Reconciliation of ITC

Reconciliation is a necessary step that every taxpayer needs to take while filing GST returns every month.  Without reconciliation, the taxpayer cannot avail the Input tax credit made on their purchases.

Reconciliation on ITC which means that, matching the all purchase data with their supplier data, is available in GST portal under GSTR 2A.

There may be chances of data mismatch between the supplier and the buyer, and omission of invoice either/ or both sides.

To overcome these issues, a Taxpayer needs to do reconciliation of purchase bills while filing the GST Return.

Being the first step of reconciliation is to identify the discrepancies.  This means matching the records with supplier records. There may be mismatching of Invoice Number, Date, Period and Invoice etc.

After you identify the mistakes, the next step is to review the identified discrepancy. The corrective actions required are as follows:

  1. Data correction
  2. Adding the missing invoices
  3. Taking actions like Accept/Reject/Modify the error in portal

Reconciliation ends with communicating with each other for all the discrepancies raised. A Taxpayer can ask the supplier to accept the changes or to modify the changes. Simultaneously, a supplier can accept the request given by taxpayer or reject the changes. If there is any missing invoice, either a taxpayer or supplier can add the invoice on their own. The opponent party can accept the added invoice.

Thus, by mutual consent between the supplier and the taxpayer, the raised discrepancies can be closed.

After reconciliation process is done, a taxpayer can claim their ITC on purchases by filing the GST return.

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