India’s GST framework is entering its most transformative phase yet. From August 2025, businesses will have to adapt to a major change hard locking of outward liabilities details in GSTR 3B. This move signals the government’s readiness to implement its original plan from 2017–18: a system where tax returns are fully automated, linked to invoice-level data, and locked from manual edits.

The journey to this point has been gradual. Initially delayed due to technological complexity and vendor readiness, the GST Network (GSTN) has steadily evolved, stabilizing monthly return processes, phasing out provisional ITC, and most recently, introducing the Invoice Management System (IMS) for real-time, document-level control. Backed by Section 39 of the CGST Act and Rule 61 of the CGST Rules, the government is now taking the final step: auto-generated, locked GSTR-3B returns, with all corrections done only via GSTR-1A before submission.

What is the hard locking of outward liability details in GSTR 3B?

Under the new system, GSTR-3B will be automatically populated using data from GSTR-1 and GSTR-1A and once generated, these figures will be non-editable. Businesses will lose the option to make manual adjustments while filing. Instead, any mismatch or error in outward supplies must be fixed in advance via GSTR-1A.

For example:  if a buyer rejects an invoice or credit note through IMS, that rejection will directly change the seller’s liability. The only way to correct it is to amend GSTR-1 via GSTR-1A before the GSTR-3B filing deadline. Once the GSTR 3B is filed, no further changes will be allowed for that month.

Three Major Shifts Reshaping GST Compliance

1. IMS as a Real-Time Vendor Portal
   IMS has turned GSTN into more than a tax filing platform; it’s now a nationwide compliance network connecting suppliers, buyers, and tax authorities in one loop. Actions taken on invoices, debit notes, or credit notes are visible to all parties, creating immediate triggers for scrutiny if discrepancies arise.
2. Compliance Integrated into Finance Operations
   With IMS, GST accuracy is no longer just the tax team’s concern. AP and AR teams now share responsibility for validating transactions, managing rejections, and keeping supplier and customer records aligned. Outward liabilities from supplier angle and ITC claims from recipient angle.
3. Full-Scale Continuous Transaction Control (CTC)
   Earlier, CTC applied mostly to sales transactions via e-invoicing and e-waybills. Now, it covers purchases too with the help of IMS facility. Every transaction is monitored and validated in real time, making tax reporting the natural output of day-to-day transaction management.

Operational Impact for CFOs

Once liabilities in GSTR-3B are hard-locked, errors cannot be fixed later. Any mismatch with GSTR-1 must be resolved ahead of time via GSTR-1A. This means:

• Rejected invoices, debit notes, and credit notes must be reviewed and corrected promptly.\
• Ignoring rejections will result in overstated liabilities, leading to tax overpayment and locked working capital.
• Reliance on last-minute edits will no longer work — GSTR-1 and GSTR-1A become the single source of truth for tax declarations.

For recipient-side operations (AP teams):

• Generate automated Purchase Registers (PR) from ERP weekly or more frequently.
• Reconcile IMS data with PR regularly to catch mismatches early.
• Work with AP to act quickly on supplier invoices and credit notes.
• Use GSTN remarks for structured vendor communication.

For supplier-side operations (AR teams):

• Monitor IMS for customer rejections and remarks in near real time.
• Update Sales Registers (SR) promptly to reflect corrected positions.
• File amended invoices in GSTR-1A before the GSTR-3B deadline.

Why IMS Adoption Is Now Critical

As the GSTN tightens compliance, input tax credit hard-locking is also expected in the near future. Manual, non-integrated processes will no longer keep up. For businesses working with consultants, the expectation will be:

• Faster, more frequent reconciliations.
• ERP integration for real-time data updates.
• Close coordination between consultants and internal finance teams.
• SLAs that demand daily or weekly reconciliation cycles.

Without these, companies risk:

• Deemed acceptance of mismatches due to delayed IMS action.
• Overstated liabilities from unresolved customer rejections.
• DRC-01 notices for GSTR-2B vs GSTR-3B discrepancies.
• Blocked working capital from delayed ITC claims.
• Increased audit exposure.

The Risks of Not Acting

Buyer-side risks include:

• No regular PR updates from ERP, blocking IMS actions.
• Delayed IMS reconciliations leading to mismatches and DRC-01 notices.
• Failure to reject vendor credit notes in time, inflating ITC claims.
• Out-of-sync vendor master data, leading to acceptance of invalid invoices.

Seller-side risks include:

• Unmonitored customer rejections, overstating liabilities.
• AR delays in fixing rejections and missing GSTR-1A filing windows.
• Sales Register not updated to reflect customer rejections.
• Missing amendments before GSTR-3B filing, increasing audit exposure.

Not addressing these will cause repeated compliance failures, strained business relationships, and unnecessary cash flow blockages.

Readiness Checklist for CFOs

Before July 2025, ensure your business can confidently answer “yes” to:

• Are IMS vs PR reconciliations run regularly?
• Can invalid credit notes be auto-rejected in real time?
• Are GSTR-1 corrections filed in GSTR-1A before GSTR-3B every month?
• Is vendor master data fully aligned with GSTN records?

Building a Sustainable Compliance Model

Hard-locking means GST compliance must become a daily, embedded process, not a month-end rush. The sustainable approach is to merge technology, automation, and integrated workflows.

This includes:

• Automated, daily purchase registers through ERP integration to keep data current.
• Real-time IMS-ERP sync to catch mismatches and address rejections before they impact GSTR-3B.
• Immediate invalid credit note rejection to protect ITC and cash flow.
• Audit-ready records with document-level visibility to reduce notice risk.

By moving from reactive corrections to proactive compliance, businesses can stop GST notices at the source, safeguard working capital, and ensure their finance function is prepared for the future of real-time GST.

Streamline your GST Compliance with IRIS GST Software’s enhanced IMS integration

• Bulk Mode Filing for GSTR-1: Work for multiple GSTINs in one go. Designed to drastically enhance your efficiency and simplify return filing across entities.
• Smarter Reconciliation with Fuzzy Logic: New fuzzy matching capabilities intelligently matches invoices with varied formats, reducing mismatches and manual intervention. Enjoy faster, more accurate GSTR-2A/2B/IMS reconciliation.
• Proactive GSTR-2B Impact Flags: Easily identify which invoices in IMS will affect your upcoming GSTR-2B. With the “Current Month 2B?” flag, focus only on actionable items and reduce ITC loss due to delayed follow-ups.
• Auto-Generated HSN Summary & Document Details: Stay compliant with Phase III mandates. IRIS GST Software auto-generates the HSN Summary and Document Details from uploaded invoice data thus saving time and ensuring accuracy.
• GSTR-1A Amendments Made Easy: With Upcoming GSTR-3B now hard-locked, IRIS GST enables seamless invoice correction via GSTR-1A. Review recipient rejections, amend returns, and avoid interest or penalties, all from one platform.
• Vendor-Level Risk Insights: Spot high-risk vendors instantly using compliance scores and ITC risk indicators. Drill down into filing frequency, cancellation status, and e-invoice applicability to safeguard your ITC.