What is GSTR-2A Reconciliation?

Tally Solutions |Updated on: July 22, 2024

• What is GSTR-2A
• What is GSTR – 2A reconciliation?
• Why is GSTR – 2A reconciliation important?
• Why is ITC reconciliation important for businesses?

What is GSTR-2A?

GSTR-2A is a system-generated document that shows the details of purchases/inward supplies of the buyer. This is an auto-generated statement that provides near-to-real time visibility of inward supplies as and when the supplier details the invoices in his GSTR-1. In also considers the GSTR-5 and GSTR-6 to auto-populate the inward supplies and input tax credit (ITC) details.

Form GSTR 2A is not a return. It is simply a read-only document that allows viewing all invoices uploaded by your suppliers. This is a dynamic report which gets updated as when the suppliers upload the invoices related to goods or services sold to you. It’s a critical statement that defines the amount of ITC you will be eligible to claim in your monthly or quarterly GSTR-3B return. Because, as buyer, you will be allowed to claim ITC only if it is reflected in the GSTR-2A/2B. So, GSTR-2B is an auto-generated statement like GSTR-2A; the only change is that it is generated monthly and remains static.

What is GSTR–2A Reconciliation?

GSTR-2A reconciliation is a process of matching the invoices available in the GSTR-2A with the invoices recorded by a business in its books. The GSTR-2A reconciliation process helps businesses to match the invoices and find out the discrepancies, if any. As a process, ITC reconciliation is done at a different frequency, mainly on a monthly or fortnightly.

Example of GSTR-2A Reconciliation

The following is the inward and outward supplies of Super Cars Ltd. for the month of July:

• On12 August, JM steels upload the invoice to the GST Portal.
• On 15^th August, Ratna Steels uploaded the outward supplies made to Super Cars Ltd.

When Supers Cars Ltd download the GSTR-2A on 16^th August, the statement will show details of both the inward supplies. Now, Super Cars Ltd will match this with books of account, basically the purchase register to ensure that all the inward supplies they made are reflected in the GSTR-2A. In this case, both transactions match, and they will be fully eligible to claim ITC in GSTR-3B. This entire process of matching the invoices is called input tax reconciliation or GSTR-2A reconciliation.   

Why is GSTR-2A reconciliation important?

The GSTR–2A reconciliation essentially ensures that the form GSTR-3B and form GSTR-2A are in agreement with one another. The following reasons are why GSTR-2A reconciliation is vital:

• It allows you to ensure that no ITC is being lost on invoices where the vendor has declared their GST liability, but the credit has not been claimed by the buyer in their returns
• Frequent GSTR-2A reconciliation allows you to find the missing invoices in GSTR-2A and take the necessary steps to get those uploaded from the supplier
• There are situations where the invoices are uploaded, but the values are incorrect. Reconciling helps you take action to get those corrected
• To avoid claiming ITC on the same invoice multiple times
  
  

Why is ITC reconciliation important for businesses?

On January 1, 2022, the Finance Ministry launched the 100% invoice matching criteria and made it mandatory for all businesses. Essentially, any business that wishes to claim the ITC will have to show 100% parity between their filed returns and supporting invoices. This step was taken due to the earlier systems which had an allowance of 10% additional ITC, without supporting invoices to the claim, had to be reduced to 5% additional ITC and eventually removed altogether.

ITC reconciliation is important and relevant for all businesses because under the current GST paradigm, you will only be able to claim ITC if the concerned invoice is present in the GSTR-2A. This matching concept enables businesses on each side of the transaction to adhere to the GST code by the strictest of margins, by incentivizing transparency and punishing fraud or false return filings.

In conclusion, through this invoice matching and automated return generation mechanism, the government has tried to create a system that ensures the ITC is transferred between states in the most efficient way possible. The system is supposed to be self-regulating and self-motivating in the sense that all business owners, suppliers or traders, need to provide concrete evidence for all transactions to claim ITC.

Coming Soon - TallyPrime Release 5.0 

• Auto Download GST Data: Automatically download GSTR-2A/2B, GSTR-1, and GSTR-3B data for seamless reconciliation.
• Connected Services for GST Invoices and Returns: Upload GST invoices and returns effortlessly via connected services.
• Direct Filing and Signing of GSTR-1: File and sign the GSTR-1 return directly from TallyPrime, simplifying compliance.
• Enhanced Outstanding Reports: Gain insights on ITC at-risk with improved outstanding reports.
• GSTN Integration: Fetch, validate, and create ledgers using GSTN, ensuring accuracy and compliance.
• Stripe-View in Reports: Analyze reports more easily with the new Stripe-View feature in all reports.
• And Much More

Read more:

• What is GST Reconciliation
• What is GSTR 1 Reconciliation
• Why is GSTR-2A Reconciliation Important for Businesses

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