GSTR-9 vs GSTR-9C for FY 2025-26: 12 Reconciliation Traps That Trigger Demand Notices – A Practitioner’s Pre-Filing Checklist
Summary: As businesses prepare to file GSTR-9 and GSTR-9C for FY 2025-26, accurate reconciliation has become essential to avoid scrutiny and demands under Section 74A. The article identifies twelve common reconciliation traps, including mismatches between GSTR-1 and GSTR-3B, excess ITC claims over GSTR-2B, QRMP/IFF reporting errors, delayed credit notes, reverse charge mismatches, import IGST reconciliation, Rule 37 and Rule 37A ITC reversals, blocked credits, prior-period adjustments, HSN reporting gaps, and turnover differences across GST returns, books, e-invoices, and income-tax records. It also explains that GSTR-9 now auto-populates ITC based on the Invoice Management System (IMS), highlights the prospective e-invoice “Ship-to GSTIN” requirement from August 1, 2026, and clarifies that the February 2026 ITC set-off flexibility affects only tax payment utilisation, not annual ITC reporting. The key takeaway is that comprehensive, documented reconciliations supported by proper working papers are critical for error-free annual GST compliance and defending departmental scrutiny.
1. GSTR-1 outward supplies exceed GSTR-3B tax paid (Table 4)
Reported in GSTR-1: ₹X of taxable outward supply. Paid in GSTR-3B: less than ₹X.
This is the most common automated flag. If your invoice-level GSTR-1 declares more outward tax than your summary GSTR-3B discharged, the portal already catches it during the year through Rule 88C / DRC-01B, and the annual gap resurfaces in GSTR-9 Table 4 versus Table 9.
Practitioner note. The system reads GSTR-1 as your admitted liability. If 3B paid less, that is admitted-but-unpaid tax — the cleanest possible Section 74A case, often with interest under Section 50 and little room to argue. Reconcile GSTR-1 to 3B monthly; if a genuine timing difference exists (invoice in March GSTR-1, tax in April 3B), document it and ensure it lands within the FY’s amendment window.
2. ITC claimed in GSTR-3B exceeds GSTR-2B (Table 8)
Availed in GSTR-3B: ₹Y. Available per GSTR-2B (Table 8A, auto-populated): less than ₹Y.
GSTR-9 Table 8 reconciles 2B-available ITC against what you claimed. A negative Table 8D — claiming more than 2B supports — is the single biggest ITC red flag, and it has already been pinging you monthly via DRC-01C under Rule 88D.
Practitioner note. Not every Table 8 gap is wrong. Import IGST (claimed on the Bill of Entry, never in 2B), opening-balance ITC, and TRAN credit all legitimately sit in 3B without a 2B source. The mistake is failing to explain them. For FY 2025-26, remember that GSTR-9 now auto-populates ITC on an IMS basis (Notification 16/2025-Central Tax) — so an invoice you left “pending” or “rejected” in the Invoice Management System will not be in your 2B, and claiming it anyway from the purchase register is what creates the delta.
3. The QRMP / IFF divergence quarterly filers miss (Table 4 & Table 6)
B2B uploaded via IFF in months 1–2 + quarterly GSTR-1 in month 3 ≠ quarterly GSTR-3B.
This is the trap only someone who has actually filed for QRMP clients sees. Under the Quarterly Return Monthly Payment scheme, B2B invoices pushed through the Invoice Furnishing Facility in the first two months of a quarter are not re-entered in the quarterly GSTR-1 — they are already filed. The quarterly GSTR-1 carries only month-3 invoices plus the B2C and amendment data. When you assemble GSTR-9, the annual outward figure must equal (IFF months 1+2) + (quarterly GSTR-1) and tie to the four quarterly GSTR-3Bs and the monthly PMT-06 payments.
Practitioner note. The classic error is double-counting IFF invoices (adding them again from the quarterly GSTR-1 view) or, worse, omitting them because the quarterly GSTR-1 looked “complete.” Build the annual outward number from the IFF + GSTR-1 + GSTR-3B trail, not from GSTR-1 alone. The same applies to ITC: a QRMP buyer’s 2B is generated quarterly, so timing differences between IFF-driven availability and quarterly claims need a documented bridge.
4. Credit notes issued late or not reversed by the recipient (Table 4I–4K)
Credit note in books reducing turnover/liability, but issued or adjusted after the cut-off — or recipient ITC not reversed.
A credit note can reduce your output liability only if declared within the statutory window (by the return for November following the FY-end, i.e., the November 2026 GSTR-3B for FY 2025-26). Miss it and the reduction is lost. Separately, the Budget 2025 amendment to Section 34 makes the recipient’s reversal of corresponding ITC an explicit condition for the supplier’s liability reduction.
