IMS: your input tax credit now depends on a monthly click

Your accountant used to file GSTR-3B and the input tax credit number just appeared, pulled automatically from whatever your suppliers reported. That stopped being true from the October 2025 return period. GST input tax credit in GSTR-3B now depends on a monthly decision you make inside the Invoice Management System (IMS): Accept, Reject, or leave Pending, one invoice at a time.

If your agency runs mostly on the 5% no-ITC rate, it is tempting to assume this is someone else's compliance headache. It is not. The 18%-with-ITC lines you still bill, the reverse charge entries on certain purchases, and the credit notes a DMC issues when a departure cancels all still run through IMS, and all of them affect what your books actually owe.

This post walks through what changed, who it actually hits, and a short monthly routine that keeps it from becoming a year-end surprise.

Why your ITC now depends on a click, not a filing

Until September 2025, GSTR-2B (and through it, the ITC figure in GSTR-3B) built itself automatically from whatever your suppliers reported in their GSTR-1. From the October 2025 tax period onward, that auto-population stopped by default. ITC now depends on the action you take, or fail to take, inside IMS before you file GSTR-3B (TaxGuru).

IMS itself is not new. It went live on the GST portal from 1 October 2024, giving a recipient the ability to Accept, Reject or mark Pending each B2B invoice, credit note or debit note a supplier reports through GSTR-1, IFF or GSTR-1A, before that document flows into GSTR-2B (Masters India). What changed a year later is that this action stopped being a convenience and started being the gate. The legal basis cited in trade commentary is CBIC Notification No. 16/2025-Central Tax dated 17 September 2025, alongside CGST Notification No. 12/2025-Central Tax (20 August 2025) and GSTN Advisory No. 624 (23 September 2025); Section 38 of the CGST Act was reworded so the "auto-generated statement" that used to feed GSTR-3B became a manual "statement" instead (TaxGuru). These notification numbers are as reported by trade press, not pulled directly off a CBIC page, so confirm the exact citation with your CA before quoting it elsewhere.

One point stays genuinely open: whether an invoice you never touch is still "deemed accepted" and folds into your ITC anyway, the way IMS worked when it first launched, is disputed even in trade commentary. TaxGuru's own reader comments push back on the article's framing that ITC stops flowing without action. As of August 2026, confirm the live behaviour on the GST portal, or with your CA, before you assume silence is safe either way.

"I'm on 5% no-ITC, this isn't my problem": the trap

An agency billing packages under the 5% no-ITC rate can still carry real ITC exposure through three routes: 18%-with-ITC service lines, reverse charge purchases, and DMC credit notes. Skipping IMS because "we don't claim ITC" ignores all three.

Most tour operators do not run a single-rate business. A 5% no-ITC package invoice can sit next to an 18%-with-ITC visa facilitation fee or a corporate MICE line billed with full credit. Office overheads carry ITC too: rent, software subscriptions, and sub-agent commission invoices, all arriving through IMS same as anything else. Ignore the dashboard and you are not skipping compliance, you are quietly losing credit you were entitled to.

Then there is reverse charge. RCM inward supplies, reported in Table 4B of your supplier's GSTR-1, IFF or GSTR-1A, flow straight into GSTR-3B and are not routed through IMS for accept, reject or pending action (TaxGuru). That is worth knowing precisely because it means RCM is the one exception: you do not need to hunt for it in the IMS dashboard, but everything else does need checking there.

And DMC credit notes, the third route, are the one that actually costs money when missed. More on that below.

Accept, Reject, Pending: what each one actually does

Each action in IMS sends the invoice or credit note down a different path into your return, and the difference is not cosmetic. Accept pulls it into your available credit; Reject removes it entirely; Pending holds it back without deciding either way.

Action	Where it lands	Effect on ITC
Accept	GSTR-2B's eligible-ITC section	Auto-populates the available-ITC column in GSTR-3B
Reject	GSTR-2B's "ITC Rejected" bucket	Excluded from any ITC claim for that period
Pending	Held back	Does not hit GSTR-2B or GSTR-3B until you act

(Source: TaxGuru)

"Pending" is the option most operators reach for by default, because it feels like the safe, no-decision choice. It is not free. An invoice sitting in Pending earns you no credit that period, and if it sits there too long you risk running into the general time limit on claiming ITC under Section 16(4) of the CGST Act, which trade commentary treats as the practical ceiling on how long you can leave something undecided (Masters India). Nobody in the sources gives a firm IMS-specific number of months for this, so treat it as a deadline that exists, not one you can calendar precisely without your CA confirming your specific filing history.

The DMC credit note case: a departure that cancelled

Say a Ladakh departure cancels three weeks before travel and your DMC issues a credit note against the hotel and vehicle costs you had already been billed for. That credit note now sits in your IMS dashboard waiting for a decision, same as any inbound invoice, and how you handle it changes both your ITC and the DMC's own liability position.

If the credit note is correct and matches what you were actually refunded or owed, accept it. That reduces the ITC you had claimed on the original invoice, which is exactly right: you never ultimately paid for that hotel block, so you should not be holding credit against it.

If the credit note is wrong, overstated, understated, or for a departure the DMC has misidentified, reject it. A rejected credit note stays out of your ITC-reduction math and can also affect the DMC's own subsequent GSTR-3B and liability position, since their books now show a credit note that was not accepted on the other end (Masters India).

