GST invoices getting smarter from October: Here's what you need to know

According to a recent advisory issued by the GSTN, the changes are aimed at reducing disputes, lowering the compliance burden, and increasing transparency in the return filing process

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Businesses registered under the Goods and Services Tax (GST) will soon find it easier to manage their invoices and tax credits, as the government is planning to roll out significant changes to the Invoice Management System (IMS).

 

According to a recent advisory issued by the Goods and Services Tax Network (GSTN), the changes are aimed at reducing disputes, lowering the compliance burden, and increasing transparency in the return filing process. The new features will take effect from the October 2025 tax cycle.

What will change?

Under the new system, taxpayers will be able to:

 

Keep invoices pending: Instead of immediately accepting or rejecting credit/debit notes and amended records, businesses will be able to keep them pending for one tax period. This will allow taxpayers more time to verify the details before taking action.

 

Add remarks when rejecting or pending: If a business rejects an invoice or holds it pending, they will also be able to add a short explanation. These remarks will appear in both the buyer’s GSTR-2B and the supplier’s dashboard, helping suppliers correct errors and avoid disputes. 

 

Reverse only the ITC actually availed: If a business did not avail input tax credit (ITC) on an invoice/document, it does not need to reverse it. And if only part of the ITC was availed, then only that part will need to be reversed.

Why this matters

Officials believe these changes will help reduce the mismatch notices sent to taxpayers every year. According to media reports, nearly 200,000 notices involving about ₹10 trillion in disputes are generated annually due to mismatches in returns.

 

These updates will allow taxpayers to:

• Gain more flexibility and time, so they are not forced into decisions immediately
• Reduce errors and disputes by ensuring clarity through enhanced communication
• Ensure only valid invoices are counted for ITC, and provide tools to reverse or correct mistakes

The move reflects the government’s effort to fine-tune the GST system, making it fairer for taxpayers while improving compliance.

GST mismatch notices

Under GST compliance, businesses must deal with multiple data points, such as outward supply details in GSTR-1, inward supply details in GSTR-2A and GSTR-2B, distribution of input tax credit in GSTR-6, and the monthly return GSTR-3B, which records supplies and tax payments.

 

If there is any mismatch between the information reported across these forms, the tax authorities issue a mismatch notice, requiring the taxpayer to submit a clear explanation along with reconciliations.