Major Updates in GSTN’s IMS You Must Know Before October 2025

Introduction: Why These IMS Updates Matter

The Goods and Services Tax Network (GSTN) is the backbone of India’s GST system. It powers the filing of returns, reconciliation of invoices, and the management of Input Tax Credit (ITC). To make compliance more seamless and taxpayer-friendly, the Invoice Management System (IMS) within the GSTN has undergone significant updates, which will be effective from the October 2025 tax period.

These updates have been introduced after extensive feedback from businesses and tax professionals. They aim to:

1. Simplify GST compliance

2. Reduce confusion in ITC reversals

3. Improve communication between buyers and suppliers

4. Provide flexibility to taxpayers dealing with large transaction volumes

If you are a business owner, CFO, or tax consultant, understanding these changes in advance will help you avoid compliance errors, reduce disputes, and streamline your GST processes.

What Is the Invoice Management System (IMS)?

Before diving into the new updates, let’s understand the basics.

The Invoice Management System (IMS) is an integrated feature in the GST portal that helps:

1. Track invoices, debit notes, and credit notes shared by suppliers

2. Reconcile them with your purchase records

3. Manage ITC claims efficiently

Essentially, IMS acts as a bridge between suppliers and buyers by displaying invoice data in GSTR-2B (for recipients) and ensuring that tax credits are claimed accurately.

With the new changes coming in October 2025, the IMS will become more flexible, transparent, and accurate, reducing compliance burdens.

Key Highlights of the October 2025 IMS Updates

GSTN has focused on three major areas for improvement:

1. Pending Action for Specified Records
   (Flexibility to defer action on certain invoices or notes)

2. Declaring ITC Reduction Amount
   (Precision in ITC reversals—no more guesswork)

3. Option to Save Remarks
   (Enhanced communication between buyers and suppliers)

Each of these updates has practical implications for businesses. Let’s break them down one by one.

1. Pending Action for Specified Records

What Has Changed

Previously, businesses were required to take immediate action on all records (invoices, debit notes, credit notes, etc.) communicated by suppliers. This caused challenges:

1. Companies with high transaction volumes struggled to review each record within the same tax period.

2. Errors often occurred when premature acceptance or rejection of documents took place.

3. Once action was taken, reversing it later became cumbersome.

To resolve these issues, GSTN now allows taxpayers to keep certain records in a “Pending” status for a limited period.

Who Can Use This Feature

• Monthly taxpayers: Can defer action for one month

• Quarterly taxpayers: Can defer action for one quarter

This provides much-needed breathing space to verify documents before finalizing them.

Records Eligible for Pending Action

Taxpayers can keep the following records pending:

1. Credit Notes or Upward Amendments of Credit Notes

2. Downward Amendments of Credit Notes, but only if the original credit note was rejected earlier

3. Downward Amendments of Invoices or Debit Notes, provided that:

   1. The original invoice was accepted, and

   2. GSTR-3B for that period has already been filed

4. Downward Amendments of ECO-Documents (E-Commerce Operator Records), provided that:

   1. The original document was accepted, and

   2. GSTR-3B has been filed

Important Timeline

The due date for keeping records pending is linked to the tax period or date in which the supplier communicated the document.

For example:

• If your supplier issues a credit note in August 2025 but you file monthly returns, you may choose to keep it pending only until your September 2025 return.

Benefits of the Pending Option

• Flexibility: Allows businesses to conduct internal verifications before acting.

• Reduced Errors: Minimizes mistakes caused by rushed accept/reject decisions.

• Better Reconciliation: Facilitates smoother invoice matching and ITC claims.

2. Declaring ITC Reduction Amount

Earlier Challenges

Earlier, businesses often had to reverse ITC without clear guidance on:

1. How much ITC was originally availed on a particular invoice

2. Whether any ITC was availed at all

This lack of clarity led to:

1. Over-reversals or under-reversals

2. Compliance disputes and audit issues

3. Additional financial burden for businesses

What’s New in October 2025

The IMS now includes a dedicated facility to declare the ITC reduction amount more accurately.

