accept, reject or allow suppliers ’ invoices to remain open during the applicable period after vendors upload to GSTR-1, resulting in more transparency for businesses and reducing the potential for errors. However, an automated process using IMS will help eliminate complications in the IMS process. Swipe is the solution to more effectively managing the entire IMS process.
Additionally, IMS activities are generally reviewed and reconciled between the 14th of every month (after GSTR-2B generation) and the 20th of the month before filing GSTR-3B . Since businesses get a limited time window to complete invoice verification, manually managing a large number of invoices can become difficult and time-consuming.
What is an invoice management system (IMS) under GST? The Invoice Management System (IMS) on the GST portal now provides a way for businesses to manage their suppliers' invoices before claiming input tax credit (ITC).
As soon as a supplier uploads their invoice in GSTR-1, that invoice will be available in the recipient’s IMS dashboard. The recipient has 3 options for each of the supplier’s invoices: (1) Accept invoice; (2) Reject invoice; or (3) Keep invoice in pending status.
Only accepted invoices will qualify for ITC and will be reflected in GSTR-2B. If the recipient does not take any action, deemed accepted .
IMS provides businesses with certainty that they will only claim ITC on verified invoices, eliminating mismatches and increasing the accuracy of compliance.
Why IMS was introduced Before IMS, many businesses existed with significant difficulty complying with their Goods and Services Tax (GST) obligations due to issues such as mismatches between what suppliers and purchasers recorded for invoices that resulted in inaccurate input tax credit (ITC) claims and the volume of notices issued to businesses by the Canada Revenue Agency (CRA).
IMS was developed so that businesses could be more accurate in their operations, be able to identify invoice fraud or error, provide for real-time reconciliation, and develop improved communication between suppliers and purchasers.
The IMS acts as an independent verification vehicle for businesses to validate invoices before any impact occurs on their GST reporting.
How IMS works (GST system flow) The structured workflow process of an IMS is used for processing invoices between suppliers and recipients within GST.
When the supplier uploads their invoices onto GSTR-1 or IFF, these invoices will then show up on the recipient's IMS dashboard.
The recipient will review these invoices and select one of three options [i.e. accept, reject or keep pending] to give an indication of their invoice status to the supplier. If the invoice is accepted, then that invoice will be included in GSTR-2B
If, after the time frame has expired, and there has been no action taken on the invoice, the invoice will automatically be treated as deemed accepted. The result is that input tax credits (ITC) are calculated using only verified invoices.
How automated tools like Swipe simplify IMS management for businesses IMS can provide many benefits. Nevertheless, managing IMS manually can be very challenging, requiring additional effort on the part of businesses with a large quantity of invoices.
When a business has many suppliers, it can receive invoices from multiple suppliers at the same time. Manually checking each invoice, tracking any required actions to complete the invoice process, or ensuring that invoices are approved on time can be confusing and time-consuming.
Many of the problems that occur as a result of businesses using manual processes to manage invoices include missing invoices, failed pending actions, incorrect ITC claims, delayed reconciliations, and human error resulting in compliance infractions.
Automating the solution process will mitigate these manual invoicing issues by creating a centralised repository for all incoming invoices from suppliers, by automating the retrieval of invoices, by streamlining the review and approval of invoices, and by providing the business with an efficient method for tracking any pending actions. Swipe reduces the amount of manual processing involved in managing and provides for better compliance management of GST.
Why managing IMS manually creates problems for businesses Although the use of the IMS can be beneficial, executing it may be difficult.
Business owners who have multiple vendors often get many invoices issued for the same monthly period. Manually checking these invoices to see whether the required actions have been completed on time, or keeping track of outstanding invoices, can be difficult for business owners.
Several common problems occur due to error-prone processes, such as missing invoices, forgetting pending action items, incorrect ITC property claims, and time-consuming reconciliation processes.
To alleviate these problems, a well-organised system such as Swipe is needed.
How IMS is done on a swipe (step-by-step process) Step 1: Log in and access the dashboard Start by logging into your account on Swipe
Instead of switching between systems, everything is available in one place.
Step 2: Automatic fetching of supplier invoices Swipe automatically pulls the supplier invoices uploaded in GSTR-1
This removes the need to manually check the GST portal and ensures that no invoice is missed.
Step 3: View structured invoice list All invoices are displayed with complete details such as supplier name, invoice number, amount, and tax breakdown.
This structured view makes it easier to identify which invoices need action.
Step 4: Verify invoice details Before taking any action, invoices must be verified.
Swipe simplifies this by clearly displaying all required information, allowing businesses to match it with their purchase records.
This step ensures that only accurate invoices are considered for ITC.
Step 5: Take action – accept, reject, or pending This is the core of IMS.
With Swipe, you can accept correct invoices, reject incorrect invoices, or keep invoices pending for later review.
This simplifies the decision-making process and ensures proper compliance.
Step 6: Add remarks for clarity If an invoice is rejected or kept pending, Swipe allows you to add remarks.
This improves internal tracking and ensures clarity during audits.
Step 7: Track pending invoices easily Pending invoices are often difficult to manage manually.
Swipe keeps them organised and visible, ensuring that businesses can revisit them and take action before deadlines.
Step 8: ITC reflection in returns Once invoices are accepted, they are considered for ITC and reflected in GSTR-2B.
These values are then used while filing GSTR-3B
Step 9: Continuous monitoring IMS is an ongoing process, as new invoices are generated regularly.
Swipe allows businesses to continuously monitor invoices, track actions, and maintain control over GST compliance without additional effort.
Benefits of using swipe for IMS Swipe for IMS application has multiple benefits. It facilitates tracking invoices quickly, minimising manual efforts, enhancing accuracy in ITC claims, decreasing compliance-related risks, and allowing for quicker decision-making processes.
This changes what has previously been a complex compliance requirement (IMS) into an easier-to-manage and streamlined process.
Conclusion A company must now verify its invoices before claiming ITC and do so proactively as opposed to correcting a mistake after-the-fact. Doing so can create greater accuracy in their records as well as create a greater need for more efficient systems.
Swipe helps with this whole process by organising invoices, making them visible and decreasing the error rate. This allows for IMS to be a practical, efficient and easily managed solution for companies.
FAQs What is IMS under GST? This is a facility introduced on the GST Portal that allows taxpayers to view, track, and take action on invoices uploaded by their suppliers.
How does Swipe help in IMS? With Swipe, businesses can quickly and easily track and verify invoices while also making decisions, giving businesses the ability to comply with GST legislation.
What happens if no action is taken on an invoice? Invoices are automatically deemed to have been deemed accepted, and thus the applicable input tax credit is priced into the invoice.
Can pending invoices be tracked on Swipe? Yes, Swipe tracks all pending invoices for timely decision-making, keeping the invoices in an orderly and visible fashion.
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