Direct Answer: In the GST Invoice Management System (IMS), you should Accept an invoice if goods/services are received, taxes match your purchase register, and all Section 16(2) conditions are met (this flows credit into GSTR-2B); mark it Pending if goods are still in transit, quality inspection is ongoing, or an internal query is unresolved (this withholds ITC for the current month without rejecting it permanently); and select Reject only if the invoice does not belong to your GSTIN, is a duplicate, or represents a fraudulent or cancelled transaction (which forces the supplier to correct or reverse it in their GSTR-1/1A).
If the invoice is stuck in IMS, our guide to IMS pending invoices explains what it costs and whose action clears it.
Taking the wrong action in IMS carries severe financial consequences. Marking a valid invoice "Pending" blocks your Input Tax Credit (ITC) for the current month, forcing an unnecessary cash outflow in GSTR-3B. Conversely, accepting an invoice with a wrong GSTIN or inflated tax amount exposes your business to automated Rule 88D (DRC-01C) recovery notices and 18% annual interest under Section 50(3).
This operational decision tree provides tax heads, accountants, and business owners with clear, unambiguous criteria for actioning every inward document on the GST portal.
The Core Decision Tree: Quick Action Flowchart
IMS Document Evaluation Logic
- Is the document genuinely issued to your GSTIN?
• NO: → REJECT immediately. Do not mark pending.
• YES: → Proceed to Question 2. - Have the underlying goods or services been physically received (Section 16(2)(b))?
• NO (Goods in transit / delayed milestone): → Mark PENDING.
• YES: → Proceed to Question 3. - Does the Taxable Value and Tax Amount match your purchase register?
• YES: → ACCEPT. (Flows into GSTR-2B automatically).
• NO (Supplier billed wrong amount): → See Section below on Valuation Disputes.
Detailed Comparison: The 3 IMS Statuses Explained
Per GSTN Advisory and CGST rules, here is how each action directly controls your return computation:
| Action Taken | Flow to GSTR-2B | Auto-Population in GSTR-3B | Supplier Impact | Recommended Use Case |
|---|---|---|---|---|
| No Action Taken | Yes (Deemed Accepted) | Yes (Table 4A) | No change to supplier return. | Clean, matched vendor invoices where physical goods are received and verified. |
| Accept | Yes (Confirmed) | Yes (Table 4A) | Locks transaction as agreed. | Explicit approval after matching with purchase ledger. |
| Pending | NO (Excluded) | NO (Credit Withheld) | Carried forward to next month's IMS ledger. | Goods in transit, unverified delivery, commercial quantity disputes under review. |
| Reject | NO (Zero Credit) | NO | Flags record in supplier GSTR-1A / GSTR-1 for amendment. | Wrong GSTIN, duplicate bill, cancelled purchase order, unauthorized billing. |
When Should You Mark an Invoice as "Pending"?
The "Pending" option is a temporary withholding mechanism designed to maintain strict compliance with statutory input conditions without forfeiting the credit permanently. Mark a document Pending under these specific circumstances:
- Goods in Transit on Month-End: The supplier billed on the 29th of September and filed their GSTR-1 on the 10th of October, but the consignment physically reaches your warehouse on the 14th of October. You cannot legally claim credit in September GSTR-3B under Section 16(2)(b). Marking it Pending carries the record forward to October.
- Quality Check (QC) or Inspection Incomplete: The shipment has arrived, but material testing is pending. If parts are defective, a debit note will be required. Hold the invoice in Pending until QC clears the GRN (Goods Receipt Note).
- Invoices Pending Management Approval: High-value professional fees or capital procurement bills where delivery milestones require sign-off from project leads.
Critical Warning: Never mark an invoice as Pending simply because you forgot to reconcile it. Every rupee placed in Pending reduces your auto-populated GSTR-2B credit by that exact amount. If you fail to recompute 2B before filing GSTR-3B, you must pay that difference in hard cash.
When Should You Mark an Invoice as "Reject"?
Rejection is a formal repudiation of the transaction on the common portal. Once rejected, the document is flagged back to the supplier to amend or cancel in their outward returns. Choose Reject ONLY when:
- Wrong Recipient GSTIN: The supplier made a clerical error and entered your 15-digit GSTIN instead of another client's. Accepting this constitutes fraudulent or erroneous ITC.
- Completely Cancelled or Fabricated Orders: The purchase was cancelled prior to dispatch, but the vendor inadvertently uploaded the draft invoice to the IRP / GSTR-1.
