How to reclaim Inputs wrongly Rejected on IMS
The Invoice Matching System (IMS), recently integrated more tightly with GSTR filings, plays a critical role in facilitating accurate Input Tax Credit (ITC) claims and liability adjustments. However, inadvertent rejections of invoices, debit notes, credit notes, or e‑commerce operator (ECO) documents by recipients can result in complexities. On June 19, 2025, clarifications were issued to address practical challenges related to such cases. Below is a detailed explanation of how taxpayers—both suppliers and recipients—can handle these situations effectively.
1. Availing ITC on Wrongly Rejected Invoices/Debit Notes/ECO Documents
Issue:
What should a recipient do if they have mistakenly rejected a valid invoice or similar document on IMS, and they have already filed the corresponding GSTR-3B return for that tax period?
Clarification:
- The recipient should request the supplier to re-furnish the same document without any modification either:
- In GSTR-1A of the same return period, or
- In the amendment table of GSTR‑1/IFF of a subsequent tax period.
- Upon re-reporting, the recipient can:
- Accept the record on IMS,
- Recompute GSTR-2B on IMS,
- Avail the full ITC on the amended entry.
- The ITC will reflect only in the GSTR-2B of the tax period in which the document is again furnished by the supplier.
2. Impact on Supplier’s Liability in Case of Re-Reported Records
Issue:
What is the effect on the supplier’s liability if a document, originally filed in GSTR‑1/IFF, is rejected by the recipient and the supplier re-furnishes it later?
Clarification:
- If a recipient wrongly rejects a document, the supplier may notice this on the IMS dashboard or receive a direct request from the recipient.
- The supplier can re-furnish the same record unchanged in:
- GSTR-1A of the same period, or
- The amendment table of any future GSTR‑1/IFF, subject to the prescribed time limit.
- Since amendment tables operate on delta (difference) values, and the same value is being re-furnished:
- No additional liability will arise for the supplier.
- Hence, the net effect on liability remains neutral.
3. Reversing ITC on Wrongly Rejected Credit Notes
Issue:
If a recipient wrongly rejects a credit note and has already filed the GSTR-3B return, how should they reverse the ITC?
Clarification:
- The recipient should request the supplier to re-furnish the same credit note without changes in:
- GSTR-1A of the original tax period, or
- The amendment table of a subsequent GSTR‑1/IFF.
- After the supplier refiles:
- The recipient should accept the credit note on IMS.
- Recompute GSTR-2B, leading to automatic ITC reversal of the full credit note value.
- This ensures accurate ITC reversal, as the original CN was completely rejected earlier.
4. Supplier’s Liability on Re-Furnishing Rejected Credit Notes
Issue:
What happens to the supplier’s liability if a credit note is rejected by the recipient and is later re-reported by the supplier?
Clarification:
- Initially, due to recipient rejection of the credit note, the corresponding liability gets added back in the supplier’s open GSTR-3B.
- However, if the same CN is furnished again in:
- GSTR-1A of the same period, or
- Amendment tables of subsequent GSTR‑1/IFFs within the permitted time:
- Then the supplier’s liability gets reduced again to reflect the correct amount.
- Therefore, the net effect is a one-time adjustment, with no undue tax burden on the supplier.
These clarifications bring much-needed procedural transparency and flexibility to taxpayers facing challenges due to inadvertent rejections on IMS. The collaborative rectification mechanism through mutual communication between supplier and recipient, and re-reporting via GSTR-1A/amendment tables, ensures that the integrity of ITC claims and tax liabilities remains intact.