Tips on Matching & Reconciliation under GST

GST reconciliation is an accounting process through which sales as well as purchases data between different transactions are matched and reconciled.

Ensure that no sales or purchases are accidentally omitted or wrongly reported by using a GST calculator.  

Why is it important?

As a taxpayer, it is mandatory for you to reconcile your sales data on a regular basis with that of the vendors to get the eligible Input Tax Credit. GST has its own system which can calculate the difference between the GSTR 3B and GSTR1 or GSTR 3B and GSTR 2A. The system can automatically find the difference in any Return and help GSTIN to identify the individual. It’s an easy and simple task to reconcile your returns. Just keep in mind what amount of your tax liability in GSTR 3B and what amount of Input Tax Credit that has been claimed.

Here are 4 steps in which GST Reconciliation can be done.

File FY returns

The reconciliation process of GST for the financial year (FY) requires you to file the GST returns regularly. Periodic GST returns are very necessary for a taxpayer to file, and even if you have missed the due date for filing the GST returns, you must file it even when you have to pay the late fees that are applicable. It is important since it is the first step in the process of GST Reconciliation. A business person must regularly update the account books and align the tax returns accordingly. If the books of accounts are not regularly updated, you will not be able to claim adequate Input Tax Credit.

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Identify any mismatched entries

Once you have filed the GST return, the process of reconciliation and matching can be started. A business should identify any mismatches or accidentally excluded entries in the account books. If you find such discrepancies, correct the entries. Then recheck the details which have been entered. Additionally, also correct if any mistakes have been found for the upcoming or next GST return filing period. However, do note that a business can make the revisions in the current and upcoming tax returns filed but will not be allowed to make the changes in the previous periods. Instead a business can file an amendment return form under GSTR 1 and GSTR 3B in the next filing.


Streamline accounts

Once the entries are aligned, match the purchase register with GSTR 3B. It is uploaded month-wise. Match it with GSTR 2A details that are uploaded by suppliers. Make sure your account book is well maintained. To avoid paying extra taxes and loss in Input Tax Credit claims, a filer should show relevant purchases and sales as any mistake in the same.


Check taxes paid

Make sure there is proper alignment between the books of accounts and GST returns. This is very important when a business is claiming Input Tax Credit. Always, check the taxes paid under the reverse charge mechanism while you are claiming Input Tax Credit on purchases. The reverse charge mechanism is the only way to avail credit of tax paid if the goods or services are used, or there is a near-future possibility available to be used for the purpose of the business. For this proper communication with customers and vendors are needed.

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When properly coordinated, it helps in uniform reporting of details in the GST returns. Chances of mismatches, incorrect entry, omission get reduced by a significant percentage when the suppliers and the recipients match their details and then file GST returns. In case of any non-compliant vendor, resolve any queries and settle the matter.

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