Invoice Matching under GST
When GST was first rolled out on the 1st of July, 2017, it was visualised along with the concept of invoice matching, which would go on to determine the final Input Tax Credit i.e. ITC – which is clearly the heart and soul of any business. A recipient of a supply can avail ITC of the supply only on successful invoice matching under GST with the supplier. For this purpose, the various forms i.e. Form GSTR-1, Form GSTR-2, Form GSTR-3 and subsequently summary returns in the shape of Form GSTR-3B were introduced. As per the original design, there were primarily 2 things which were to be happen – GST invoice wise details furnished by suppliers in Form GSTR-1 were to undergo invoice matching, GST invoice wise details of inward supplies furnished by recipients in Form GSTR-2 were to under invoice matching – for the ITC to be allowed to the businesses.
Changes introduced in invoice matching under GST
However, as the days passed, Form GSTR-2 and Form GSTR-3 were deferred, and Form GSTR-1 and Form GSTR-3B were continued month after month, which essentially meant that there was no effective invoice matching process, and the entire nation filed returns on a summary basis. In the recently held 27th GST Council meeting however, the much awaited simplified return filing model was introduced, and the facility to avail the right ITC has become less complicated.
Nevertheless, it is important to be aware of the details that will be cross-checked by the GST portal to ensure that the invoice matching under GST is done correctly, for the purpose of a more compliant return filing, and availing of the right ITC.
What are the details verified for invoice matching under GST?
As per the invoice matching process in GST, the following are the key details which are verified:
- 1. GSTIN of the supplier
- 2. GSTIN of the recipient
- 3. Invoice or debit note number
- 4. Invoice or debit note date
- 5. GST Tax amount
How will the claimable ITC be calculated?
The claimable ITC in GST, will be calculated post invoice matching under GST is completed for:
- 1. Invoices or debit notes which are accepted by the recipient in Form GSTR-2A, without any modification
- 2. Supplies for which the claim of input tax credit by the recipient is equal to or less than the tax paid on the invoice or debit note by the supplier
How can one communicate discrepancy in ITC claim?
A discrepancy in ITC claim by the recipient will be communicated to both the recipient and the supplier, on or before the last day of the month in the following manner:
- 1. GST MIS-1: Discrepancy in ITC claim on inward supplies will be communicated to the recipient
- 2. GST MIS-2: Discrepancy in ITC claimed by the recipient will be communicated to the supplier
he supplier and recipient can thus make suitable rectification in the returns furnished for the month in which the discrepancy is communicated. If the discrepancy is not rectified, the amount of discrepancy will be added to the tax liability of the recipient for the month succeeding the month in which the discrepancy is made available.
Hence, invoice matching under GST is crucial for claiming the right ITC or Input Tax Credit. Thus all businesses should ensure that the invoice details are entered correctly and discrepancies are resolved in a timely manner to avoid loss of ITC, which may adversely affect the businesses working capital. More importantly, businesses should go through the provisions introduced in the 27th GST Council meeting, to understand how they should prepare for compliance under the simplified return filing model.