What is GST Reconciliation?
GST Reconciliation is an essential step that the taxpayer needs to carry out to avail ITC. The Process of reconciliation and equivalent of GST returns is not new for taxpayers as it was common in the prior VAT and excise regime. you need to reconcile your purchase data for every month’s GST filing with all your suppliers’ sales data that they have uploaded on GSTN.
How to do GST Reconciliation?
The GST Reconciliation should be done across months. You should begin the reconciliation process within the GSTIN and then take it to the PAN level. One of the most important elements of the GST return is a tax credit which carries better relevance compared to any other component of GST returns.
The common issues faced during GST reconciliation:
One of the main barriers during GST reconciliation is that the parties involved have another way for their invoice numbers. This may make it tougher for the execution mechanism to find an exact match nearby invoice number. An effective reconciliation tool could solve these issues while also simplifying the process of matching and reconciling GST returns data.
Some of the major issues with the reconciliation between GST returns are listed below.
- One of the major issues which are raised i.e. the miss-match of invoice numbers with the seller which is used by the purchaser to keep an account on transactions and it is also provided in GSTR-2A and the reason behind the problem is they may be adopting different convention.
- The buyer operates its business in multiple territories and the problem raises that the supplier provides with different GSTIN in compare to the buyer GSTIN.
- Next comes the recording of the invoice in different periods by the buyer and supplier.
- The invoice data accounted by buyer and seller mostly mismatched and the reason behind this may be a recording of the invoice at different dates by buyer and seller but in this case, the fault will be from buyers’ end because he should enter the date which is provided in the sales invoice.
- There may be a minor difference in invoice value of buyers and suppliers due to the adoption of different round off practices.
The cause for GST reconciliation mismatches:
- There is a liability declared by the vendor, but the credit has not been availed in GST returns. Such Subjection should be used before the due date of September or Annual returns.
- Many of the Purchasers take advantage of credit on supplies in the GST returns although the dealer has not announced such. In such cases, the purchaser should make sure with the dealer that the credit is declared from his side. If there is a delay it would raise the risk of disallowance in such credits.
- Next comes the Distinction between the credit stated by the vendor and the credit utilized. such distinction should be determined and adjusted, for e.g. issuing of debit or credit note.
- It’s quite possible that there will be a mismatch in details provided like the difference in GSTIN number of buyer and seller, date mismatching, minor value difference in the invoice. So, the modification should be made accordingly in GST return.