Key clarifications by GSTN:

1. If no ITC was availed on an invoice, no reversal is required.

2. If partial ITC was availed, only that portion needs to be reversed.

This feature introduces data-driven accuracy into ITC management.

How It Works

Businesses can now:

1. Declare the exact amount of ITC availed on each invoice.

2. Reverse ITC fully or partially as per actual availment.

3. Apply the feature even if a reversal was already made earlier.

4. Avoid reversals entirely if ITC was never claimed.

Example for Better Understanding

Let’s consider a real-world example.

1. A supplier issues an invoice of ₹1,00,000 with GST of ₹18,000.

2. The recipient avails only ₹10,000 of ITC (due to partial eligibility).

Earlier:
Reversal often applied to the entire ₹18,000, creating a mismatch.

Now:
Reversal will apply only to the ₹10,000 actually availed.

If no ITC was claimed, no reversal is needed.

Benefits for Businesses

• Reduced Compliance Burden: Pay only what is necessary.

• Lower Dispute Risk: Ensures audit-friendly documentation.

• Enhanced Transparency: Aligns ITC reversals with actual claims.

3. Option to Save Remarks

Why This Matters

Disputes and delays often arise due to lack of clarity between buyers and suppliers regarding why a record was kept pending or rejected.

New Feature in IMS

Taxpayers can now add optional remarks when taking action on records such as invoices, credit notes, or ECO-documents.

How It Works

1. While marking a record as Pending or Rejected, a taxpayer can add a brief remark.

2. This remark will be visible:

   1. To the recipient in GSTR-2B

   2. To the supplier in their Outward Supplies Dashboard

Benefits of Using Remarks

• Improved Transparency: Both parties can see the reason for action.

• Fewer Disputes: Suppliers get clear feedback and can act accordingly.

• Better Documentation: Creates an audit trail for future reference.

Example Scenario

Suppose a business marks a credit note as pending and adds the remark:

“Awaiting supplier confirmation on GST rate change.”

This remark alerts the supplier to review and resolve the issue promptly, reducing delays and confusion.

Applicability and Timeline of New Features

1. The new ITC declaration and reversal feature will be effective from the October 2025 tax period.

2. It will apply only to records filed by suppliers after the rollout date.

3. Older records filed before the rollout will remain unaffected.

Practical Steps Businesses Should Take

1. Review All Invoices and Credit Notes

Ensure that all documents received from suppliers are accurate and complete before acting in IMS.

2. Train Finance and Tax Teams

Teams should be well-versed in:

1. Using the Pending Action feature

2. Entering exact ITC amounts

3. Adding remarks effectively

3. Improve Communication with Suppliers

Leverage the new remarks feature to:

1. Flag discrepancies early

2. Speed up resolution of mismatches

3. Maintain strong vendor relationships

4. Maintain Proper Documentation

Ensure that all pending records, ITC declarations, and remarks are properly archived for:

• Internal audits

• Statutory audits

• Future reference

5. Consult Professionals if Needed

For businesses with large transaction volumes or complex ITC structures, consulting a GST expert can help ensure a smooth transition.

Benefits of the IMS Updates for Businesses

Key Takeaways

• Flexibility in Compliance: Pending action option reduces compliance pressure.

• Precision in ITC Reversals: Avoids unnecessary payments or disputes.

• Transparency and Communication: Remarks feature improves coordination between buyers and suppliers.

• Audit-Friendly System: Reduces risks during GST audits.

Conclusion: Embrace the Change for Better GST Compliance

The October 2025 IMS updates by GSTN mark a significant shift toward simplified, transparent, and accurate GST compliance. By adopting the new features proactively, businesses can:

1. Avoid last-minute compliance challenges

2. Minimize disputes and mismatches

3. Build better relationships with suppliers

4. Enhance overall operational efficiency

As India’s GST ecosystem continues to evolve, staying informed and compliant is key to hassle-free business operations. Start preparing now to leverage the full benefits of the IMS updates.