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.