In a Goods & Services Tax (GST) environment, Input Tax Credit (ITC) is an important advantage that avoids "double taxation" and positively affects a business's cash flow. ITC lets companies reduce the GST they paid when they made purchases against the GST they owe on those purchases to determine if they either owe tax or are entitled to a refund (or backlog) of GST already paid. Therefore, ITC reduces tax liabilities and keeps working capital in the business longer that would have otherwise gone to tax. No one expects to get something for nothing, and just like any other benefit, the ability to claim full ITC is not automatic. Businesses must reconcile hundreds or thousands of purchase invoices submitted to them by vendors with the GST filings based on their purchases and sales tax output obligations. Having thousands of purchase invoices makes this process tedious but not impossible. Any mismatches, supplied invoices that are not in the filing, missing invoices, incorrectly filed donation invoices, or other incorrect information can result in denied credits, legal notices, penalties, and cash flow disruption. In practice, unmatched invoices or a vendor delay may result in valid credits being forfeited, and contingent liabilities related to fraudulent or duplicate invoices may trigger an expensive or painful GST audit. To avoid this, businesses need to ensure that all eligible invoices received are tracked to verify when submitting GST return filing services.
Having organized records is the key to ITC. A missing purchase invoice or an error clearly jeopardises a business’s credit. Alas, far too many taxpayers continue to use manual matching against spreadsheets or ad hoc processes. This is blind-matching, and it puts taxpayers in a very vulnerable position to miss under- or over-reporting a purchase or a transaction across multiple purchase registers and GSTR-1, with respect to the auto-populated GSTR-2B. Over time and by the time the taxpayer receives notice from an audit, they may identify $1000’s in credits that they missed and could not claim, or credits that the ATO may challenge. The recipient must ensure they are reconciling and claiming their ITC in the Act timeframes, or they risk forfeiture of their credit under s16 of the CGST Act.
What is the Invoice Management System (IMS)?
To address these challenges, GSTN launched the Invoice Management System (IMS) on 1st October 2024. IMS works as a filter between suppliers' GSTR-1 uploads and a buyer's GSTR-2B credits. Every invoice documented and reported by a vendor is available for the recipient to see on their IMS dashboard. The recipient receives the ability to accept, reject or leave an invoice pending. The only eligible ITC recorded automatically in GSTR-2B IMS will be the invoices that the buyer accepted. (If the recipient takes no action as of the next filing date, the invoice will be assumed to be accepted.) In effect, IMS will allow the taxpayers real-time control to check the legitimacy and accuracy of each invoice. The official GST advisory stated "this is a big upgrade in the ITC ecosystem" since "only the accepted invoices by the recipients would become part of their GSTR-2B as their eligible ITC."
Industry experts clarify that IMS “is a filtering layer between the vendor’s uploaded invoices (GSTR-1) and the taxpayer’s eligible input tax credits (GSTR-2B)”. This helps to simplify reconciliation and increase ITC claims. Companies can catch wrong or duplicate invoices, and fix with suppliers instead of surfacing later when filing a return or dealing with an audit. One commentary notes that IMS “reduces errors, reduces manual reconciliation, and enables compliance with GST law”. In conclusion, IMS aims to eliminate the “deemed acceptance” of false invoices and reduce the risk of tax notices.
How IMS ensures ITC accuracy
The Invoice Management System (IMS) solution is an intelligent automation layer for ITC reconciliation that builds on the official portal. It assembles the supplier invoices (i.e., from GSTR-1/IFF filings) and matches them to your purchases (i.e., ERP or accounting data) and GSTR-2B in real time. This auto-matching process means that your business can easily identify any gaps. For example, GSTHero's IMS can reconcile GSTR-2B data to the company's ERP purchases, "wrapping up the activity of accepting & rejecting invoices much faster." If an invoice in GSTR-2B has no corresponding purchase in your books, or vice versa, it shows as a discrepancy.
IMS Software automation tools and workflows can dramatically speed reconciliation processes. GSTHero IMS identifies fraud through AI and matching algorithms, which validate an invoice before filing. GSTHero's IMS provides bulk action workflows, allowing teams to either accept or reject thousands of invoices with the push of a button. This rapid processing time (the team emphasizes under 11 Minutes to process an invoice) eliminates hours of manual labour. Fast processing equates to Instant supplier communication. If there are discrepancies, you can immediately email a vendor directly from GSTHero IMS to rectify issues. Internally, the IMS captures a complete audit log of everything with timestamps attached to every accept/reject decision, making compliance and audit purposes easier.
Unique features of GSTHero’s IMS
Beyond the basic IMS functions, GSTHero has added several specialized features to maximize ITC claims and compliance:
AI-powered Validation: The system uses intelligent checks to flag risky invoices before filing. For instance, it will alert you to invoices with unusual tax rates or amounts so you can verify them. This AI-powered validation ensures you only accept genuine invoices, providing an audit-ready trail. As GSTHero notes, this helps clients “avoid GST audits & financial penalties” by catching issues early.
