GST Reconciliation is not new to any taxpayer. The matching of data between the account books and tax returns was an easy task for many organizations. If the tax department had found any mismatch, communications would be sent to the taxpayer and accordingly further audits would be carried out by the authorities.
It has been over a year since India’s biggest ever Indirect Tax reform has been rolled out. Now is the time to actually get ready to comply with the process requirements specified under the GST law.
Understanding the reconciliation process
While carrying out GST reconciliation you may face the following three categories namely:
1) Mismatch – If your vendor and you, both have entered the invoice, but if there are any mismatches in the content of the same invoice.
- Difference in Amount of invoice
- Difference in Tax Amounts
- Difference in HSN code of product
- Difference in the description of item.
2) Internal Miss Records – Your vendor has raised the invoice but your records don’t reflect that particular invoice.
3) External Miss Records – You have entered the invoice in your records, but the vendors records do not match with the same invoice.
The rationale behind these errors might be any of the following:-
- Rounding off error
- Goods in Transit
- Invoice generated by vendor not in the present month but in the subsequent month.
You shall have 2 options in all the above cases of errors viz.
Accept your records/ changes – Means rejecting vendor’s changes
Accept vendor’s records/ changes – Means changing your records
After the changes are categorized in different categories according to their mistake, the taxpayer should get in touch with the vendor for rectifying such issues and it shall take much more time to ask vendors to get their returns sorted.
The reconciliation process is opened from 11th to 14th of the month. The reconciliation process lies between the due dates to file GSTR-1.i.e. 10th date of the next month and the due date to file GSTR-2, i.e. 15th date of the coming month. In this time it is a very difficult process for you to connect with each and every vendor. Therefore, the reconciliation will be conducted on a regular basis and at appropriate time slots, to make it an easy process.