Managing Rejected Invoices in the GST Invoice Management System

The GST portal's recently launched Invoice Management System (IMS) mandates that taxpayers respond to invoices by accepting, rejecting, or marking them as pending. Failure to act results in invoices being "deemed accepted," which can lead to inaccuracies in GSTR-2B data and subsequent compliance challenges. This article will clarify what a rejected invoice signifies within the IMS dashboard and outline the process for reviewing such invoices.

What Constitutes a Rejected Invoice in the IMS Dashboard?

Within the IMS, a rejected invoice is one that a recipient taxpayer has formally declined on the dashboard prior to the GSTR-2B generation. This rejection often stems from discrepancies between a purchase order and the invoice, or other reasons like a supplier's erroneous entry. If left uncorrected, rejected invoices can lead to increased tax liability for suppliers or understated Input Tax Credit (ITC) claims for buyers, as these invoices will not appear in GSTR-2B. Therefore, suppliers must monitor rejected invoices in their IMS dashboards and take appropriate corrective measures.

Steps to View Rejected Invoices in IMS

When a buyer rejects an inward invoice, the GST portal immediately updates this status in the supplier's IMS dashboard. Suppliers are then required to amend their GSTR-1 or use GSTR-1A and take other necessary actions to prevent excessive tax liability, penalties, and compliance issues. Similarly, buyers must track the invoices they have rejected and confirm whether suppliers have rectified their GSTR-1 or issued credit notes as needed.

Viewing Rejected Invoices: A Guide for Suppliers

1. Access the GST portal using your login credentials.
2. After logging in, go to the 'Services' tab, then 'Returns,' and select the 'Invoice Management System (IMS) Dashboard' option.

Services > Returns > Invoice Management System (IMS)

3. The IMS Dashboard displays two sections: 'Inward Supplies' and 'Outward Supplies.' Suppliers should navigate to the 'Outward Supplies' section to monitor actions (Accept, Reject, or Pending) taken by recipients on invoices they have issued. Click 'VIEW' in this section.
4. Choose the relevant financial year and GST return period for which you wish to inspect rejected invoices. For instance, to review October 2024 invoices, select '2024-25' as the financial year and 'October' as the return period, then click 'SEARCH'.
5. Two tabs will appear. The first allows you to see all Business-to-Business (B2B) supplies reported in GSTR-1/1A by standard taxpayers or through the Invoice Furnishing Facility (IFF) by those under the QRMP (Quarterly Returns with Monthly Payment) scheme. The second tab is for viewing invoices that have been rejected, where your tax liability has been re-added to GSTR-3B by the portal.
6. If you are a supplier checking rejected invoices before the 20th of any given month, use the 'Universal view of B2B supplies reported in GSTR-1/1A/IFF' tab. After the 20th, you should select the 'Rejected records (where liability added back in GSTR-3B)' tab. In this situation, any required adjustments can be made in the subsequent month's GSTR-1 filing.

Viewing Rejected Invoices: A Guide for Buyers

The initial two steps are identical for buyers.

1. Click 'VIEW' within the 'Inward Supplies' section. A pop-up will remind you about 'Deemed accepted' invoices for GSTR-2B generation; click 'OKAY' to proceed.
2. A summary of various inward invoice categories will be displayed. To access invoices you have rejected, select the 'B2B-Invoices' category. This action will open the 'IMS Dashboard (Inward Supplies) - B2B Invoices (with all status)' page, where you can also process invoices or modify previous actions.

Common Reasons for Invoice Rejection in IMS

Buyers may reject inward invoices for several reasons, including:

• Incorrect invoice details: This could involve errors in the invoice number, date, taxable value, or discrepancies in the GSTIN information of either the supplier or recipient.
• Tax rate or amount discrepancies: Instances where the supplier applied an incorrect GST rate or made calculation errors in the tax amount.
• Duplication: When an invoice has been erroneously processed twice within the GST portal.
• Timing errors: Invoices incorrectly raised for a different accounting period.

Illustrative Scenario of an IMS Rejected Invoice

Consider a scenario where a bakery orders 100 kg of flour from a retailer, delivered in four 25 kg packs. Pre-packaged food items of 25 kg or more attract 0% GST. However, the retailer mistakenly charged 5% GST on the invoice and uploaded it to the portal. The bakery accepted the flour delivery but rejected the invoice in the IMS, informing the supplier to amend their GSTR-1.

Consequences and Solutions for Incorrect IMS Actions

As per GSTN's advisory dated June 19, 2025, clarifications regarding incorrectly rejected documents are as follows:

• If a recipient mistakenly rejects a document in IMS and has already reported it in GSTR-3B, they can request the supplier to include the document in GSTR-1A for the same period or as an amendment in GSTR-1 for a subsequent period. This enables the recipient to accept the document accordingly.
• Regarding the supplier's impact from a rejected invoice, the aforementioned action will not increase their liability.
• Recipients can reverse Input Tax Credit (ITC) claimed by accepting a credit note issued by the supplier on IMS. Upon recomputation of GSTR-2B, the ITC will be reduced by the full amended value.
• For suppliers, if a credit note is rejected, their liability is initially re-added to the unsubmitted GSTR-3B. However, once the supplier reports the credit note in GSTR-1A for the same period or GSTR-1 for the next period, their liability will decrease proportionally.