The GST Network (GSTN) has rolled out a much-awaited portal update in the Invoice Management System (IMS), providing greater flexibility in handling credit notes involving ineligible Input Tax Credit (ITC).
What has changed?
While accepting a credit note on the GST portal, taxpayers can now choose whether ITC should be reduced for the selected record(s):
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Yes – ITC will be reduced
(Default option, applicable where eligible ITC was availed) -
No – ITC will remain unchanged
(Useful where ITC was already reversed earlier or was never availed)
Why is this update important?
This update is particularly relevant in the following situations:
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Ineligible ITC credit notes, where the original invoice was accepted and ITC had already been reversed in earlier returns.
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Credit notes issued for non-ITC items or for adjustments made after ITC reversal.
Earlier, acceptance of credit notes automatically resulted in ITC reduction, often leading to double reversals, reconciliation mismatches and avoidable compliance issues.
Important clarification
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Where multiple records are selected, the chosen option applies collectively, unless records are handled separately.
Practical takeaway
This update brings operational clarity and reduces unnecessary ITC reversals, making credit note reconciliation under IMS more accurate and taxpayer-friendly.