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GST Input Tax Credit Reconciliation

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Overview

Reconciliation under GST 

Reconciliation under GST is usually matching all the data filed by the suppliers to the data filed by recipients. It includes all the transactions made during the period. Reconciliation in GST ensures that no sales are omitted wrongly.

The Mismatches that can be noticed under various Reconciliation exercises: 

1) Difference in the amount of credit shown in GSTR 2A and GSTR 3B

2) Variation in the amount mentioned in GSTR 3B and GSTR 1

3) Alteration in provisional credit claimed and the actual credit that is claimable

Several causes of mismatch

There are various causes of a mismatch in GST. However, the most popular ones are:

1) When the vendor declared liability but credit is still not obtained in GST returns. Such credits must be obtained at the earlier stage of annual returns.

2) If the vendor has not declared responsibility on the supplies provided, but business has already obtained credit on such gaining in the GST returns. In such cases, the businesses should follow up on the vendors, or else may face risk

3) Mismatch in liability declared and credit availed by the vendors. In such cases, the reasons for mismatch should be obtained reconciled properly.

4) Errors in the details filed. There are various mismatches found, such as GSTIN, number of the invoice, date of the invoice, and many more.

Reconciliation under GST may sound an easy process. But it involves a lot of hassles. It consumes a lot of time, as the taxable person has to communicate with the vendor frequently. They have to make amendments to avoid mismatch in the data. If you have thousands of invoices in a month, then even a single percentage will seem like a lot of volumes. Thus it would be best if you reconcile the returns frequently.

Importance of GST Reconciliation

1) As per the recent GST returns model, the taxpayers will only be able to claim ITC, if an invoice is present as a vendor data. Thus it is necessary to reconcile the GST.

2) All the GST returns are usually filed monthly or quarterly. Thus it would be great if you have a consolidation of data reported over the financial year. In order to maintain accuracy, reconciliation in GST is essential.

3) Claims eligible for ITC against invoice raised in the financial year.

4) Any appointment of ITC fitting to financial year.

5) CDNs issued against any invoices.

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