Reconciliation concept under GST and its importance:

It has been long pending issue to streamline all the different types of indirect taxes and implement a “Single Taxation” system. This system is called as GST ( GST is the abbreviated form of Goods & Services Tax). The main expectation from this system is to abolish all indirect taxes and only GST would be levied. As the name suggests, the GST will be levied both on Goods and Services.

Under GST, reconciliation is a fundamental process which allows you to find out the differences and the variances in the books of accounts and the GST filings of your business.

It is crucial to carry out the reconciliation to avoid any mismatch between the books and the tax filings.

GST reconciliation helps to find out the mismatches which are as under.

Vendor has not declared liability in his GST returns, due to which you cannot claim the input.

Vendors failed to file their returns.

Mismatch between the liability declared by the vendors and the credit availed. (Such differences should be identified and appropriately reconciled by issuing debit/credit notes, etc. or avail the missed credit before filing the return under section 39 for September* following the end of the financial year to which a particular invoice pertains or the furnishing of the relevant annual return.

Errors or omissions in furnishing the data, such as mistakes in entering the GSTIN, invoice number mismatches, invoice date mismatches, etc.

Importance of Reconciliation:

Helps to avail the actual credit available by eliminating the mismatches.

To avoid the claims of unavailable credits.

To match the books of accounts with the GST filings.