Major Changes in GST Invoice Management System (IMS) from October 2025 Tax Period

Major Changes in GST Invoice Management System (IMS) from October 2025 Tax Period

Issue: To simplify reporting, enhance reconciliation, and improve the management of Credit Notes and Input Tax Credit (ITC) reversal, the GST Network (GSTN) has introduced major updates to the Invoice Management System (IMS), effective from the October 2025 tax period.

Facts:

• The Invoice Management System (IMS) is the core module used by taxpayers for reporting their outward supplies (sales/GSTR-1 data).
• The changes are procedural and designed to address long-standing issues related to accurately reconciling Credit Notes and managing associated ITC liability reversals.
• These updates come into effect from the GST return filing cycle for the tax period of October 2025.

Decision:

The GSTN introduced key enhancements to the Invoice Management System (IMS) focused on providing greater flexibility in handling adjustments and credit notes, which is vital for maintaining an accurate Input Tax Credit chain.

Key TakeDowns:

• New ‘Pending’ Option for Credit Notes: A significant update allows taxpayers to record Credit Notes under a new status, likely ‘Pending’. This permits accurate reporting of the adjustment in sales even if the corresponding ITC reversal or final reconciliation by the recipient has not been completed, simplifying the supplier’s GSTR-1 filing.
• Declaration of ITC Reversal Amount: The system introduces a dedicated mechanism for taxpayers to clearly declare the reversal amount of Input Tax Credit (ITC) related to these Credit Notes. This ensures that the tax liability reduction is accurately reflected by the supplier and enables precise verification of the corresponding ITC reversal by the recipient.
• Effective Date: These changes are mandatory for all taxpayers and apply to the GST filing cycle corresponding to the tax period of October 2025.
• Enhanced Reconciliation: The update aims to reduce the common discrepancies faced by taxpayers in reconciling data between their sales returns (GSTR-1) and summary returns (GSTR-3B) by providing more accurate interim reporting options within the IMS.