Practitioner note. Two-sided exposure: the supplier who books a credit note the recipient never reversed can have the liability reduction questioned; the recipient who never reversed faces an ITC demand. Reconcile credit notes both ways before year-end.
5. RCM liability under-declared or paid without matching ITC (Table 4G, 6C–6D)
Reverse-charge liability in books > RCM tax shown as paid in 3B; or RCM paid but ITC not correctly availed.
Reverse-charge supplies (GTA, legal, director’s remuneration, imports of services, notified goods/services) must be paid in cash, and the corresponding ITC — if eligible — availed separately. GSTR-9 Tables 4G (RCM liability) and 6C/6D (RCM ITC) are routinely under-filled.
Practitioner note. Cross-check RCM against your expense ledger, not your GST returns — the liability is triggered by the expense, whether or not anyone reported it. Missing RCM is a favourite scrutiny item because it is provable straight from the P&L, and self-invoicing for unregistered-supplier RCM must exist on file.
6. Import IGST and ICEGATE credit that never appears in 2B (Table 6E, Table 8)
ITC on Bill of Entry claimed in 3B/Table 6E, but absent from GSTR-2B.
Import IGST flows from ICEGATE/Bill of Entry, not from any supplier’s GSTR-1, so it structurally never sits in GSTR-2B. Claiming it is correct; failing to evidence it is the problem.
Practitioner note. Keep Bill of Entry numbers and ICEGATE acknowledgements mapped to each claim. When Table 8 shows the gap, your reconciliation should point straight to the BoE schedule. This is the most “explainable” of all Table 8 differences — but only if the working paper exists before the notice.
7. 180-day non-payment reversals (Rule 37) not reflected
Supplier unpaid beyond 180 days, but ITC never reversed.
Under the second proviso to Section 16(2) read with Rule 37, ITC on any invoice unpaid to the supplier within 180 days must be reversed (with 18% interest) and re-availed on payment. The annual return is where unreversed 180-day items surface against the creditors’ ageing.
Practitioner note. Run the creditors’ ageing at year-end against ITC claimed. An old unpaid invoice with credit taken is a clean reversal-plus-interest demand. Re-availment after payment is not time-barred by Section 16(4) — but the original reversal cannot be skipped.
8. Supplier-default reversals under Rule 37A / Section 16(2)(c)
Supplier did not file GSTR-3B / pay tax by 30 September, but buyer’s ITC left intact.
Section 16(2)(c) makes the supplier’s actual payment of tax a condition of your credit; Rule 37A operationalises it — if the supplier has not filed/paid by 30 September following the FY, the buyer reverses by 30 November, re-availing when the supplier later pays.
Practitioner note. This requires tracking supplier compliance, not just your own. A vendor flagged as non-filer or “NGTP” turns your otherwise-valid ITC into a reversal. Bona-fide buyers have some High Court relief (Gauhati, Karnataka, Allahabad, Tripura) on supplier default, but treat that as a litigation position, not a filing assumption.
9. Blocked credits under Section 17(5) availed and not reversed (Table 7)
ITC on motor vehicles, employee welfare, works contract, CSR, etc. claimed and sitting unreversed.
Section 17(5) blocks specific credits regardless of business use. GSTR-9 Table 7 is where reversals and ineligible ITC are declared; an empty Table 7 on a business that obviously incurs blocked-credit expenses invites scrutiny.
Practitioner note. Maintain a blocked-credit register through the year. The reversal is cheaper than the demand-plus-penalty, and a clean Table 7 signals a well-run ITC process to the reviewing officer.
10. Prior-period transactions misplaced across the year-end (Tables 10–13)
Invoices or ITC of FY 2025-26 declared in the returns of the next FY — or vice versa.
GSTR-9 Tables 10–13 capture transactions of FY 2025-26 that were declared (or amended, or whose ITC was claimed) in the returns of April–November 2026. Get the side of the line wrong and your Table 4/6 totals will not reconcile, and the differential tax in Table 14 will misstate.
Practitioner note. This is where most “the numbers don’t tie” panic originates at filing time. Maintain a single cut-off schedule listing every FY 2025-26 transaction settled in the next year’s returns, with the exact GSTR-1/3B period it landed in. Tables 10–13 then fill themselves.
11. HSN summary gaps and the e-invoice “ship-to” change (Tables 17–18)
HSN-wise outward (Table 17) / inward (Table 18) summary incomplete or at the wrong digit level.
HSN reporting is mandatory — broadly 6 digits above ₹5 crore turnover and 4 digits below — and the annual HSN summary must reconcile to your outward and inward values. A separate, forward-looking item: the GSTN advisory dated 17 June 2026 makes “Ship-to GSTIN” conditionally mandatory in e-invoicing from 1 August 2026.
