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What you know about GST matching is the most important part of the GST regime. GST reconciliation is not a new topic for taxpayers, because the idea of reconciliation existed before GST.
However, under the GST regime, the reconciliation process grew stronger.
Let's see what exactly is a GST Reconciliation and what is a GST reconciliation?
GST Reconciliation is the process by which taxpayers know the difference between their books and the GST declaration. Also, with the help of GST Reconciliation, you can correct Mismatches either by communicating with the provider or by making changes to your books.
In addition, you should go through the GST Reconciliation process regularly. This will help you avoid the consequences and penalties you face for failing to comply. If the deviation is too high, you can also face an audit from the tax office.
Types of GST Reconciliation
Here is a list of the most common GST match types to consider when submitting your GST returns:
Internal supplies and Reconciliation of GSTR2A
Reconciliation of GSTR 3B and GSTR 2A
Reconciliation of GSTR 3B and GSTR 1
In case of a discrepancy between these returns, the reason for the notification will be communicated by the GST authorities.
Mismatches in GST Reconciliation
Here are some important Mismatches that can occur with GST matching
Mismatches in invoice details
The data shared between you and your provider may contain some errors. Some of the most common Mismatches in details are incorrect invoice number, invoice date and/or invoice value.
This is the most common discrepancy when comparing GST. Sometimes providers stamp the wrong GSTIN due to human error. This may conflict with claims from the ITC.
Why is GST Reconciliation Important?
There are several reasons why Reconciliation of GST returns are important to you. Let's discuss briefly:
The main importance of GST Reconciliation is that it requires 100% accurate ITC. You can request an accurate ITC by sorting out the difference between your purchase list and GSTR 2A.
Reconciliation of GST helps avoid duplication of work when filing annual GST Returns. However, to do this, you need to reconcile all of your monthly or quarterly GST returns.
GST reconciliation helps resolve issues with invoices issued by your provider so that required changes can be made to ensure a perfect GST refund.
While matching some data is a simple and easy task, the biggest challenge is with thousands of data. GST data reconciliation not only takes a lot of time but also requires a lot of manpower because it is done manually. Therefore, GST returns should be reconciled regularly in an appropriate manner. This can help you identify & explain the changes needed within the allotted time. You can also protect yourself from inspection notices from tax authorities.
Have a huge number of invoices to reconcile? Need support on GST Reconciliation? Email us your concern at email@example.com, firstname.lastname@example.org.