Careful: Leaving a disputed credit note sitting in Pending because you have not yet resolved the disagreement with the DMC feels neutral, but it is not. It delays the correction either way, and the same Section 16(4)-adjacent time pressure that applies to invoices applies here too. Resolve the dispute and act on the credit note in the same month you receive it wherever you can, rather than letting a season's worth of unresolved cancellations pile up.

The 20-minute monthly IMS routine

A monthly IMS check does not need to be a project. Run it once, between the 14th (when GSTR-2B generates) and your GSTR-3B filing date, and it stays a 20-minute task instead of a year-end scramble.

1. Log into the GST portal and open the IMS dashboard once GSTR-2B for the period has generated on the 14th.
2. Pull your own record of DMC, vendor and supplier invoices and credit notes received that month, whatever spreadsheet or ledger your agency keeps for this.
3. Match each IMS entry against your own record. Clean matches with correct amounts get Accepted.
4. Anything disputed, wrong-amount, or from a supplier you're chasing gets Rejected, with the reason logged somewhere you or your CA can find it later.
5. Anything genuinely unresolved (a DMC dispute still in conversation, an invoice you're waiting to verify) gets left Pending, but flagged with a date to revisit it, not left indefinitely.
6. Finish all of the above before you file GSTR-3B for that period. Once GSTR-3B is filed, no further IMS action is possible for that period's invoices (TaxGuru).

That last point is the one that turns "we'll get to it" into a real cost. The window closes the moment the return is filed, not at some later cleanup date.

What GSTR-9 for FY 2025-26 changes at year end

The annual return, GSTR-9, has historically been a chance to true up the year's ITC in one pass. For FY 2025-26, that changes: GSTR-9 auto-populates its ITC figures on an IMS basis under Notification 16/2025-Central Tax, so a year of invoices left Pending or ignored in IMS shows up as a genuine reconciliation gap at annual-return time, not a fresh slate you can fix retroactively (as reported, June 2026).

Treat this as the reason the monthly routine above matters more than it used to. A skipped month used to wash out at annual filing. Under the current mechanics, it does not. Confirm this specific point with your CA before FY 2025-26's annual filing season, since it turns directly on how much ITC your return shows as available, and the notification framework here is still relatively new.

What to do if you've never opened the IMS dashboard

If you have been letting your CA or accountant handle GST filings end to end and have genuinely never opened the IMS screen yourself, the backlog is recoverable, but treat it as a priority the next time GSTR-2B generates, not a someday task.

Log in and sort what has accumulated by amount and rate: an 18%-with-ITC vendor line worth ₹40,000 needs attention before a ₹2,000 line does. Work through the backlog with the same Accept, Reject, Pending logic above, oldest first. Anything tied to a period whose GSTR-3B is already filed cannot be actioned retroactively, that is a real, permanent loss on that invoice, not a scare tactic. Going forward, the fix is simply not letting a second month pass unchecked. If a GST notice does eventually surface over a mismatch, the response playbook is worth reading separately, but a clean monthly IMS habit is what keeps you from needing it. Pair this rhythm with your regular GSTR-1 and GSTR-3B filing routine, since IMS sits directly between the two.

Common questions

Is the Invoice Management System on GST mandatory?

There is no separate registration step, IMS is simply part of how GSTR-2B and GSTR-3B are now built for every registered taxpayer, so in that sense it is not optional to have. Whether you are required to actively act on every invoice, versus letting unactioned ones default a certain way, is the disputed point covered above. Treat acting on it monthly as mandatory in practice, whatever the technical default turns out to be, and confirm the current default behaviour with your CA.

Does IMS apply to reverse charge invoices?

No. RCM inward supplies reported in Table 4B of your supplier's return go straight into GSTR-3B without an accept, reject or pending step in IMS (TaxGuru). You still owe and pay that tax under reverse charge; you just will not find those specific entries waiting for a decision on the IMS screen.

What happens if I take no action on an invoice in IMS?

This is the one point sources genuinely disagree on. IMS's original 2024 design treated no action as "deemed accepted," folding the invoice into GSTR-2B automatically. Whether that default still holds for ITC auto-population after the October 2025 change is contested in trade commentary itself. Do not assume either answer. Check the live portal behaviour or ask your CA before relying on silence either way.

The short version

• From the October 2025 return period, ITC in GSTR-3B is built from what you Accept, Reject or leave Pending in IMS each month, not auto-filled the way it used to be.
• A mostly-5%-rate agency still carries real IMS exposure: 18%-with-ITC service lines, office overheads, and DMC credit notes for cancelled departures all run through it.
• Reverse charge (RCM) purchases are the one exception. They flow straight into GSTR-3B and skip the IMS accept/reject/pending step entirely.
• Accept adds the invoice to your available ITC. Reject excludes it. Pending holds it back until you decide, and holding it too long risks the general Section 16(4) time limit on claiming credit.
• A disputed DMC credit note for a cancelled departure needs an active decision, accept if it matches what you actually owe, reject if it doesn't. Sitting on it changes nothing in your favour.
• Once GSTR-3B for a period is filed, that period's invoices can no longer be actioned in IMS. Run the check before filing, not after.
• FY 2025-26's GSTR-9 pulls ITC figures from your IMS record under Notification 16/2025-Central Tax, so a year of unresolved Pending invoices becomes a year-end gap, not a clean-slate reconciliation. Confirm the current position with your CA.