10 Apr GST Audit Basics – Part 01
GSTR-2A vs Purchase Books reconciliation primarily involves matching the data uploaded by the suppliers in their GSTR-1, reflected in recipient’s GSTR-2A with those of the recipient’s purchase data.
It is very important to reconcile GST Returns Data because:
a. Under GST Returns, the taxpayers will only be able to claim ITC if the particular invoice is present in the GSTR-2A or supplier’s data. This requirement forces the businesses to reconcile and claim ITC correctly.
b. Sometimes, it happens that the vendor has declared his/her GST liability and credit has not been availed by the purchaser in his GST returns. So, not to lose the claim of ITC, the data should be reconciled on a regular basis. This reconciliation process will ensure no ITC loss on any invoices.
c. To avoid any duplication, taxpayers must consolidate and reconcile the values. This will ensure the correct declaration and maximize the credit of input taxes.
Downloading and Arrangement of GSTR-2A
- Downloading GSTR 2A – of each month can take up a lot of time, usually it takes 20 minutes to download file for one month.
- Arranging Files – Once downloaded, arranging these files one below the other and eliminating blank rows and rows containing totals requires huge processing power.
- Maintaining Numerical Accuracy – While arranging the files and combining them, maintaining totals can be a challenge. Missing one row can make all the invested time useless. These manual errors are inevitable when dealing in volumes.
- Converting books in the same format as GSTR-2A – Before we look into this topic, it is important to understand how to identify a unique line in GSTR- 2A. In GSTR-2A a unique line is formed by the combination of GST NUMBER, INVOICE NUMBER, and RATE. Consolidate all the entries in books in the format where a unique entry is formed for a “GST NUMBER & INVOICE NUMBER & RATE”. It is possible that multiple entries of the same rate be appearing for a single invoice number, those need to be consolidated before the mapping process begins.
- Non-uniform Invoice numbers – Most of the times while passing entries in books, invoice numbers are not entered completely and this can cause a lot of problems as it becomes impossible to match with Vlookup.
- Inherent Limitation in GSTR 2A – GSTR-2A for any particular month may contain invoices from any previous month and monthly consolidation can be challenging as you would have to keep track of all the invoices that appeared in different months for proper reconciliation. Thus each GSTR-2A will affect each previous months reconciliation.
- Mapping – Mapping can be done on 3 levels
- Vlookup Match – An exact match of invoices
- Probable Match – Matching invoices on an approximate basis using advance logics
- Manual Match – Manually editing invoices to match them
- Party wise summary – Making a Party Wise Summary is essential to identify the parties who are responsible for this difference.
A lot of entities are unaware of the requirement of such mapping, and many face problem in making and gaining control over such reconciliations.
You can make and maintain these reconciliations in minutes with https://gsthelpline.org.in/
Further 12 different kinds of classification can be done for invoices:
1) Invoice appearing in books, not in GSTR-2A — (Having tax amount)
2) Invoice appearing in books, not in GSTR-2A- (Not having tax amount)
3) Invoice appearing in GSTR-2A, not in books- (Having IGST)
4) Invoice appearing in GSTR-2A, not in books- (Having Other GST)
5) Common Invoice, Category Match, Taxable Value Mismatch, Tax Mismatch
6) Common Invoice, Tax Match, Taxable Value Mismatch, Category Mismatch
7) Common Invoice, Category Mismatch, Taxable Value Mismatch, Tax Mismatch
8) Common Invoice, Category Match, Taxable Value Mismatch, Tax Match
9) Common Invoice, Tax Mismatch, Taxable Value Match, Category Match
10) Common Invoice, Taxable Value Match, Tax Match, Category Mismatch
11) Common Invoice, Category Match, Taxable Value match, Tax match
For more info or queries, comment below.