One word which stand synonym to GST from compliance perspective is RECONCILIATION! Most of the Consultant’s time or the taxation team of any organization is spent in preparing and undertaking several reconciliations under GST. Because of the same, the demand and market for tax technology solutions have thrived and prospered. Several consulting firms now have dedicated tax technology teams whose main task is to provide the front running team with necessary arsenal to assist their clients in undertaking reconciliations of the voluminous data.

Through this article, I have tried to capture some of the important and necessary reconciliations which are must from the finalization of books standpoint. The same are as follows:

1. Reconciliation of Revenue of operations to be reported in financials in books v. in FORM GSTR-1

Though GSTR 9C has now been discontinued which contained this particular reconciliation, it is important to undertake this reconciliation on a periodical basis to ensure that all the income reported in books have been properly accounted for in GST returns at invoice level. This will also help the organization in mitigating risk of future litigations

2. Reconciliation of revenue from operations in books v. in e-Way Bills

In earlier VAT regime, it was observed that the sales turnover which could not be reconciled with the e-way bills/ road permits generated were treated as deemed sales by the tax officers and taxes were levied on such turnover. Therefore, in order to avoid such cases, the organizations may carry out this reconciliation on a periodical basis to identify discrepancies in time bound manner and take corrective actions accordingly

3. Reconciliation of GSTR 1 v GSTR 3B

This is one of the reconciliations which is being provided to tax officers by GSTN on a periodical basis and most of the notices are issued based on this reconciliation. Hence, it becomes very important to file your GST returns in such a manner that there should not exist any difference between GSTR 1 and GSTR 3B. However, in case there is any difference, the same should be properly accounted for and reason for differences should be recorded as well.

4. ITC Reconciliation in FORM GSTR-2A v. FORM GSTR-3B

The SUPERSTAR of all the reconciliations. This is one of the most crucial part of the GST compliances o ensure that GST credits availed are secured and free from all the litigations. Various tax technology solutions are based on this reconciliation itself

One more important part which is now added in this reconciliation is the e-invoice reconciliation. Wherever, e-invoice is applicable to respective vendors, reconciliations should be undertaken to ensure that IRN has been generated for the invoices generated by such vendors

5. ITC Reconciliation in FORM GSTR-2A v. in Books

Again, the superstar reconciliation. Since, the process of availing GST credits is cumbersome task now a days because of reconciliation with GSTR 2A and the complex calculations of Rule 36(4), it is important that whatever credits are recorded in books must reconcile with GSTR 2A. Recording and segregating GST credits under Credit control A/c and Credit final A/c can be a convenient way to keep track of credits

Other important reconciliations which can be undertaken are as follows:

6. Where e-invoice is applicable, reconciliation of data sent to IRP for e-invoice generation vis-à-vis the same reported in GST returns

7. ITC reversed in GST returns vis-à-vis ITC reversed and booked as cost in the books of account

8. Ineligible ITC reported in GSTR 3B vis-à-vis recorded in books

9. Adjustments of previous year, done in subsequent GST returns – Since, GSTR 3B cannot be amended or revised, any adjustment of prior period done in subsequent GST returns should be properly reconciled and recorded so that necessary replies can be submitted at the time of assessments/audits

10. Reconciliation of accounts of the suppliers and vendors

11. Refund claimed on GSTN portal vis-a-vis GST credit recorded as refund receivable in books

12. Refund rejected on the GSTN portal vis-a-vis treatment of such refund in books

13. GST paid through GSTR 3B vi-a-vis GSTR payable ledger in books

14. GST paid in cash in March return with payables recorded under current liability as per books

15. Balance of Electronic Credit ledger with ITC in books

16. Balance of Electronic Cash ledger with excess cash paid in books

17. Cross charge of expenses among several GSTINs and treatment of the same in books

18. SCN/ ASMT 10/ Demand order with contingent liability/ liabilities

19. Payment of interest and late fees on the GSTN portal vis-à-vis recording the same as expenses in books

20. SCN/ASMT-10/ demand orders issued by tax officers vis-à-vis disclosure of the same (as contingent liabilities)

21. Analytical reconciliation such as comparison of sales / GST output liability / ITC with prior periods to identify any discrepancy and identifying reasons of such deviation

22. In certain cases, such as Government contracts / e-commerce related business, reconciliation of TDS and TCS credits with the debtor accounts

23. If ISD registration has been taken, reconciliation of ISD credits vis-à-vis common expenses recorded in books of accounts

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Qualification: CA in Job / Business
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Location: Gurugram, Haryana, IN
Member Since: 02 Oct 2018 | Total Posts: 6
I am an Associate Member of the Institute of Chartered Accountants of India and have more than 3 years of professional experience in Indirect taxes related work. View Full Profile

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September 2021