With the uploading of returns till completion of the audit process, assessees are required to keep pace with changing demands of authorities through GST common portal. While Filing returns, the taxpayer is required to reconcile the values of supplies and taxes paid to avoid issues in claiming ITC (Input tax credit) and filing an annual return. GST reconciliation requires rigorous matching of books of accounts with tax returns and finding values creating discrepancies.
Without reconciliation or default in reconciliation, the assessee might have to face legal consequences, In general, the taxpayer should reconcile all his values placed in the tax returns at both times i.e., before and after filling of returns. Also for reconciliation of GST errors, it is well expected to keep in touch with related vendors to indicate them to upload their returns with accurate information.
Some common errors found during GST Reconciliation:
- Mismatch of credit to be claimed as per GSTR 3B and GSTR 2A
- Differences in numbers of invoices/debit/credit note etc. placed in return.
- Usage of GSTIN of different business than actual entity filling return.
- Mismatch of Date of invoice/debit/credit note being added to subsequent month or previous as the case may be.
- Problems in rounding of values.
- The difference in the nomenclature of invoices (like Adv/01 by supplier and Adv01 by the taxpayer).
GST Reconciliation has always even been an automated task for the taxpayer as one can reconcile all values placed in different returns while filing an annual return showing automated values and pay additional liability if any. The taxpayer is only required to keep his vendors well informed of transactions held during the year to suffice compliance and claim ITC.
Way of Doing GST Reconciliation
In GST, the assessee can take the input credit of their taxes paid if the same has been updated in their GSTR 2A. If it is not there in GSTR 2A, they have to reverse the ITC and pay tax accordingly with interest. To avail ITC the taxpayer after reconciling values have to successfully file their annual return. Thus, for accuracy in reconciliation one must follow the below guidelines:
Step 1: Prepare an excel report of invoices and all related transactions from the books of accounts defining GST No, Invoice Numbers, Invoice Dates, Name of Party’s transacting, Taxable values, CGST, SGST, IGST.
Step 2: Download GST Returns (GSTR1, GSTR3B, GSTR2A, etc) from the common portal either in the PDF format or excel.
Step 3: Compare Values of Returns especially the date of invoices, invoice numbers, ITC Availed, ITC Claimed previously, ITC received, Ineligible ITC, Table of exports, Category of invoice (B2B, B2C, etc).
Step 4: Note and place the differences found in a separate column of your excel sheet in face of the transaction and intimate your vendor to upload invoices or make the necessary changes to his return if any.
Before submission of the final annual return, it is necessary to reconcile the uploaded values with those placed in GSTR 2A to avail ITC.
Also Read: Desk-based GST Audit
Why GST Reconciliation is necessary?
GST Reconciliation is necessary for the taxpayer to avail ITC, in case a taxpayer is found in default of claiming under or additional ITC the person concerned might have to face major tax consequences and interest penalties. One should reconcile his return values in order to :
- Claim ITC on taxes paid against purchases as updated by vendors in GSTR 2A.
- To avoid duplicacy or misreporting of values/invoices in returns which might attract tax penalties for the taxpayers.
- To ensure an audit of the taxpayer gets completed with no additional liability or penalty arising.
- To make necessary changes in returns or report additional liability of invoices before submission of the final annual return.
- To file all dues and pending returns, and change business state to GST exempted if no more liable to register under GST.
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