What is GST Reconciliation?
GST Reconciliation is a process through which a taxpayer comes to know about the discrepancy between his books of accounts and GST Returns. This is the meaning of GST reconciliation.
Moreover, with the help of GST Reconciliation, you can rectify the mismatches either by communicating with the supplier or doing changes in your own books of accounts.
In addition to this, you should carry out the GST Reconciliation process at regular intervals. This helps you to avoid any consequences and penalties that you may face due to mismatches. In case the mismatch amount is too high you can also face scrutiny from the tax authority.
Under the GST regime, we can claim ITC only if our suppliers have filed their GST returns. Now, checking the returns filed by supplies at invoice level on the GST portal is next to impossible. That is where you will need a GST Accounting Software, which can automatically check the returns filed by your suppliers and match them with purchase data as fed in your accounting software.
What are the types of GST Reconciliation
Here is the list of most common kind of reconciliation in GST that you must consider at the time of filing your GST Return:
● Inward supplies and GSTR 2A Reconciliation
● GSTR 3B and the GSTR 2A Reconciliation
● GSTR 3B and GSTR 1 Reconciliation
Any differences noticed between these returns will lead to a show cause notice from the GST authorities.
Mismatches under GST Reconciliation
Here are some of the important mismatches that you may encounter during GST Reconciliation
Mismatches in Invoice Details
There can be several mistakes in the furnished data between you and your supplier. Some of the common invoice details mismatches are wrong invoice number, invoice date or/and invoice value.
Mismatch in GSTIN
While doing GST Reconciliation this is the most common discrepancy. Sometimes due to human error, the supplier punches the wrong GSTIN. This may conflict while claiming ITC.
To read more regarding errors that you may face during GST Reconciliation you can read our article.
Why is GST Reconciliation Important?
There are various reasons why GST Reconciliation of GST Return is important for you. Let us discuss them in brief:
First and foremost importance of GST Reconciliation is to claim 100% accurate ITC. You can claim accurate ITC by sorting out all the discrepancy between your purchase register and GSTR 2A.
GST Reconciliation helps in avoiding duplicity at the time of filing Annual GST Return. However, to do this you need to reconcile all your monthly or quarterly GST Returns.
GST reconciliation helps in raising issues with invoices generated by your supplier, so to make necessary amendments to furnish errorless GST Return.
How to do GST Reconciliation?
You may refer to the following steps while reconciling your data:
To begin with, you should first reconcile within the GSTIN thoroughly.
After which you should reconcile the data furnished to the PAN India level.
Afterwards, you should consider doing supplier-wise GST Reconciliation; this will ensure that you avail any unclaimed ITC.
NOTE: In order to find out your ITC you have to compare your GSTR 2A with inward supplies.
You can also reconcile the data furnished in the E-way Bill and invoices. This will help you to raise a mismatch in the taxable amount to the supplier in case of any discrepancy.
The Bottom Line
Though reconciling the handful of data is a simple and easy task but the major challenge arises when there are thousands of data. GST Reconciliation of data not only requires a lot of time but also needs a significant number of human resources while doing it manually.
