Matching & Reconciliation under GST

What is reconciliation, why need Reconciliation, how to reconcile, how to reconcile Transitional  ITC, what are the major issues for reconcile, what are software for reconcile, what may be Mismatches for Reconcile


What is Matching & Reconciliation under GST?

Reconciliation under Goods & Services Tax (GST) meaning that matching the data entered by the supplier with those of the recipients they dealt with and recording of all the transactions that have taken place during that period with that corresponding Buyer. The reconciliation process ensures that no sales or purchases are omitted or wrongly reported in the GST returns. 

Reason of Mismatches:-

These are the Following Mismatches  that can be noticed by when Matching and Reconciliation exercises taken up:

  • Differences between the amount of credit shown in GSTR- 3B and the GSTR 2A or/and
  • Discrepancies between GSTR-3B and GSTR-1 or/and
  • Differences arises in the provisional credit claimed (temporarily)and actual credit (GSTR-3B)that is claimable. This situation arises usually during transition stages.

Point to be noted that:-

If there are any differences noticed between these returns then this will lead to scrutiny notices that may be issued by GST Department.

Major Causes:-

  • The vendor has declared liability but credit is not availed in GST returns: Such credits should be availed at the earlier of the due date of September month return of Next financial year or Annual return.
  • The vendor has not declared liability on supplies made but businesses have availed credit on such procurements in the GST returns: Businesses should follow up with the vendor to ensure that the liability is declared.  Otherwise, the Risk of such credits disallowed may arise due to such mismatch.
  • There might be a mismatch between liability declared by the vendor and credit availed. So there may be differences arose.
  • Mistakes in the details furnished: There can be a mismatch in the fields such as GSTIN of the supplier/recipient, number and date of the invoice/debit note, etc. 

The need for Gst Reconciliation:-

There can be the following two issues that are:-

  • Certain deadlines are stipulated in the GST laws for making amendments to GST returns data or to claim ITC. 

gst registration

Other Causes:-

 The Crucial  issues in regard to the Reconciliation under GST between GST returns are:

  • The invoice number that the purchaser has recorded does not match with the seller’s invoice received in 2A. Both follow a different convention.
  • The purchaser may work in multiple states, and the seller has raised an invoice with another GSTIN/HQ GSTIN instead of the actual purchaser GSTIN. In this case, it might not reflect completely at a GSTIN level.
  • The invoice date mentioned on the invoice by the purchaser doesn’t match with the seller as mentioned by them in their respective returns (GSTR-1/3B). Mostly purchaser at fault here as they should’ve entered the same date as in the Sales invoice.
  •  Differences arise maybe because the purchaser and supplier have been recorded invoices in different return periods of upcoming respective periods.
  • When invoice number and date do not match while only the invoice value matches between two parties.
  • There may be multiple invoices between a purchaser and supplier that may be written at the different values in respective records of buyer and seller. For eg;-

Buyer recorded at a lower value than Seller recorded invoice value

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