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Since October 2024, the GST IMS layer sits between GSTR-1 filing and GSTR-2B generation. Unactioned invoices in IMS create ITC gaps that may not surface until GSTR-3B filing.
Compare purchase register invoices against IMS inbox. Classify each as accepted (flows to 2B), rejected (excluded from 2B), or pending (needs action). Cross-reference against GSTR-2B.
IMS action deadline before 14th of each month, GSTIN validation, invoice-level amount matching with tolerance ≤ ₹2, automatic acceptance rules for known suppliers.
IMS action queue, GSTR-2B gap analysis, ITC at risk from pending invoices, and supplier follow-up list for unactioned invoices.
A finance team at a mid-size manufacturing company processes roughly 400 inward invoices per month. Before October 2024, their reconciliation workflow was straightforward: match the purchase register to GSTR-2B, post the ITC in GSTR-3B. Since the GST Invoice Management System went live on October 14, 2024, that workflow has an additional layer that most teams have not yet built into their process — and the gap is producing DRC-01C notices.
What Is the GST Invoice Management System (IMS)
The Invoice Management System is a facility on the GST portal that allows registered taxpayers to review inward invoices uploaded by their suppliers before those invoices are auto-locked into GSTR-2B. It went live on October 14, 2024 as part of the GST Council’s effort to make ITC reconciliation more deliberate and reduce the volume of automated demand notices triggered by GSTR-3B vs GSTR-2B mismatches.
IMS is accessible through the GSTR-2B dashboard. The Inward Supplies statement now has two tabs: GSTR-2B (the locked static statement) and IMS (the actionable review layer). Every invoice that a supplier uploads in their GSTR-1 appears in IMS first — before it moves into GSTR-2B.
The practical significance: for FY 2025-26 and beyond, the ITC reconciliation process that stops at GSTR-2B is one step short of what the GST system actually requires.
How IMS Works: The Three Actions Explained
For each invoice visible in IMS, the recipient has three choices:
Accept: The invoice is confirmed and included in the current month’s GSTR-2B. ITC becomes available for that month’s GSTR-3B filing. Use Accept when the invoice exists in your purchase register, the GSTIN is correct, the amount matches, and the supply is eligible for ITC.
Reject: The invoice is excluded from GSTR-2B. The supplier sees the rejection in their GSTR-1 amendment workflow and is expected to file a credit note or amendment. Use Reject when the invoice does not exist in your purchase register, the amount is wrong, or the GSTIN is incorrect.
Keep Pending (default if no action taken): The invoice is deferred to the next month’s GSTR-2B generation cycle. The ITC is not available for the current month. Use Pending when the invoice is under dispute, when you have not yet received goods or services, or when you need more time to verify the invoice against your purchase register.
The action deadline is before the GSTR-3B filing date for that month — typically the 20th. Any Accept actions must be completed before 3B is filed for the ITC to appear in that month’s return.
How IMS Changes the Reconciliation Workflow
The old three-step process is no longer complete:
| Step | Old Workflow (Pre-October 2024) | New Workflow (Post-October 2024) |
|---|---|---|
| Step 1 | Export purchase register from ERP | Export purchase register from ERP |
| Step 2 | Download GSTR-2B from portal | Review IMS dashboard; Accept/Reject/Pending each invoice |
| Step 3 | Match purchase register to GSTR-2B; claim ITC in GSTR-3B | Download GSTR-2B (now reflecting IMS decisions) |
| Step 4 | — | Match purchase register to GSTR-2B; claim ITC in GSTR-3B |
The new Step 2 is the critical insertion. IMS decisions drive GSTR-2B values, which drive ITC in GSTR-3B, which determines whether a DRC-01C notice is triggered. Teams that skip IMS and rely only on GSTR-2B are not making the decisions — they are inheriting them by default.
IMS Reconciliation Scenarios: What to Do in Each Case
| Scenario | IMS Status | Purchase Register | Recommended IMS Action | Reason |
|---|---|---|---|---|
| Invoice in IMS, in purchase register, amounts match | Pending (default) | Yes | Accept | Eligible ITC; confirm it |
| Invoice in IMS, not in purchase register | Pending (default) | No | Reject | Supplier filed invoice you haven’t received |
| Invoice in purchase register, not in IMS | N/A | Yes | Follow up supplier | Supplier has not filed GSTR-1 yet |
| Amount in IMS differs from purchase register | Pending | Yes (different amount) | Reject | Supplier filed wrong amount; request amendment |
| Blocked credit under Section 17(5) appears in IMS | Pending | Yes | Accept (do not claim ITC) | Accept to prevent rollover; reverse in GSTR-3B with correct coding |
| Invoice under commercial dispute | Pending | Dispute | Keep Pending | Defers to next month; buys time to resolve |
Blocked ITC and IMS: The Section 17(5) Trap
Section 17(5) of the CGST Act lists supplies for which ITC cannot be claimed regardless of whether the invoice appears in GSTR-2B. Common examples include motor vehicles for personal use, food and beverages, health club memberships, and works contract services for immovable property construction.
The IMS trap: if you Reject a Section 17(5) invoice in IMS, the supplier sees the rejection and may file an amendment, creating unnecessary back-and-forth. The correct approach is to Accept the invoice in IMS (confirming the supply occurred) but not claim the ITC in GSTR-3B. The reversal is handled in Table 4 of GSTR-3B with the appropriate blocked credit code.