- Duplicate Invoices: The vendor uploaded the same invoice number twice with differing dates or tax amounts.
Note on Commercial Price Disputes: If a vendor charged ₹1,18,000 instead of the agreed ₹1,00,000, do not blindly Reject the invoice if goods were received. If you reject it, you forfeit all ITC until the supplier files an amendment. Instead, standard practice is to mark it Pending or Accept the undisputed portion while instructing the vendor to issue a credit note for the excess.
Special Rules for Credit Notes in IMS (GSTN Advisory No. 624)
Can you mark a supplier's Credit Note as "Pending"?
Under GSTN Advisory No. 624, the portal treats Credit Notes with strict asymmetric rules to prevent tax evasion. When a supplier issues a credit note, it reduces their output liability and reduces your eligible ITC. If recipients were allowed to keep credit notes "Pending" indefinitely, government revenue would suffer.
Therefore, a credit note can only be kept Pending for one tax period. If no further action is taken, the system automatically treats the credit note as accepted, reducing your ITC in GSTR-2B. If you disagree with a vendor credit note (e.g., they issued an unjustified debit to your account), you must formally Reject the credit note so the supplier is notified to correct it.
Worked Financial Scenario: The Cost of Improper IMS Toggling
Consider an electronics distributor in Bengaluru reviewing their monthly purchases:
- Total Inward Invoices in IMS: ₹1,20,00,000 | Total GST: ₹21,60,000
- Invoice A (₹40,00,000 + ₹7,20,000 GST): Consignment received on 4th October. Due to audit fear, the junior accountant marks it Pending.
- Invoice B (₹5,00,000 + ₹90,000 GST): Clerical typo in rate (billed 18% instead of 12%). The accountant marks it Rejected.
Outcome on 14th October GSTR-2B:
- Auto-generated GSTR-2B ITC: ₹21,60,000 − ₹7,20,000 (Pending) − ₹90,000 (Rejected) = ₹13,50,000.
- The firm's monthly output GST liability is ₹20,00,000.
- Net Cash Tax Payment Required: ₹20,00,000 − ₹13,50,000 = ₹6,50,000.
- If Invoice A had been cleared (goods arrived before GSTR-3B filing and status updated to Accept + Recompute), net cash payout would have been only ₹6,50,000 − ₹7,20,000 = ₹0 (with ₹70,000 surplus credit).
That misclassification in IMS cost the business an immediate working capital drain of ₹6,50,000 in cash.
5-Step SOP for Monthly IMS Review
- Step 1: Export IMS Inward Records between the 11th and 13th of every month after suppliers complete GSTR-1 filings.
- Step 2: Match Against Purchase Ledger: Run an automated reconciliation against your internal accounts books using gstr2bmatch.in to isolate missing bills, value mismatches, and unfamiliar GSTINs.
- Step 3: Execute Portal Actions: On the GST Portal IMS dashboard, mark confirmed bills as Accepted, verified transit shipments as Pending, and bogus/wrong bills as Rejected.
- Step 4: Recompute GSTR-2B: If you altered any Pending or Rejected items, you must hit the "Recompute GSTR-2B" button on your dashboard.
- Step 5: Verify GSTR-3B Table 4A: Confirm that the final auto-populated figure matches your reconciled eligible credit before clicking proceed to payment.
Pre-Classify Your IMS Records Without Uploading to Cloud
Manual checking across 200+ vendor lines on the GST portal is slow and prone to accidental clicks. Run your purchase register through our client-side matcher to instantly identify exactly which bills are safe to Accept and which belong in Pending.
Reconcile Now →Frequently Asked Questions
What happens if I take no action at all on an invoice in IMS?
By default, any document where no explicit action is taken is deemed to be Accepted when GSTR-2B is generated on the 14th of the month. It automatically populates into Table 4A of GSTR-3B as eligible ITC.
Can I change my action in IMS after saving?
Yes. You can modify your action (e.g., change from Pending to Accept or Accept to Reject) anytime until you file GSTR-3B for that tax period. However, remember to click "Recompute GSTR-2B" after making status adjustments.
Does rejecting an invoice automatically delete it from my supplier's GSTR-1?
No. Rejection notifies the supplier on their portal dashboard and unlocks the document in their GSTR-1A / next GSTR-1 for amendment or cancellation. It removes the tax credit from your GSTR-2B immediately.
Related guides
- IMS pending invoices: why invoices get stuck in IMS Pending and what it costs
- IMS credit note pending: whether credit notes can be kept pending
- DRC-01C reply: how to reply to the ITC mismatch notice