Between the 11th and 20th of every month, accounting teams across India reconcile inward supplies against data furnished by suppliers. Under the Invoice Management System made operational by the Goods and Services Tax Network (GSTN), recipients have the statutory mechanism to accept, reject, or mark pending each invoice uploaded by suppliers. If your accounts payable team marks an invoice as rejected without notifying the vendor, the supplier remains liable to pay the output tax on that invoice in their Form GSTR-3B. To understand the statutory effect of rejection, review our guide on IMS reject invoice in GSTR-2B consequence, and see the payment impact in IMS accept vs pending action supplier payment.
Statutory basis under Section 38 and Rule 60(7)
The authority to take action on inward invoices stems from Section 38 of the Central Goods and Services Tax (CGST) Act, as amended by the Finance Act, 2022. Section 38 provides that details of outward supplies furnished by registered suppliers are communicated to the recipient in an auto-generated statement, specifying which inward supplies are eligible for input tax credit and which supplies are restricted. You can verify the statutory provisions at Section 16 and Section 38, CGST Act.
Rule 60(7) of the CGST Rules, 2017 governs the compilation and generation of Form GSTR-2B. When a recipient takes action in IMS, the system uses those choices to compile the recipient dynamic GSTR-2B statement. Technical advisories on IMS actions and system behavior are documented in the GSTN IMS User Manual and FAQs and on the official GST Portal Returns Hub.
Common mistake: Marking an invoice as Rejected on IMS does not cancel the invoice in the supplier ERP or delete it from the GST portal. It merely excludes the tax amount from your GSTR-2B Table 4(A)(5). The supplier outward tax liability remains active in their Form GSTR-1 until they take corrective action.
Consequences on the supplier side after IMS action
Understanding what happens on the supplier portal dashboard explains why prompt communication is essential:
First, outward liability remains in Table 3.1. When a supplier files Form GSTR-1 by the 11th of the month, the outward tax liability auto-populates directly into Table 3.1(a) of their Form GSTR-3B. Rejection by the buyer in IMS does not automatically lower this figure.
Second, the supplier has a correction window via Form GSTR-1A. If the supplier is notified promptly, they can log into the GST portal before filing Form GSTR-3B and open Form GSTR-1A. In GSTR-1A, the supplier can amend the taxable value to zero, correct the GSTIN, or delete erroneous entries, which directly reduces their GSTR-3B liability for the current month.
Third, post-filing remedy requires a credit note. If the supplier files Form GSTR-3B without making corrections, they pay the output tax to the government. Their only subsequent remedy is to issue a formal credit note under Section 34 or file an amendment under Table 9 of their next GSTR-1.
Standard operating procedure for accounts payable teams
To avoid operational confusion, finance departments should follow this 5-step SOP every tax period:
Step 1 is matching on the 12th. As soon as suppliers complete monthly GSTR-1 filing on the 11th, run an automated reconciliation between your purchase ledger and the IMS inward supplies report.
Step 2 is categorizing discrepancies. Separate issues into two distinct buckets: genuine structural errors requiring Reject (wrong GSTIN, duplicate bill, unapproved supply) versus timing differences requiring Pending (goods in transit, quality testing).
Step 3 is recording actions in IMS. Mark the respective radio buttons in the IMS dashboard on the portal before the 14th of the month.
Step 4 is dispatching formal communication within 24 hours. For every rejected or pending record, send a structured email notice to the supplier accounts receivable contact specifying the exact invoice details, financial impact, and expected action.
Step 5 is tracking supplier resolution. Verify whether the supplier has filed Form GSTR-1A before 20th of the month. If the supplier provides proof of correction, update IMS action and recompute GSTR-2B.
