What is Reconciliation in GST ?

What is Reconciliation?

In GST, one specific requirement is filing GST returns and reconciling the data inserted at the taxpayer’s end with the data entered by our vendors. The taxpayer can view their vendors’ GSTR 1 (auto-populated GSTR 2A) filed. The vendors shall also have access to the taxpayer’s data inserted in GSTR 2 (auto-populated GSTR 1A). You must change the invoices if you find any mismatch in taxpayer and vendors’ invoices. This process is known as Reconciliation.

Here are the causes for Reconciliation.

  • Mismatch

Your vendor and you both have entered the invoice, but there are certain mismatches in the content/ingredient of the same invoice.


  1. The difference in the Total amount of invoice
  2. The difference in Tax Amounts
  3. The difference in HSN code
  4. The difference in the item description.
  • Internal Miss Records

Your vendor has entered the invoice, but your records don’t reflect such an invoice.

  • External Miss Records

You have entered the invoice in your records, but the vendor records do not reflect such invoices.

The rationale behind these discrepancies might be any of the following, though this is not the exhaustive list of explanation:-

  1. Rounding off error
  2. Goods in Transit
  3. Invoice considered by the vendor not in this month but in the subsequent month, etc.

You shall have two options in all the above cases of discrepancies, viz. Accept your records/ changes – it means rejecting the vendor’s changes. Accept vendor’s records/ changes – it means altering your records.

Although it seems to be a simple process due to automation, reconciliation under GST still consumes a lot of time and resources, as taxpayers are required to continuously communicate with vendors to make amendments in the returns filed by them or even to track. It would not task for businesses having a handful of transactions to monitor. However, a single-digit percentile will be a significant volume if you have thousands of invoices in a month. Therefore, one must reconcile the returns data regularly under GST.

MasterGST provides practical tools for reconciliation, i.e. Merge Tool. By using the merge tool, we can merge invoices in mismatches.

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