The GST Network (GSTN) has introduced a much-awaited update on the GST portal to provide improved flexibility in handling credit notes through the Invoice Management System (IMS), particularly in cases involving ineligible Input Tax Credit (ITC). As per the updated functionality, while accepting a credit note on the portal, taxpayers can now choose whether ITC needs to be reduced for the selected record(s). The option “Yes” results in reduction of ITC and continues to remain the default choice, whereas selecting “No” ensures that ITC remains unchanged. This facility is especially useful in situations where ITC had already been reversed in earlier returns or where ITC was never availed. The change addresses a key practical issue faced by taxpayers earlier, wherein acceptance of credit notes automatically led to ITC reduction, even in cases involving ineligible ITC or post-reversal adjustments. Such automatic reductions often resulted in double reversal of ITC, mismatches in records, and avoidable reconciliation efforts. With this enhancement, taxpayers can now accurately reflect the correct ITC position while accepting credit notes. It is further clarified that where multiple records are accepted together using the checkbox option, the selected response will apply uniformly to all such records, unless individual records are processed separately. This update is expected to bring greater accuracy and ease in GST compliance.
Source from: https://a2ztaxcorp.net/wp-content/uploads/2025/12/GSTN-20.12.2025.pdf