Practitioner note. The ship-to change is prospective — it bites FY 2026-27 reconciliations, not FY 2025-26, because it applies to e-invoices generated on or after 1 August 2026. Flag it now for clients with bill-to/ship-to differences (stock transfers, third-party deliveries), because a wrong ship-to GSTIN will later create place-of-supply and HSN-summary mismatches. For FY 2025-26 itself, the HSN focus is simply completeness and the correct digit level.
12. Turnover that doesn’t tie across GSTR-9, books, e-invoice and ITR (GSTR-9C Part II)
Turnover per audited financials ≠ turnover per GSTR-9 ≠ e-invoice/IRP totals ≠ turnover per ITR/26AS.
GSTR-9C Part II exists to reconcile audited-financials turnover with GSTR-9 turnover and explain every difference. But the bigger 2026 risk is cross-system: the department now routinely matches GST turnover against the IRP’s e-invoice totals and against income-tax turnover.
Practitioner note. Three reconciliations, not one: GSTR-9 vs books (the 9C job), GSTR-1 vs e-invoice/IRP (timing and missed IRNs), and GST turnover vs ITR/26AS (the cross-departmental flag that increasingly drives notices). Document the standard reconciling items — schedule of credit notes, non-GST income, other operating income, branch transfers — so the difference is explained, not merely present.
A note on the February 2026 set-off change — and why it is not a Table 6 issue
Many practitioners are linking the February 2026 ITC set-off advisory to GSTR-9 Table 6. It doesn’t belong there. GSTN Advisory 647/649 lets you apply CGST and SGST credit to residual IGST liability in any order once IGST credit is fully exhausted — a GSTR-3B portal-logic flexibility from the February 2026 tax period, not a change in law. The mandatory IGST-first rule (Section 49A/49B, Rule 88A) is unchanged, and CGST↔SGST cross-utilisation stays barred. Crucially, this affects how you paid (the cash-vs-credit and head-wise split), not what ITC you availed — which is what GSTR-9 Table 6 reports. So don’t expect the set-off change to explain a Table 6 delta; if anything, it matters when reconciling the tax-paid split in Table 9, not the ITC-availed breakup in Table 6.
The two-column discipline (and the template)
Every trap above reduces to the same move: put the reported figure next to the expected figure and quantify the difference with a reason. For each line — outward tax, ITC availed, ITC reversed, RCM, tax paid — your working paper should carry: value per GSTR-1/IFF, value per GSTR-3B, value per GSTR-2B/books, the difference, the reason code, and the corrective action (amend, reverse, pay via DRC-03, or document-and-explain). A reconciliation that names the reason survives scrutiny; one that only shows a number does not.
The accompanying Excel template lays this out across the twelve traps with the reported-vs-expected columns, a reason-code list, and a DRC-03 decision column, so the year-end exercise becomes a checklist rather than a scramble.
Frequently asked questions
1. When are GSTR-9 and 9C for FY 2025-26 due, and who must file? 31 December 2026. GSTR-9 above ₹2 crore aggregate turnover; GSTR-9C above ₹5 crore, self-certified. Filing is barred beyond three years from the due date.
2. If a mismatch leads to a demand, is it under Section 73? No — for FY 2025-26 it is Section 74A, the unified provision that replaced Sections 73 and 74 from FY 2024-25, usually preceded by DRC-01B/01C, ASMT-10 or a DRC-01A intimation.
3. Does GSTR-9 now pull ITC from IMS? Yes. For FY 2024-25 onward the GSTR-9 format auto-populates ITC on an IMS basis (Notification 16/2025-Central Tax), so invoices left pending/rejected in IMS won’t be in your 2B — claiming them anyway creates a Table 8 gap.
4. Does the February 2026 set-off flexibility change my annual ITC figures? No. It is a GSTR-3B payment-utilisation flexibility (any order for CGST/SGST against residual IGST after IGST is exhausted), not a change to ITC availed. IGST-first remains mandatory.
5. Does the new e-invoice “ship-to GSTIN” rule affect FY 2025-26 reconciliation? Not directly — it applies to e-invoices from 1 August 2026, so it affects FY 2026-27. Flag bill-to/ship-to cases now to avoid future place-of-supply and HSN mismatches.
6. Can I revise GSTR-9 after filing? No. There is no revision facility — accuracy at first filing is essential, which is exactly why the pre-filing reconciliation matters.
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This article is general information as on 25 June 2026 and is not advice on your specific facts. GST forms, thresholds and portal behaviour are changing through 2026; verify current positions on the GST portal and the latest CBIC notifications before filing.
The author, CA Sundram Gupta, is the founder of Patron Accounting LLP, a CA & CS firm headquartered in Pune with offices in Mumbai, Delhi and Gurugram, advising businesses on GST annual returns, GSTR-9C reconciliation and departmental enquiries.
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