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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.
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.
The following is the inward and outward supplies of Super Cars Ltd. for the month of July:
Inwards Supplies of super Cars Ltd
When Supers Cars Ltd download the GSTR-2A on 16th 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.
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:
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.
The latest version of TallyPrime is filled with numerous features to cater to your GST as well as other business function needs. Simply upload your GSTR-2A/2B statement, and TallyPrime will automatically reconcile and provide you with a concise and detailed summary of the reconciled transactions and discrepancies. The best aspect is that all unreconciled transactions are identified in several categories, allowing you to determine the cause of the discrepancy and take the most appropriate action to correct it. Here is a quick list of things that you can do using the GSTR-2A/2B reconciliation feature of TalyPrime:
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