When to choose Reject versus Pending
Applying the incorrect action in IMS disrupts both tax compliance and commercial vendor relationships:
| Scenario | Correct Action | Statutory Reason | Commercial Impact |
|---|---|---|---|
| Wrong buyer GSTIN entered | Reject | Not your inward supply under Section 16(2)(a). | Supplier must amend GSTIN via GSTR-1A. |
| Duplicate invoice uploaded | Reject | Prevents duplicate liability and double counting. | Supplier reduces liability in GSTR-1A. |
| Goods in transit on month-end | Pending | Section 16(2)(b) requires physical receipt of goods. | Payment released as per delivery terms; credit deferred. |
| Quality check or inspection hold | Pending | Material under testing; invoice may be partially accepted. | Commercial payment held partially until clearance. |
| Rate or calculation discrepancy | Reject or Pending | Pending if minor and note expected; Reject if completely disputed. | Supplier issues credit note or debit note. |
Worked arithmetic example for ₹50,000 wrong billing
Consider a practical case of an engineering manufacturing company in Pune (Recipient) and an industrial tool supplier in Ahmedabad (Supplier). On 10 October 2026, the supplier filed GSTR-1 including an invoice with an erroneous GSTIN and incorrect tax calculation.
| Particulars | Invoice In Books | Supplier GSTR-1 Upload | Variance / Error |
|---|---|---|---|
| Invoice Number | INV-2026-0482 | INV-2026-0482 | Matched |
| Invoice Date | 28 September 2026 | 28 September 2026 | Matched |
| Taxable Value | ₹2,50,000 | ₹3,00,000 | Excess ₹50,000 billed |
| IGST Rate | 18% | 18% | Matched |
| IGST Amount | ₹45,000 | ₹54,000 | Excess ₹9,000 tax charged |
| Total Invoice Value | ₹2,95,000 | ₹3,54,000 | Difference ₹59,000 |
Under the SOP, the recipient finance team executes four actions:
- On 13 October 2026, the recipient selects Reject on invoice INV-2026-0482 on the IMS portal. As a result, the entire ₹54,000 is excluded from the recipient GSTR-2B Table 4(A)(5).
- The recipient issues SOP Notice Template 1 to the supplier, explaining that the purchase order was for ₹2,50,000 and the invoice was billed at ₹3,00,000.
- On 15 October 2026, before filing GSTR-3B, the supplier opens Form GSTR-1A, amends the taxable value of INV-2026-0482 to ₹2,50,000 (IGST ₹45,000), and submits the return.
- The recipient changes the IMS status from Rejected to Accept on the amended record and clicks Recompute GSTR-2B, successfully claiming eligible ITC of ₹45,000 in their GSTR-3B.
Ready vendor communication email templates
Standardizing accounts payable communication eliminates back and forth emails between finance teams. Below are two field-tested templates for finance departments.
Template 1: formal notice of invoice rejection on IMS
Use this template when an invoice is rejected due to wrong GSTIN, duplicate billing, or fundamental commercial dispute:
Template 2: formal notice of invoice kept pending in IMS
Use this template when an invoice is legitimate, but input tax credit cannot be claimed in the current period due to goods in transit or pending quality inspections:
Related guides
- IMS pending invoices: supplier credit rating and GST impact
- IMS action on amended invoices: how supplier GSTR-1A changes reset your GSTR-2B
- GSTR-2B rejected invoices fix: how to resolve portal errors
- Why are my invoices stuck in IMS Pending, and what does it cost
Frequently asked questions
Does rejecting an invoice on IMS automatically cancel the supplier tax liability?
No. Rejecting an invoice on IMS removes the input tax credit from your GSTR-2B, but it does not reduce the supplier outward tax liability on the portal. The supplier must actively amend the invoice through Form GSTR-1A before filing GSTR-3B, or issue a credit note or Table 9 amendment in their subsequent GSTR-1.
What is the difference between Reject and Pending on IMS?
Reject is used when an invoice is permanently disputed, invalid, duplicate, or billed to the wrong GSTIN. Pending is used when the invoice is genuine but credit cannot yet be availed, such as when goods are still in transit under Section 16(2)(b) or undergoing internal quality inspection.
When must IMS actions be completed for current month GSTR-2B generation?
IMS actions should be taken before the cut-off date when GSTR-2B is generated on the 14th of the month. If you change actions after the 14th, you must click Recompute GSTR-2B on the portal before filing Form GSTR-3B.
Can a recipient change an IMS action from Rejected back to Accepted?
Yes. A recipient can change the action on any invoice in IMS from Rejected to Accepted or Pending, or click Reset, at any time before filing Form GSTR-3B for that tax period. Once Form GSTR-3B is filed, actions for that period become final.
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Last checked: 18 October 2026. Sources: Section 16 and Section 38, CGST Act, GSTN IMS User Manual and FAQs, GST Portal Returns Hub.