GSTR reconciliation: Meaning, Process, Tips and more for you

GSTR reconciliation means comparing two sets of data. Besides, it needs to match across all GST returns. This is where GSTR reconciliation becomes important.

Do you know that many businesses get GST notices because their data doesn’t match?

Yes, you are reading this right.  You can avoid these issues by doing a proper GSTR reconciliation. This blog is your ultimate guide to know everything about GSTR reconciliation. Let’s dive in and learn together.

What is GST?

Before telling you all about GSTR reconciliation, you need to know what GST is.

In simple words, GST is the Goods and Services Tax.

 This indirect tax has replaced many direct taxes in India. It includes VAT, service tax, and excise duty.  On 29th March 2017, it was passed in the parliament. From 1st July 2017, it came into effect

• Goods and Services Tax is levied on the supply of goods and services
• GST is multi-stage
• It is comprehensive
• This is a destination-based tax
• It is a domestic tax law
• GST applies to the entire of India

What does GSTR reconciliation refer to?

To answer your question, what is GSTR reconciliation, I need to tell you this.

To make it simpler for you:

1. GSTR reconciliation refers to comparing two sets of data entries
2. It helps in identifying any differences
3. It is done to correct the unintentional errors
4. This helps in addressing omissions

In the case of tax, GSTR reconciliation is essential.

It gives rise to short-paid or not paid taxes.

From this, you can also understand the taxes you have paid in excess.

Why do you need GSTR reconciliation?

There are many reasons as to why you need to opt for GSTR reconciliation. These are listed below for you:  As a taxpayer, you can claiman  ITC invoice as a part of your GSTR 2B. That’s why you need to do a GSTR reconciliation. If your data does not match as per the purchase register and GSTR 2B

Here you need to remember this:

• The introduction of the static return form GSTR 2B
• As a result, the monthly return has moved to GSTR 2B from GSTR 2A
• For the yearly reconciliation, GSTR 2A
• You need to refer to GSTR 2A for TDS and TCS credits
• You can file GST returns monthly or quarterly.  Once the financial year (FY) is over, you need to file an annual return. Remember to do this before 31st December in that FY.
• Ensure the correctness of the declaration
• This helps you avoid duplication
• You need to reconcile the data
• After this, you can consolidate the values and make the declaration

If you have reached so far, I know what you are probably thinking. Is there any deadline for this, right?

Let me tell you:

• There are certain deadlines in the GST law
• It applies to GST returns data or to claim ITC
• As the CGST Act states, to take actions (filing the return under section 39)
• This applies from the month of October to the end of the FY to which a particular invoice pertains.

This includes:

1. Appointment of ITC belonging to a FY as eligible or not needs to be made earlier
2. It needs to be affected before the given deadline
3. Claim eligible ITC against any invoice
4. You need to declare the CDNs issued against any invoices raised in an FY
5. Besides, you need to file amendments
6. This helps you to report the GST  returns filed for an FY

In case of the due dates, please take note.

It is subject to change as per the notifications issued by CBIC

What data are reconciled under GSTR reconciliation?

Is there any mismatch in GSTR reconciliation?

Yes, you can see some mismatches in GSTR reconciliation. These are listed below:

• Differences or mismatches in sales details between GSTR-3B and GSTR-1
• You can see differences in the amount of ITC in GSTR-3B and the GSTR-2B/GSTR 2A
• Besides, the unclaimed ITC or excess ITC claims in three way reconciliation
• This includes IMS vs GSTR 2B and GSTR 3B

The difference in purchase documents is also there between the invoice management system (IMS) and the purchase register (1st October 2024). ITC values in GSTR 2B vs the ITC in the books of account. This applies to the rigorous vendors.

Differences in tax payable are compared upon auto populated GSTR 3B with the books of accounts:

• Mismatch in sales details between the books of accounts and GSTR 1
• It is autopopulated from the e-invoicing system

The mismatches in GSTR reconciliation?