Fuzzy Matching Capability: Small discrepancies (e.g., in invoice numbers or vendor names) often block credit. GSTHero’s fuzzy logic engine matches invoices with slight variations, so you don’t lose ITC over trivial typos.
Cloud Access & Multi-User: Because it’s cloud-based, your team can access IMS from anywhere. Multiple users can work in parallel, with role-based permissions, so finance, procurement, and tax teams collaborate seamlessly.
ERP/Accounting Integration: The solution is integration-ready for 100+ ERP systems, including SAP, Oracle, Microsoft Dynamics, Tally, and many more. GSTHero provides connectors (e.g., Tally and SAP connectors) so that purchase data flows automatically into IMS. This means your invoices and records sync in real time no manual exports.
Bulk Action Workflows: As mentioned, you can process thousands of invoices in minutes, making it ideal for high-volume businesses.
Detailed Reporting & Dashboards: After reconciliation, GSTHero IMS generates smart reports. You get a Real-Time ITC Health Dashboard showing total eligible ITC, pending invoices, and vendor compliance gaps. Post-reconciliation, you can pull vendor-wise or month-wise reports of accepted/rejected invoices. These reports make your claims audit-ready and simplify any needed follow-up.
Taken together, these features ensure you capture all legitimate ITC. In fact, customers report dramatic results. One large FMCG CFO said, “GSTHero helped us reduce ITC mismatches by 90%.” Another tax head at a leading IT company noted that “before GSTHero, our ITC tracking was chaotic. Now, we get full visibility into our invoices in one dashboard”. In both cases, the automation and accuracy of IMS translated to real cost savings and peace of mind.
Advantages of IMS in GST: Compliance Benefits and Easy Integration
Using GSTHero IMS is not just about saving time; it also strengthens compliance. The solution is ISO-27001 certified and built by a government-authorized GST Suvidha Provider (GSP), so data security and GST law adherence are assured. Because every step (from matching logic to final approval) is logged, the system leaves no ambiguity for auditors. You can quickly produce ITC reconciliation snapshots for any past month, vendor, or GSTIN. The AI validation and tolerance settings further reduce errors, meaning “wrongful ITC claim,” which can trigger penalties, and are minimized. In short, GSTHero’s IMS helps businesses prove that their ITC was carefully reviewed.
From an IMS integration standpoint, GSTHero made it easy to plug IMS into existing accounting environments. The product page notes “Integration Ready with 100+ ERPs (including SAP, Oracle, MS, Tally, and many more)”. Whether your books are in Oracle Financials, Microsoft Dynamics, or even a simple Tally setup, GSTHero provides connectors so that invoice and purchase data flows without manual imports. This tight integration means the IMS is always working with up-to-date figures, and any changes in your ERP (like a cleared invoice) instantly reflect in the dashboard.
Real-World Scenario: Catching Missed Credits
Think about a small to medium-sized manufacturer that processed 5,000 purchase invoices a month. In the past, the accounts team would download GSTR-2B and spend hours matching it against their ERP sales register. Many invoices were missing, vendors had delayed filing, or possibly changed returns, and new invoices were produced. By the time the firm had to file the returns, the accounts team had little time left to chase after vendors and ultimately lost out on much of their ITC - often, thousands of rupees! After using GSTHero IMS, all of the incoming invoices with a PO were funneled directly into the IMS dashboard. The incoming invoice was flagged because it was pending the supplier acceptance (the team's existing purchase order invoice didn't match the supplier's invoice). The manager was able to click "notify supplier" from the platform as they have templated versions for emails. Within days, if not hours, the supplier reissued an updated invoice and the firm accepted it! By the quarter's end, the firm had claimed Tax almost 100% of their eligible ITC (before, they routinely lost ~5%). The auto-reports even helped defend the ITC positions during an audit and no OCR notices were received.
Conclusion and Call to Action
By streamlining invoice reconciliation, Invoice Management Systems ensure businesses leave no money on the table when it comes to Input Tax Credit. GSTHero’s IMS solution, with its advanced matching algorithms and deep ERP integration, helps companies maximize their ITC claims accurately and compliantly. The platform not only automates tedious tasks, but also builds a robust audit trail so you can stand behind every credit claimed.
GSTHero is Now Rebranding to COVORO
As we continue to innovate and bring smarter tax compliance solutions to businesses, we are excited to share that GSTHero is rebranding to COVORO. This new identity reflects our expanded vision beyond GST, focusing on end-to-end compliance automation, AI-driven insights, and global invoicing solutions. While the name is changing, our commitment to accuracy, reliability, and customer-first service remains the same. With COVORO, you can expect even more powerful tools to streamline tax workflows and maximize compliance benefits.