RECONCILIATION UNDER GST

 

Reconciliation is a very familiar term that comes into contact to a Businessman again and again. Any Taxpayer who is doing any type of Business has to go through reconciliation procedure. Every Taxpayer and Businessman know that reconciliation means error free books of Accounts and tallying or matching the data of one book with the other is termed as reconciliation. Reconciliation can be done of any books of Accounts or of anything and at any stage.

 

Reconciliation under GST means the reconciliation of Taxes paid or payable at different stages by the taxpayer. We know that when reconciliation of Accounts of books are done there are two set of books, one is of yours and the other is of the vendor that needs to be matched for errors and differences.

 

Likewise, under GST Reconciliation there are returns that need to be reconciled with each other. Return that needs to be reconciled with each other will be GSTR 2B with your Purchase books and GSTR 1 with your Sales books.

Before proceeding for reconciliation, you should check the ITC comparison sheet in the portal, that it is showing for any differences or not.

 

Taxpayer should be very clear with the concept that one’s GSTR 1 becomes the others GSTR 2B and reconciliation is done at both the stages. So, first Taxpayer should try their best to file their GSTR 1 correctly, on time and request for the same to their vendors also.

For reconciliation of books of accounts, you need a proper book keeping so that you can easily reconcile your data with GSTR 2B. Masters India provides a service of Accounting &Compliance which will give you the facility of safe & correct book keeping.

 

Now, Let us understand how to Reconcile the data of GST

 

• ·       GSTR 2B is generated on 12^th of every month containing invoices of previous month.
• ·       Taxpayer has to download the excel format of GSTR 2B from the portal and match each invoice along with tax amounts with their Purchase books. This has to b done every month so that any discrepancy in any invoice can be corrected in the next month’s return.
• ·       Try & make sure to not go for the option of claiming ITC 105% of GSTR 2B.
• ·       Claim the ITC exact shown in your GSTR 2B, so that there will be no difference of ITC in GSTR 3B and GSTR 2B, as larger differences are leading to cancellation of registration.
• ·       Arrange your purchases in the order it is visible in your GSTR 2B.
• ·       If there is any fault in GSTR 2B then communicate with your vendor for the same and come to a mutual conclusion for what to be done to rectify the same.
• ·       ITC claimed by a taxpayer should be same in three places – Your Purchase books, Your GSTR-3B &Your GSTR-2B.
• ·       ITC should be matched separately for CGST,SGST & IGST.

 

Now, when you are done with the ITC part you have to make sure that your GSTR-1 is filed correctly because any larger and inappropriate difference in Sales of GSTR-1 & GSTR-3B can lead to immediate cancellation of Registration. You should always be clear & specific that the figures of Sales should be exactly the same in both GSTR-1 & GSTR-3B.

 

Some steps that can be taken to avoid Mismatching of data in returns.

 

• ·       Never rectify or correct any mistake in Sales between the duration of filling of GSTR 1 & GSTR 3B.
• ·       Taxpayers should be clear with a view to maintain their accounts and Returns in a way that no mismatches should occur in Reconciliation. Reconciliation done monthly on regular basis will lead to a very efficient Book keeping.
• ·       Never try to claim excess ITC; if there is excess ITC with you as compare to GSTR-2B then just keep it and wait for that ITC to be visible in GSTR-2B.
• ·       If you have purchased any goods then your vendor will definitely file that invoice in their GSTR-1, you just need to coordinate with your vendor to file their GSTR 1 timely so that you can avail your ITC on time.
• ·       If by any chance your vendor does not file their GSTR 1 on time then there is no need to panic as you can claim that ITC on your next month’s return.

 

Some of the main points that need to be focused on while Reconciling under GST for both GSTR-1 & 2B

 

• ·       GSTIN is correctly entered in sales invoice.
• ·       Invoice number should be same in your Books and GSTR 1.
• ·       Invoice number should be same in your purchase book & GSTR 2B
• ·       Amounts should be separately reconciled for SGST, CGST, IGST, UGST &Taxable value.
• ·       Check for the purchase invoice in other return periods also in GSTR 2B.
• ·       Try to file your sales in GSTR 1 in the same month in which it occurred.
• ·       Check & match every detail in a single invoice like GSTIN, Invoice date, Invoice number, Invoice name, taxable value and tax amounts, because there can be many invoices of same amount.
• ·       Make your accountant to coordinate with your vendors before filling of GSTR 1 for any discrepancy regarding invoices issued by you and received by them.
• ·       Make sure to reconcile the data of debit & credit notes because this is the major factor of differences and mismatches in small firms.
• ·       Differences can be due to freight and carriage charges.
• ·       Difference can be due to selection of wrong rate of GST while entering the invoices.
• ·       Mismatch can be due to wrong selection of taxability like taxable under consumption or consumer.
• ·       Mismatch can be due to wrong selection of taxability between Purchase taxable or Interstate purchase taxable.

 

One of the major challenges that one faces during Reconciliation when there are loads of Invoices is checking every single detail in every Invoice which becomes a very lengthy and time-consuming process.

And, here Masters India (www.mastersindia.co) is providing GST SUIVIDHA KENDRA for accounts and book keeping which will make your Reconciliation easy.