What is Reconciliation in GST ?

Category : | Author :MasterGST

What is Reconciliation?

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


Here are the causes for Reconciliation…

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


Difference in Total amount of invoice
Difference in Tax Amounts
Difference in HSN code
Difference in the item description.
2) Internal Miss Records – Wherein your vendor has entered the invoice but your records don’t reflect such invoice.

3) External Miss Records – Wherein you have entered the invoice in your records, but the vendor records do not reflect such invoice.

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

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 vendor’s changes
Accept vendor’s records/ changes – it means altering your records

Reconciliation under GST although seems to be a simple process due to automation but still consumes lot of time and resources, as taxpayers are required to continuously communicate with vendors for making amendments in the returns filed by them or even to track. It would not tasking for businesses having a handful of transactions to monitor. However, in case you have thousands of invoices in a month, then even a single digit percentile will be a significant volume. Therefore, one must reconcile the returns data on regular basis under GST.

MasterGST providing effective tools for reconciliation i.e. Merge Tool. By using merge tool we can merge invoices in mismatches.