GSTR 1 Reconciliation
1. 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 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.
2. 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 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 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.
3. 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 processing of returns.
Therefore, the vendor-wise reconciliation must be done on a regular basis. If not done on 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|
|Reconcile transitional Input Tax Credit||With previous carried forward Input tax credits in returns filed under erstwhile taxation laws with GST TRAN - 1 in which the carried forward ITC is transited into your new returns in GST.|
|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 table of exports at 6A||Match Table of exports at 6A of GSTR 1 with 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|
4. Generating GSTR 1 Reconciliation report in Tally.ERP 9
GST compliance is complete if information of outward and inward supplies in books reconcile with the data on GST portal. Due to involvement of counter-party, multiple systems, and users, discrepancies creep in frequently making reconciliation a critical step.
The filing process involves
- Supplier uploading details of outward supplies in GSTR 1.
- Buyer receiving the supply details in his GSTR 2A.
- Buyer approving, rejecting, modifying or adding the supply details and filing GSTR 2.
- Supplier receiving the modified supply details in GSTR 1A. Supplier approving or rejecting the updated supply details.
All the approval, rejection, or modification is done on the GST portal. The supplier or the buyer has to login to the GST portal to check the status of each voucher. The GSTR 1 report in Tally.ERP 9 has the status reconciliation feature that enables you to mark the status of each transaction based on the online status. This will allow you to track the status of all the transactions uploaded without having to login to the portal.
To view Status Reconciliation report:Step 1: Go to Gateway of Tally > Display > Statutory Reports > GST > GSTR – 1 .
Step 2: Click U: Status Reconciliation. The Status Reconciliation screen appears
Components of GSTR 1 reconciliation report:
|Count||Displays the total count of vouchers under the particular table for the reporting period.|
|Set Status||With Tally.ERP 9, one can drill down from any table in GSTR 1 to view the voucher register with list of vouchers and change the status of the voucher.
To set the status:
Step 1: Select a voucher or multiple vouchers using Spacebar.
Step 2: Click S : Set Status.
Step 3: Select the Activity status and Reconciliation status of the voucher based on the details in the GST portal and press Enter.
The status change based on the status set for each transaction, is displayed in the Voucher Register.