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Maximize Input Tax Credit and do complete GST Compliance with Reconciliation

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What is Reconciliation?

In general terms, reconciliation refers to the matching of two sets of data to evaluate differences. Also, reconciliation helps keep a tab on manual errors.

Under taxation, reconciliation holds importance because it can give rise to tax short paid or not paid or excess paid as well.

GST reconciliation involves matching data of purchase and sales between different returns with purchase and sales registers.

Reconciliation under GST although seems to be a simple process, however it still consumes a lot of time and resources. One such example is that taxpayers are required to continuously communicate with vendors for making amendments in the returns filed by them or even to track ITC claims.

Therefore, one must reconcile the returns data on a regular basis under GST.

Listed below are different types of GST reconciliation that need to be done: GSTR1 vs Books, GSTR 2B vs Books, GSTR 2A vs 2B, GSTR-1 vs 3B, and so on.

GSTR1 Annual Reco with Books: 

GSTR1 Reco is the regular comparison of the data of our GSTR1 return (uploaded data on portal) and the books of account (sales register) to verify that our books of accounts are in sync with our return. GSTR 1 reconciliation is the process of matching two sets of data; data available in the GSTR-1 form and data available in your books of accounts. In an ideal situation, the two sets of data must match exactly; however, in the real world, for plenty of reasons, differences can occur.

Importance of GSTR1 reco to clients in terms of Express GST:

ExpressGST provides an Annual/ Monthly/ Quarterly comparison option available for GSTR1 and books to check on match and mismatch invoices and invoices available in R1 but not in books and vice versa.

It also includes:

The manual process is time-consuming as one needs to go through every transaction, calculate, and then rectify when mismatches occur between the two sets of data. ExpressGST thus provides a GSTR1 reco tool to perform the process in automation thus benefiting the user. As GSTR-1 reconciliation is a regular process, using software to perform this task is a smart way of ensuring zero errors while filing returns.

How it helps USERS?

Process of reconciling GSTR1 with Books in Express GST

After login to ExpressGST software,

As in the above example, imported books data has given 7 mismatched records under the B2B section. The mismatch are of various types as highlighted in the cards. The above mismatch is in GST of buyer, POS, invoice date, invoice value, taxable value, IGST which is not matching with that of uploaded GSTR1 data. All the highlighted red data are mismatches identified with that of GSTR1 as described below:

 POSDateInvoice ValueTaxable ValueIGSTCGSTSGST
BooksMadhya Pradesh 05/10/2023 25816.00 23050.002766.00  
GSTR1Rajasthan21/08/2023 475000.00452380.94 11309.5211309.52

It also provides Party wise matching and Section wise matching.

Doc section gives B2B, B2CL, Export, CDNR and CDNUR details while Summary section gives B2CS, Advance Received, Advance adjusted and HSN.

2A & 2B Reconciliation with Purchase Register

Here are a few reasons why GSTR 2A/2B reconciliation is important

Express GST provides the following features in Reconciliation of ITC :

Process of reconciling 2B/2A data with books in express GST

STEP 1

STEP 2

STEP 3

 Note:

STEP 4

After the books data gets imported, 3 ways reco is done.

  1. Supplier Wise
  2. Invoice Wise
  3. Month Wise
Supplier Wise Reco

This Type of reco is useful when you want to check the Supplier wise Difference in Tax or taxable value.

It is done by sorting Invoices by supplier’s name and checking if the Invoices of particular Supplier present in 2A/2B and in Books. Matching of Invoices is categorised into 4 types of status as explained below:

In the above example, it can be understood that 1 Invoice of Supplier is matched and1 is in 2B only. Also it can be seen that there is Tax diff of ₹1226.52 as per books and as per 2B which could be due to 1 invoice that was missed to be accounted in books and is appearing 2B only.

For details, you should click on supplier name and you will get the details of bill to bill reconciliation of supplier

You can sort the reco with excel like filter & sorting options given at the column heads.

You can sort supplier name alphabetically in increasing or decreasing order by clicking on supplier name column.

GSTIN number can be searched by using a Filter like button and similarly other columns can be filtered also.

Invoice wise Reco

Click on Invoice-wise Reco to view invoice wise data reconciliation.

Here you can do reconciliation by selecting any of the Status vis-à-vis Matched, Partially Matched, in 2B only, in books only.

Month Wise Reco

Click on Month Wise Reconciliation to get the reconciliation done by month wise.

You will get the graphical view. You can get the taxable and tax figures if you click on Flip Button here.

