Part availmement of ITC in case of rejection of supply

In IMS, you cannot directly reduce the value of an invoice. You must either Accept the invoice in IMS and reverse the rejected portion's ITC manually in GSTR-3B (Table 4(B)(2)), or keep the action Pending/Rejected in IMS while asking the supplier to issue a formal Credit Note.

In IMS, partial ITC acceptance is not possible at the invoice level. The system only allows three actions per invoice: accept, reject, or keep pending.

For rejection or shortage scenarios, here are the two compliant options:

Option 1 (accept and manually reverse in GSTR-3B):
Accept the invoice in IMS. Then manually reverse the rejected portion ITC in GSTR-3B Table 4(B)(2) for that month. This works when the adjustment is small and you do not want to involve the supplier.

Option 2 (pending + supplier credit note):
Keep the invoice pending in IMS and ask the supplier to issue a Credit Note under Section 34 of the CGST Act for the rejected quantity or short delivery. Once the credit note appears in your GSTR-2B, you can accept the net eligible ITC.

Option 2 is cleaner from an audit trail perspective because the credit note provides formal documentation for the rejection. Option 1 is faster but requires careful GSTR-3B reconciliation.

Avoid leaving invoices permanently pending in IMS without resolution. From FY 2026-27, perpetually pending invoices may get auto-accepted by the system after a defined period, removing your ability to reject them.

This [GST credit note and debit note guide](https://taxgarden.in/blog/gst-debit-note-credit-note-section-34-rules-india-2026) covers Section 34 procedure and timelines for issuing credit notes.