At its October 8, 2026 meeting, the GST Council recommended linked changes to help taxpayers reconcile reported tax liability and input tax credit (ITC) across GST returns. The proposal includes ways to correct liability reported in GSTR-3B against supplier filings, and to correct ITC claimed in GSTR-3B against the credit shown in GSTR-2B. The Council recommended that the alternate mechanism may start with the April 2027 return, but this is a proposal—not a rule already in force—and it remains subject to consultation and possible changes.
What the 57th GST Council recommended
The Council’s recommendations connect the information reported by suppliers and recipients across existing returns and portal statements. The intended result is clearer reconciliation before a mismatch leads to a system-generated intimation or demand notice. The official announcement describes expected benefits, not measured results: it provides no estimate of how many notices may be avoided or how much taxpayers might save.
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- Enhancements to GSTR-1, GSTR-1A and the Invoice Furnishing Facility (IFF) to improve reconciliation with GSTR-3B.
- A proposed electronic statement of tax paid on reverse-charge supplies and ITC claimed, to support correct reporting of reverse-charge liability and related credit.
- A mechanism to correct or rectify liability reported in GSTR-3B so it aligns with GSTR-1, GSTR-1A or IFF.
- Changes involving the Invoice Management System (IMS), including recipient options to accept, reject or keep an inward-supply record pending for GSTR-2B generation, subject to conditions. The announcement includes a limit on how long a credit note may remain pending but does not set out the final detailed rules.
- A mechanism to correct or rectify ITC claimed in GSTR-3B so it aligns with ITC made available in GSTR-2B.
- A circular clarifying ITC reporting and reversal in light of IMS and the related electronic statements.
The announcement says the measures are intended to reduce mismatches in liability and ITC, demand notices and system-generated intimations, while improving ITC integrity across the supply chain. These are the Council’s expected effects, not quantified or independently verified outcomes. Read the Ministry of Finance announcement.
How the proposed changes address the two mismatch types
Liability reconciliation and ITC reconciliation are separate tracks. The source filings and the correction being proposed differ in each case.
#1 Best Overall
| Track | Information compared | Proposed correction |
|---|---|---|
| Output tax liability | Supplier outward-supply details in GSTR-1, GSTR-1A or IFF compared with liability in GSTR-3B | A GSTR-3B liability correction or rectification mechanism, alongside enhancements to the supplier-side forms and facility |
| Recipient ITC | ITC available in GSTR-2B compared with ITC claimed in GSTR-3B | A GSTR-3B ITC correction or rectification mechanism, with IMS-related changes and clarification on ITC reporting and reversal |
The proposed reverse-charge statement is an additional element: it is intended to help report reverse-charge tax paid and related ITC correctly. The announcement does not describe every operational step, eligibility condition or consequence of a correction. Those details should not be assumed until the mechanism is finalized.
When the reforms could start—and what is not final
The Council recommended that the alternate mechanism may commence with the return for April 2027. It also recommended a time-bound public consultation on the revised mechanism and authorized the Union Finance Minister to approve necessary changes based on stakeholder feedback. Accordingly, April 2027 is the recommended starting point, not confirmation that final rules will take effect on that date. Taxpayers should distinguish the recommendation from any later notification or portal implementation.
How the proposal relates to the existing IMS
IMS is already an optional facility on the GST Portal; it is distinct from the additional rule and correction mechanisms recommended in 2026. The GST Council’s November 2024 newsletter says IMS became available on October 14, 2024. Under the guidance described there, a recipient can accept, reject or leave pending invoices or records furnished by a supplier in GSTR-1, GSTR-1A or IFF. Recipient actions inform GSTR-2B, and actions may be changed—with GSTR-2B recomputed—until GSTR-3B is filed for the period.
The newsletter also notes that some records are not available for recipient action in IMS under the described guidance, including records where ITC is not eligible and reverse-charge supplies. The 2026 Council announcement recommends further IMS-related changes, including conditions for keeping records pending; it does not establish that every detail of those proposed changes is already available in the portal. See the GST Council’s November 2024 newsletter.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Why matching matters to taxpayers
Return matching helps taxpayers identify differences between what a supplier reports and what is reflected in the recipient’s credit statement or return. A GST Council background note from 2020 explains that comparing GSTR-1 with GSTR-3B can flag liability differences, while matching a purchase register to GSTR-2B can help identify invoices a supplier has not reported, so the recipient can follow up. That document gives historical context; it is not the final specification for the 2026 proposal. Read the GST Council’s 42nd-meeting background material.
For businesses and tax teams, the practical point is to keep the supplier-side and recipient-side checks distinct. A difference in outward-supply liability is not the same issue as a difference between ITC claimed and ITC available in GSTR-2B. The recommended mechanisms aim to provide correction paths for both, but the announcement does not say that reconciliation will become automatic or that every mismatch will disappear.
Quick Recap
What taxpayers should do for now
- Continue to follow the GST rules and filing processes currently in force; the Council’s announcement is a recommendation.
- Reconcile outward-supply reporting and GSTR-3B liability separately from purchase records, GSTR-2B and ITC claimed.
- Use existing IMS functionality where appropriate, following current portal guidance and the rules applicable to the relevant record.
- Watch for the consultation outcome, final rules and portal guidance before changing filing procedures based on the proposed April 2027 start.
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