As shown below are the comparison of GSTR 2A/GSTR 2B and books data for a month and also annual

For Example, in the month of Oct, Taxable value as per 2A is 39,35,555.00 Taxable value as per 2B is 43,87,488.05 and as per books is 1,67,78,914.79.

In the same way, in the month of Oct, Input tax as per 2A is 2,63,148.08 as per 2B is 2,86,546.34 and as per books is 2,86,546.34

This is the Month wise Reco where you get to reconcile data by 2A, 2B and Books.

STEP 5

How do I view Annual, Quarterly or Monthly Reco?

STEP 6

How to email the Default suppliers?

In the above example, you can share email to a single supplier in case of default or you can share email to multiple suppliers also by selecting bulk option on left hand side.

As Baxy limited had 1 invoice in Books Only that means 1 invoice was not uploaded by Baxy limited in his GSTR-1 as a result of which it was reflected in our 2B statement. In this scenario, actionable mail is to be sent to the default supplier for not uploading his invoice as a result of which the respective company is not eligible to claim its input credit in the relevant month.

STEP 7

Email of annual report and downloading monthly data

You can also email the complete Reconciliation report containing Supplier wise 2A-2B Reco and Invoice wise 2A-2B Reconciliation. You can Click on Email Complete Data Button on the right side of Page and enter the required email id and get the complete (Annual)reco report on the email within few seconds.

In other cases you can download monthly data into the system for any particular month into excel.

The Exported Reco report also gives details of all suppliers GSTR1 and GSTR3B filling dates for complete Year with their filling frequency as Monthly/Quarterly under QRMP option as shown below.

Additional Conflict report gives the following details as shown below

In the below example,

In 2A not in 2B, reflects 3 suppliers whose data in not in 2b but available in 2A that means supplier has either not filed his GSTR1 or he has not considered the above invoices his return or may be supplier has delayed in filing as a result of the invoice is not reflecting in current month 2B.

ITC Eligibility conflict by 2B, the above 7 suppliers having ITC ineligibility because those invoices have been marked as ineligible ITC in the books of the company

RCM Conflict, the above suppliers identify a difference in their RCM selection when compared with RCM of supplier

POS conflict, the above suppliers having a mismatch in POS when compared to supplier POS which may result to ITC ineligibility

ITC Tracker

Express GST ensures that your GSTR-2B data is fetched without manual intervention. Our advanced reconciliation engine matches data between books and GSTR-2B to identify gaps, with the option to define custom matching logic and claim 100% ITC in GSTR 3B.

Express GST also allows users to annually reconcile ITC across financial years for accurate preparation of GSTR-9 and GSTR-9C.

In respect to above, GSTR 3B Enterprise plan provides ITC tracker to keep a track on all such ITC. ITC tracker is an end-to-end enterprise solution for maximising the claims of the input tax credit. ITC tracker has exclusive features to improve your input tax credit claims with value additions as it provides,

The ITC tracker tool in ExpressGST helps clients to claim correct and actual ITC rather than claiming maximum   and incorrect ITC. Client can decide whether he needs to claim the entire ITC available as per his 2B statement or to check with his books and then claim such ITC which is relevant and pertaining to his business only.

The ITC Tracker gives different checkpoints to client helping him in his 3B ITC claim amount

Process of claiming/calculating correct ITC under ITC tracker module of 3B

Step 1

From the GSTIN Dashboard under Return summary section, select the 3B return for the month where Reco with 2B was done as shown below:

Step 2

Step 3

Click on Set Auto ITC Claim Status which divides all invoices from books and 2B under 6 status: Accepted books, Accepted 2B, Pending, Action Require, Rejected and New Value

Step 4

Apart from Invoice wise ITC claim, you can also check View party Wise ITC claimed showing Total books document, Total 2B documents, Total pending and No Action taken and also gives the ITC difference as per Books and 2B and Total ITC claimed.

Step 5

This ITC tracker report can be downloaded into excel using the Email Icon on the right-hand side window which gives complete supplier wise and invoice wise 2b Reco report with ITC claimed status on each invoice with the remarks already added in the remarks flag on left hand side of the window.

Note: Invoices that are marked pending, can be accessed in the future periods, by using Show Pending Since filter. However, those in the Action Required cannot be accessed in the future periods.

Note: Invoices that are marked pending, can be accessed in the future periods, by using Show Pending Since filter. However, those in the Action Required cannot be accessed in the future periods.

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