GST reconciliation necessitates the comparison of purchase and sales data from several returns as well as sales and purchase registers.
This content piece aims to cover everything about GST reconciliation.
The GST Act contains no definition for the term "reconciliation." In accounting terminology, "reconciliation" can be defined as the process of matching balances after a period to confirm that two sets of accounting records are in agreement.
Furthermore, because all GST returns are interconnected, GST reconciliation is critical. GST reconciliation enables taxpayers to determine if taxes are underpaid, overpaid, or not paid at all.
Why is GST Reconciliation vital?
GST reconciliation enables taxpayers to determine if taxes are underpaid, overpaid, or not paid at all. The following are the many types of GST reconciliation:
- To match the Input Tax Credit, reconcile GSTR-3B with GSTR 2A or GSTR-2B. (ITC)
- To identify anomalies in sales details, reconcile GSTR-3B and GSTR-1.
- The provisional ITC and the real ITC claimable under GSTR-2B are reconciled.
What Is GST Reconciliation and How Do I Do It?
GST reconciliation is required at several levels:
- Reconciling every GSTIN's data
- PAN-level data reconciliation
- Reconciling data by supplier to claim any unclaimed ITCs or reverse any ITCs that are ineligible.
Reasons for GST Data Inconsistencies
- The tax liability has been stated by the supplier, but no ITC has been claimed in the GST return.
- Although the provider does not reveal the tax due, the recipient has claimed ITC in his GST return.
- There is a data difference between the declared liability and the ITC claimed.
- Human error, such as entering the wrong GSTIN for the supplier or beneficiary.
Consequences of Failure to Reconcile Data in GST
If a taxpayer fails to reconcile GST return data, the GST authorities may issue scrutiny notices. In some situations, a GST officer can even suspend a taxpayer's GST registration using form REG-31. The following are examples of when a GST officer can suspend a taxpayer's GST registration:
- The disparity between the sales data in GSTR-1 and GSTR 3B
- The difference between the GSTR-2B and GSTR-3B purchase data
Concluding Lines….
While reconciling a little amount of data is simple, the challenge arises when dealing with large amounts of data. And manually reconciling large amounts of data is not only time-consuming, but it can also result in GST registration suspension owing to data anomalies. To avoid receiving notices from the GST administration, it is highly suggested that a taxpayer should hire a well-versed resource.
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