These are as follows:

You (the vendor) have declared liability, but

• Credit is not available in GST returns

1. You need to avail these credits before the due dates of annual returns
2. In case you have not declared liability on supplies
3. But the business has availed credit for procurements
4. This applies to GST returns
5. You have to check with the vendor
6. This helps you to declare the liability

• Mismatch in liability and credit

1. Here you need to identify the reasons properly
2. You must reconcile in a proper manner here
3. This includes the furnishing of the relevant annual return

• Mistakes in the furnished details:

1. It is another aspect of GSTR reconciliation mismatch
2. The mismatch can be in the GSTIN of the supplier or the recipient
3. In case of the number and date of the invoice
4. In debit notes also

Some more facts about this for you:

1. So, GSTR reconciliation under GST is simple
2. However, the automation takes time and resources
3. You have to talk to the vendors
4. This helps you to make amendments to the return filing
5. It is beneficial for tracking ITC claims

But,

• It is not a tough task for businesses with fewer deals
• In case you are having hundreds or thousands of invoices in a month
• In this, a single-digit percentage has an essential value
• Hence, you need to reconcile the returns data
• You need to do this on a regular basis under GST

GSTR reconciliation in the pre-GST times

Reconciliation is not new to you (a taxpayer). This exists in VAT and excise times, too. In the pre-GST times, the matching data was easier. The penalty was much lower

GSTR reconciliation under the GST

Under GST, GSTR reconciliation is vital. The GST authorities monitor the sanity of the ITC that your business uses. This helps with online tax systems. This includes data that vendors declare.  It is necessary for you to claim ITC . It is beneficial for preventing GST registration suspension. Your return filings are automated. Now, your GST returns are also interlinked

How to do GSTR reconciliation?

You need to do GSTR reconciliation across months.  This needs to be continued for the next FY. They consider the amendments you make in both the earlier FY and the current FY

Besides this,

• ITC is the most important aspect here
• The sanctity of claims in the previous tax regime is not the same now
• the genuineness needed to be confirmed at the stage of filing GST returns
• This includes GSTR 2B or GSTR 2A, taking action

You need to do the vendor wise recocnicliation daily.  If not, you must consider doing so before filing GST returns. This helps to know and declare unclaimed ITC within the deadline

So, all you need to do is:

1. Claim ITC of a relevant FY
2. If you have not claimed it previously.
3. In case of reversal of the ineligible ITC
4. The unidentified and unclaimed ITC
5. Match the table of exports in 6A of GSTR 1
6. This includes your declaration in GSTR 3B
7. Submit your details of shipping on ICEGATE
8. Compare the Annual Income Tax Return with the Annual GST return

You must compare the purchase register. This includes GSTR 2B for the whole FY  Compare GSTR 1 with GSTR 3B . GSTR 3B and GSTR 2A differentiation. This includes the whole year.

Are there any common issues with GSTR reconciliation?

These are as follows:

• The invoice number does not match the purchaser and Seller
• This applies to invoices received in GSTR 2B
• Both follow a different convention
• The purchaser is working in various stages. You, (the seller) raise with another GSTIN or HQ GSTIN
• As opposed to the actual purchaser GSTIN
• The invoice date is not matching the seller's date
• This happens when the invoices are recorded in different places
• It is the purchaser’s fault
• If the purchaser and seller recorded invoices in different return periods
• The invoice value is different for the supplier and the purchaser
• This happens when both parties have different conventions of rounding off
• The invoice value differs at supplier's and purchaser’s cases. Here, if CD/DN is issued, it fails to match
• The date and number are not same. Only the va;ue matches
•  There are a lot of invoices between a purchaser and a supplier
• Similar value in the invoice
• But the date is not same

Final thoughts

In conclusion, GSTR reconciliation is not an option.  It is vital. It helps you to stay compliant. The regular reconciliation helps you in many ways. You can avoid GST notices.

You can also claim the correct ITC. A clear record? Yes, this is another benefit of GSTR reconciliation. It reduces stress during audits. So, what are you waiting for?

If you want smooth GST compliance, make GSTR reconciliation a monthly habit.

For any further queries, visit online legal India.

FAQs

1. What is GSTR reconciliation in simple words?

In simple words, GSTR reconciliation means matching GST return data with books.

2. Is GSTR reconciliation mandatory for me?

Yes, this is mandatory for you. You can stay GST compliant and also claim ITC.

3. Which returns can I reconcile under GST?

The returns you can reconcile under GST are GSTR 1, GSTR 3B, and GSTR 3B and annual returns

4. Can I do GSTR reconciliation monthly?

Yes, you can do GSTR reconciliation monthly.