Wrongly Rejected Invoices on IMS? Here’s How to Reclaim Input Tax Credit

1. What is the Invoice Management System (IMS)?

The Invoice Management System (IMS) was introduced by GSTN from 1 October 2024 to improve ITC matching between suppliers and recipients. It allows taxpayers to view, accept, reject, or keep pending invoices, debit notes, and credit notes uploaded by suppliers in their GSTR-1 or IFF. IMS then populates GSTR-2B accordingly, which in turn influences ITC claims in GSTR-3B.

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2. Common Errors and Rejections in IMS

Many taxpayers have accidentally rejected documents in IMS due to clerical errors or misunderstanding of document details. Common errors include:

• Wrongly rejected invoices from regular vendors
• Mistaken rejection of debit notes or e-commerce operator (ECO) documents
• Rejected credit notes that should have been accepted to adjust ITC Such rejections can result in mismatches, reduced ITC, and tax liability disputes.

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3. GSTN’s Clarification on Wrongly Rejected Documents

GSTN, via its July 2025 advisory, issued key clarifications:

• Wrongly rejected invoice/debit note: The recipient should ask the supplier to re-upload the same document (without changes) in GSTR-1A of the same period or amendment table of any subsequent GSTR-1/IFF.
• Recipient Action: Once re-reported, the recipient must re-accept the document in IMS and recompute GSTR-2B. Full ITC can then be claimed.
• Impact on supplier: No increase in tax liability since amendments are neutral in delta terms.
• Credit notes: If wrongly rejected, supplier must re-upload via GSTR-1A/amendment. Once accepted in IMS, ITC will be reduced appropriately.

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4. Recomputing GSTR-2B: The Right Way

After the document is correctly re-reported and accepted in IMS, the taxpayer needs to refresh their GSTR-2B. This can be done using the ‘Recompute GSTR-2B’ feature on the portal. Once recomputed:

• The updated ITC will reflect in the next GSTR-3B period
• The taxpayer can now safely claim or reverse ITC as required

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5. Best Practices to Prevent Errors

To avoid future rejection issues:

• Always verify supplier GSTIN, document number, and date before rejecting
• Coordinate with vendors before rejecting invoices or credit notes
• Maintain internal checks before submitting actions in IMS
• Avoid last-minute processing to reduce the risk of human errors

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6. FAQs

Q1. Can a rejected invoice be restored without supplier action?
No. The supplier must re-upload the document for the recipient to re-accept it.

Q2. Will the supplier’s liability change if they re-upload a rejected invoice?
No. Since it’s the same invoice, the amendment has a neutral impact on their tax liability.

Q3. Can credit notes also be reversed similarly?
Yes. Once the supplier re-uploads and the recipient accepts the CN, ITC gets correctly reduced.

Q4. Is there a deadline for correcting such rejections?
Ideally, before the due date of filing the next GSTR-3B. Early correction helps avoid compliance risks.