GSTR 1 Reconciliation

|Updated on: January 18, 2022

What is GST Reconciliation?

Reconciliation of GST returns and Matching concepts under GST are not new to any taxpayer. The process has been carried forward from earlier VAT and excise law. Back then, matching of data between the books of accounts and tax returns was an easy task for many business organizations. If the department on processing the returns found some discrepancy, communications would be sent to the taxpayer and accordingly further scrutiny and audits would be carried out by the authorities.

But in GST, this process has gained significance as the sanity of the Input tax credit utilized by businesses is monitored by the GST authorities regularly. Under GST, the taxpayers must on a regular basis reconcile their data every month with the data declared by its vendors too. The return filing and processing are semantically automated, and the GST returns are inter-linked.

Common errors during GST reconciliation

There can be several causes for mismatches such as:

The vendor has declared liability, but credit is not availed in GST returns: Any left-out credits should be availed at the earlier of the due date of September returns or Annual returns.

Non-declaration of liability on supplies by the vendor, but businesses have availed credit on such procurements in the GST returns : Businesses should follow up with the vendor to ensure that the liability is declared. Otherwise, risks of such credits being disallowed may arise.

Differences between liability declared by the vendor and credit availed: The reasons for differences should be identified and reconciled appropriately (e.g. by servicing debit notes/credit notes etc.) before 30 September 2018.

Errors in the details furnished: There can be a mismatch in the fields such as GSTIN of the supplier/recipient, number and date of the invoice/debit note etc. Make amendments in the GST returns of the month following the relevant month when mistakes were committed.

How to do GST Reconciliation

To start with, reconciliation must be done within the GSTIN and then must be taken to the PAN level. Reconciliation of Goods and Services Tax returns must be done across months for the entire financial year 2017-18. And also, the amendments made to GST returns of FY 2017-18 in the current period of 2018-19 must be considered.

Tax credit is the most important component of the GST return as it holds greater relevance when compared to any other component of the GST returns. The genuineness can be confirmed by a taxpayer now at a stage of filing GST returns (vis-vis with GSTR 2A & take action). This function was carried out by tax authorities in erstwhile taxation laws, usually during the processing of returns.

Therefore, the vendor-wise reconciliation must be done on a regular basis. If not done on a regular basis, then the taxpayer must consider doing it before filing September 2018 GST returns. This process will help to identify and declare any unclaimed ITC within the deadline.

Reconciliation process – To do list

To do Items

Returns in which this must be given effect to or reconciled with

To claim the Input Tax Credit belonging to FY 2017-18, if not claimed earlier or reverse the ineligible ITC, if not identified and done earlier

In the monthly summary return GSTR 3B

If you are an exporter then, match the table of exports at 6A

Match Table of exports at 6A of GSTR 1 with the corresponding declaration in GSTR 3B

Comparison to ensure that ITC is claimed at right figures and liability has been declared with right values and the same has been carried forward in the GST returns filed

Comparison between Annual Income Tax Return with Annual GST return by preparing workings for GST reconciliation format for audit


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