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It is extremely important to understand the process and the issues faceed during GST reconciliation.

How to do GST Reconciliation

It’s been a long time that India’s biggest ever indirect tax released and with that comes some procedural requirements specified under the GST Act.

The first procedural requirement comes with filing of GST returns and reconciling the data provided from the taxpayers end with data provided by vendors end. Since the Government has released the required format for GST returns, which requires lots of information from the taxpayers’ side. So, taxpayers must maintain the record in proper format which is the only key to hassle free return process.

Reconciliation, though sometime it looks like a simple process considering the automation involved under GST, but in real it requires lots of human efforts, as you have to contact your vendors on regular basis asking them to make changes/alteration in returns filed.

Both the parties will have the access to view GSTR1 which is filled by vendors and GSTR3B which is filled by the taxpayers.

So, if any mismatch or missing entries are found on behalf of vendors then the taxpayers can contact them for the required corrections. If there are thousands of transactions between the taxpayers and the vendors, it is very much possible there will be some mismatches. So, you might require calling the vendors and get the issue resolved.

Understanding Reconciliation Process:

GST reconciliation must be performed periodically to claim maximum credit and to avoid mismatches.

File GST Returns:

Taxpayers are required to mandatorily file all periodic GST returns along with the interest or late fees (if filed after due date). GST reconciliation begins after filing GST returns.

Identify mismatches:

The taxpayers should identify the mismatches and correct the relevant entries in the books of accounts and amend the same in the coming GST return filing period. Revision of GST returns is not allowed as per GST laws. However, filing of the corrected entries via an amendment return Is allowed in the next periodic return. These amendment entries should be filed in GSTR 1 & GSTR 3B.

Tally GSTR 2A and GSTR 3B:

Match the purchase register with GSTR 3B (uploaded month wise) and with GSTR 2A details (uploaded by the supplier). In order to avail ITC, taxpayers must streamline the books of accounts, the GSTR-3B return, and GSTR-2A form.

Availment of ITC:

Taxpayers should keep a check on taxes paid under the reverse charge mechanism for claiming ITC. However, a taxpayer can avail credit of taxes paid under reverse charge mechanism only if the goods and/or services are used or will be used for purpose of business.

Reconciliation Software:

There should be a coordination between the vendors and customers which results in uniform reporting of the details in the GST returns. Chances of mismatches, omission or incorrect entries are reduced when the supplier’s and recipients’ synchronize their details and then file GST returns.

This communication gap between the suppliers and the recipients can be reduced by  Reconciliation software which enable the users to send a Reconciliation Mismatch Report to the vendors or suppliers.

The taxpayers should report all the rectified sale or purchase transactions of the financial year for the September returns. September’s returns are to be filed by 20 October. This is the last chance for the taxpayers to report and correct all differences filed in tax returns of the financial year.

Any taxpayer who has not claimed ITC in the preceding months can avail the same in the subsequent months, but not later than the filing of Annual return i.e GSTR -9 or filing of GST returns for September month of the subsequent financial year, whichever is earlier.

Post Author: Tachotax

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