Have you received any notice from GST authorities demanding an explanation of the discrepancy between GSTR 2A and GSTR 3B self-declaration?
This shows that you did not reconcile your purchase invoices with GSTR 2A/2B before submitting your GST 3B reports.
What are GSTR 2A and GSTR 2B?
GSTR 2A is a dynamic document auto-populated with information on the eligible Input Tax Credit (ITC) that a registered taxpayer can claim. The GST site auto generates GSTR 2A data based on the suppliers’ GSTR 1 data.
GSTR 2B is a static document updated once a month (on the 12th of each month), compared to GSTR 2A, which is updated when the supplier enters his sales data using FORM GSTR 1.
How can I efficiently claim ITC returns?
The vendor’s or seller’s GSTR-1 is automatically used to fill out any company’s GSTR-2A. It is essential to remember that taxpayers can claim ITC if the invoice details match the vendor information.
According to Section 16(1), “every registered person shall be entitled to take credit of any input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business, and the said amount shall be credited to such person’s electronic credit ledger, subject to such conditions and restrictions as may be prescribed and in the manner specified in Section 49.”
Even a single error or mismatch in monthly bills or vendor data might cause the taxpayer’s ITC claim to be blocked.
As a result, it is critical to do frequent reconciliation of the purchase register and 2A/ 2B to ensure that the ITC claim process runs smoothly.
The most crucial procedure in any tax regime is the GSTR 2B reconciliation or matching of data between the books of account and the tax returns. It is especially true under the Goods and Services Tax regime, as there is an ITC provision.
What are the input tax credit provisions?
Section 16 (1) Every registered person shall be entitled to take credit of input tax charged on any supply of goods and services or both to him that is used or intended to be used in furtherance of his business, subject to such conditions and restrictions as may be advised and in the manner specified in section 49, and said amount shall be credited to the electronic Cash Ledger.
For example, Mr. Ajay received a tax invoice for purchases made on January 10, 2022, but did not receive goods until February 20, 2022.
Therefore, the taxpayer cannot report ITC on that tax invoice in GSTR-3B for June 2022 but may claim it later once the goods have been delivered.
As a result, the government is on high alert to ensure that taxpayers follow the new tax government’s laws and regulations.
What are the benefits of GSTR 2B Reconciliation Software?
- Businesses should use an ‘Automated Reconciliation’ service such as GSTHero.
- GSTHero is a GSTR 2B Reconciliation Tool that provides you with precise qualifying ITC, ensuring that you fully comply with GST regulations.
- Mistakes are eliminated due to minimal human interaction.
- Thorough reconciliation reports
- Invoices mismatched/unmatched are Carried forward to the next reconciliation cycle.
- Reconciliation via the online portal and tracking of credit and cash ledgers.
- The option to use net-off for purchases, debit notes, and credit notes for specific transactions, as well as modifications for transaction-level reconciliation.
- Validation of matching invoices ensures that they are not considered in future invoices unless specifically unlocked.
- Detailed and summary reports available with Invoices are automatically tagged into different buckets for quick verification and actionable insights.
- Option to email suppliers’ supplier-specific mismatch reports.
- Reconciliation for ITC and purchase information are shown on the dashboard.
- The programme auto generates GSTR-3B and GSTR-9 using the reconciliation functionality.
- Automation of all stages of the reconciliation process, including data import and export and report generation
- Integration with various ERP systems.
- As a GSP that collaborates with the GSTN organization, GSTHero can provide reports that are entirely GST compliant and that may be used to respond to official government legal notices quickly.
- You do not need to spend time. You only need to spend five minutes, and then you can quickly implement it.
- Our authentication and authorization solution ensures the safety of utmost significance.
- The cloud-based service allows you to access and utilize GSTHero from any global location.
- It provides a report of matched, mismatched, and unmatched invoices and consolidates reconciliation reports.
- There is also PAN Level Reconciliation offered.
Impact of GST Input Tax credit Reconciliation
- The following criteria make it vital to reconcile data as per books and GST Portal:
- Reconciliation ensures that credit is claimed for the tax paid to the supplier to guarantee that no invoice is missed or recorded more than once.
- GST defaulters who claim ITC based on forged invoices may face penalties.
- If the supplier has not recorded the outbound supply in GSTR-1, the correspondence might be issued to ensure that the errors are rectified.
- Errors made by Suppliers in GSTR-1 or Recipients in GSTR-3B can be corrected.
Enterprises must select GSTHero software that can supply all GST returns under one roof with a recon solution for GSTR 1, 3B, and 2A/ 2B to prevent show cause notifications from GSTN authorities for ITC discrepancy due to variations in inward register and GSTR 2A/ 2B.
File your GST returns in minutes rather than hours!
GSTHero is a government-approved GST Suvidha Provider, so you don’t have to worry about the security of your data or sensitive credentials!
GST Hero’s Reconciliation Solution is a one-stop shop for all your Reconciliation requirements.
- The GSTR 1 data is auto-populated.
- 1-click data preparation
- Auto-notification to your defaulting suppliers
- Customisable signature template-
- Simple integration- with your current ERP system and CRM.
- GST compliant- compliant with all GST laws, allowing you to file your returns quickly.
- Bulk signing- Improve your workflow by signing multiple documents in less time with multi-part access.
- Remote signing allows you to authenticate and authorize your document from anywhere in the world.
We have made it clear in each step of filling out a GST return that reconciliation and matching the account books is one of the most important aspects of it. You cannot file a return without first automating your account books; this is the first step in claiming.
Ignoring it will also result in additional losses, increased taxes, and a reduction in your claim. If you do not keep it up to date regularly, it can become a time-consuming process, and you may have to pay a late fee and face other issues.
It is recommended that you implement effective technology such as GSTHero Solution to automate the process of reconciliation and matching and maintain open lines of communication with your vendors to ensure that you expend minimal effort while reaping maximum benefits.