GST Reconciliation is a method of matching the input data fields by the supplier with recipients and reporting all of those transactions we processed during that period. This reconciliation method guarantees no sales or purchases are missed or mistakenly registered in the GST returns.
The reconciliation process is simple but time-consuming; taxpayers must constantly monitor any distinctions or mismatches that may impact the ITC claim. Every taxpayer reconciles their inputs regularly with the vendors to claim suitable Input Tax Credits.
- Under the reconciliation process of GST, the taxpayers must file GST returns periodically. Even if you missed your GST returns for that particular period, you have to fill those GST returns with the applicable late fee. The taxpayers must update to date their accounts and match the tax returns accordingly.
- The taxpayers must specify the mismatches and correct the similar entries in the accounts. They should amend these details in the GST return filing period. However, it allows for filing the updated entries via an amendment return in the next recurring return. Accordingly, should file these amendment entries in GSTR 1 & GSTR 3B.
- Ensure you carefully match the purchase register with GSTR 3B and GSTR 2A details. It is essential to simplify the accounts, the GSTR-3B return, and the GSTR-2A form to help the ITC on the applicable purchases; otherwise, the taxpayer will lose the ITC claim.
- The consistency between the accounts and the GST returns is vital for declaring ITC. Additionally, while claiming ITC on purchases, taxpayers should keep a check on taxes paid under the reverse charge mechanism. However, taxpayers can only help the credit of taxes paid under the reverse charge mechanism if the goods and services are used for all business.
- Vendors and customers have to communicate with each other to report the details in the GST returns. Suppose the suppliers and the recipients share each other to file GST returns. There will be less chance of mismatches, deletions or incorrect entries. Also, you must identify non-compliant vendors to resolve the queries that will help the recipients maximize ITC. We suggest you use MasterGST Advanced reconciliation software to reduce this communication gap between the suppliers and the recipients. MasterGST reconciliation software allows the users to send a reconciliation mismatch report to the vendors or suppliers to resolve any issue.
- Any taxpayer who has not declared Income Tax Credit in the preceding months can avail of the same in the next year. Any amendments or changes to the earlier-filed returns can do within the same timeline.
- GST reconciliation is a recurring event. It must file periodically to claim maximum credit and avoid larger-scale mismatches. The taxpayers shall convey the queries to their vendors before and file error-free returns.