This distinction matters for the ITC reconciliation that feeds into your GSTR-2B reconciliation — the Accept count in IMS will exceed the ITC claimed in GSTR-3B, and that delta must be documented with Section 17(5) rationale to avoid scrutiny during GST audit.
IMS Deadlines and GSTR-3B: When to Act
The IMS action window for a given month runs from the 14th (when GSTR-2B is generated) to the 20th (GSTR-3B filing deadline for most taxpayers). This is a six-day window in most months.
For large organisations processing hundreds or thousands of inward invoices, reviewing each IMS entry individually within six days is not feasible without a structured matching process. The practical workflow is to run the purchase register vs IMS comparison first, auto-accept all matched invoices, flag mismatches for human review, and only then complete the IMS actions on the portal.
Organisations that file GSTR-3B under the QRMP scheme (quarterly filers) have a different IMS action cycle — the quarterly GSTR-3B filing date replaces the monthly deadline. However, IMS itself still generates on the 14th of each month.
Common IMS Mistakes That Create DRC-01C Notices
Claiming ITC in GSTR-3B before completing IMS actions: If you claim ITC from your purchase register without checking whether those invoices are in IMS, you may claim ITC on invoices that are still Pending (not yet in GSTR-2B). This creates a GSTR-3B vs GSTR-2B excess, triggering DRC-01C if the difference exceeds ₹1 lakh or 20% of GSTR-2B ITC, whichever is lower.
Accepting invoices that should be rejected: Accepting a wrong-amount invoice locks it into GSTR-2B. If you then claim ITC at the invoiced amount rather than the purchase register amount, the books show a different ITC than GSTR-2B, requiring reconciliation adjustment.
Ignoring Pending invoices from prior months: Invoices kept Pending in month N roll into month N+1’s GSTR-2B. Finance teams that do not track pending inventory find themselves with ITC appearing in GSTR-2B that they did not expect, which can distort the month’s reconciliation.
Missing the monthly IMS window: If GSTR-3B is filed before IMS actions are completed, the IMS decisions for that month are locked at whatever their current state is. This happens when 3B is filed early without coordinating with the IMS review step.
Structured GST reconciliation software that runs the purchase register vs IMS comparison before the GSTR-3B filing date eliminates most of these errors by surfacing the exceptions that require human decisions rather than requiring a manual line-by-line review.
For finance teams managing reconciliation across multiple GSTINs, the IMS layer compounds with each registration — each GSTIN has its own IMS dashboard with independent action deadlines. An automated reconciliation platform for India that handles multi-GSTIN IMS consolidation is the only practical way to manage this at volume.
Critical IMS Operational Rules
Three operational rules govern IMS behaviour that finance teams must build into their reconciliation SOPs. Violating any of these creates ITC exposure that is difficult to reverse.
Never reject an invoice — use Pending instead. Rejecting an invoice in IMS is a permanent action for that month’s cycle. Once rejected, the invoice is excluded from GSTR-2B and the supplier receives a rejection notification. If the rejection was made in error — the invoice was legitimate but the team could not verify it in time — recovering the ITC requires the supplier to file an amendment or re-upload the invoice in a subsequent GSTR-1. This creates a minimum one-month ITC delay and depends entirely on the supplier’s cooperation. The safer approach for any invoice where verification is incomplete is to mark it as Pending. Pending invoices roll forward to the next month’s GSTR-2B generation cycle, preserving the ability to accept and claim ITC once verification is complete. There is no penalty for keeping invoices in Pending status.
Credit notes have no Pending option. Unlike invoices, credit notes uploaded by suppliers in IMS offer only two actions: Accept or Reject. There is no Pending option. This means credit notes require immediate verification within the IMS action window. An accepted credit note reduces your ITC in GSTR-2B for that month. A rejected credit note leaves your ITC unchanged but notifies the supplier, who may escalate the dispute. Finance teams must prioritise credit note review in IMS because the binary choice does not allow deferral.
Deemed acceptance applies if no action is taken. Invoices left without any action in IMS are treated as deemed accepted and flow into GSTR-2B automatically. This default benefits compliant businesses with accurate supplier records — legitimate invoices do not require manual acceptance. However, for businesses with high invoice dispute rates or frequent supplier errors, the deemed acceptance default can pull incorrect invoices into GSTR-2B, creating ITC claims that must be reversed in GSTR-3B.
Two-level reconciliation requirement. IMS introduces a two-level ITC verification that did not exist before October 2024. Level one: reconcile books ITC (purchase register) against GSTR-2B values to confirm that the ITC claimed in GSTR-3B does not exceed what GSTR-2B allows. Level two: reconcile the resultant ITC figure against the IMS dashboard to verify that IMS actions (Accept, Reject, Pending) are consistent with the books position. A mismatch between IMS actions and the books — for example, an invoice accepted in IMS but not recorded in the purchase register — indicates either a booking delay or an erroneous acceptance that must be corrected before GSTR-3B is filed.
The full IMS reconciliation framework, including how GSTR-2B values feed into GSTR-3B ITC calculations, is documented on the GST portal under the GSTR-2B help section.