Browsed by
Tag: GST return

invoicing
Union Budget 2020: Fake invoicing under GST a non-bailable offence

Union Budget 2020: Fake invoicing under GST a non-bailable offence

Comments 0 Comment

In order to crack down on fake invoicing and fraudulent input tax credit (ITC) refunds under the goods and services tax (GST), the Budget has introduced strict penal provisions under the GST legislation, making it a non-bailable offence. The move has already been approved by the GST Council.

Besides, Finance Minister Nirmala Sitharaman announced that the new GST return framework and e-invoicing would be implemented from April 1, to improve compliance and plug the tax revenue leakages.

According to the government, the masterminds of fraudulent ITC rackets involve people like daily wagers, rickshaw pullers etc. As per the changes in the law, those fraudulently availing ITC without invoice or bill in cases where the amount of tax evaded or the amount of ITC wrongly availed or utilised or refund claimed worth over Rs 5 crore will be punishable with imprisonment for a term which may extend to five years and with fine and shall be cognizable and non-bailable.

“Further, the scope of Section 132 has been expanded by extending the provisions to a person who causes to commit and retains the benefits arising out of different offences,” said Abhishek
GST collections touched Rs 1.11 trillion in January, the second highest monthly collection since the roll out, the third straight month of GST receipts crossing the Rs 1-trillion mark.

“With an eye on the future of Indirect tax regime in India, this year’s Budget has aimed at simplification of tax compliances. New GST return framework and E-invoicing would be implemented from April 1, 2020, primarily in an attempt to plug the tax revenue leakage on account of fake invoicing and fraudulent claims of input tax credit,” said Anita Rastogi – Partner, Indirect Tax & GST.

Source: Business-Standard.

XaTTaX is Best GST Software, Simplify your Financial matters with GST eFiling Software for Return Filing & GST Billing Software in India.

  • Automate Invoicing and get Paid Faster
  • Integration with all popular accounting software
  • Manage your GST and E-WayBill Software anytime anywhere using multiple devices

Get Our GST Software DEMO and E-WAY BILL DEMO for FREE

gst refund claim
Central government, states to get tough on GST refund claims

Central government, states to get tough on GST refund claims

Comments 0 Comment

Central and state government officials on Tuesday decided to scrutinize goods and services tax (GST) refund claims more diligently, compulsorily investigate all fake claims and step up coordination between income-tax and GST authorities.

The move to tighten enforcement measures comes amid the continued shortfall in GST revenue collections.

The decision to deal with fake tax refund claims by businesses and traders with no leniency was taken at a meeting of central and state officials in the capital.

At the meeting, led by revenue secretary Ajay Bhushan Pandey, it was decided to set up a panel of officers to recommend quick measures to curb “fraudulent refund claims, including the inverted tax structure refund claims and evasion of GST”, said an official statement. The panel will give its advice within a week, which may be implemented across the country by January-end, it added.

With lower-than-expected revenue collection leading to friction between Union and state governments, primarily over delays in compensation payments to states, the authorities have decided to become more strict in their approach to enforce provisions of the law. In the first two years since the indirect system was introduced, the government had taken a lenient view to help businesses make a smooth transition to the new tax regime.

On Tuesday, officials also explored ways of sharing data among the GST Council, Central Board of Indirect Taxes and Customs (CBIC), Central Board of Direct Taxes (CBDT), the revenue department and the various enforcement agencies under the government.

Considering that fraudulent claims for input tax refunds are made on raw material of products allegedly exported, officials explored the possibility of linking GST refund for risky and new exporters with the foreign exchange remittances they receive.

The other proposal was to insist on a single bank account for foreign remittance receipt and GST refund disbursements.

Verification of tax credits availed by taxpayers that do not match with what their suppliers have disclosed was also discussed, the statement said.

Source: live-Mint

XaTTaX is Best GST Software, Simplify your Financial matters with GST eFiling Software for Return Filing & GST Billing Software in India.

  • Automate Invoicing and get Paid Faster
  • Integration with all popular accounting software
  • Manage your GST and E-WayBill Software anytime anywhere using multiple devices

Get Our GST Software DEMO and E-WAY BILL DEMO for FREE

gst council
GST Council votes for a change, shifts lotteries to highest slab

GST Council votes for a change, shifts lotteries to highest slab

Comments 0 Comment

The Goods and Services Tax (GST) Council on Wednesday departed from its practice of consensus-based decision-making, opting the first time for a vote to settle differences among states over the taxation of lotteries.

The council also deliberated upon a presentation made by a committee of officers set up to study revenue augmentation, but refrained from any generalised rate increase or removal of exemptions.

“The council has decided to impose a single rate of 28% on state-run and authorised lottery,” union finance minister Nirmala Sitharaman said after the 38th meeting of the GST Council.

It decided to put the matter to vote following wide divergence over whether there should be a single rate or dual rates.

“Every attempt was made to keep the set tradition alive … Every attempt was made to convince … But, eventually the council was reminded that the rules allow (for voting) and that tradition is not part of the rule book,” Sitharaman said. “I took the sense of the house … and we went ahead with the decision to have a vote. So, it is not enforced by the council, or by me as the chair.”

All decisions in the previous 37 meetings of the GST Council, headed by the union finance minister with state ministers as its members, had been taken unanimously.

Some Steps Against Tax Evasion
These included crucial ones on the finalisation of the GST law as well as the rates for goods and services.

On Wednesday, 21 states voted in favour of the single rate of 28% on lotteries, while seven voted against, an official said. The GST Act had prescribed two rates — 12%, if the lotteries are sold within the same state, and 28%, if a state sells its lottery tickets outside its jurisdiction.

Tax experts said hopefully the council wouldn’t have to resort to voting frequently and Wednesday’s remained an exception.

“For the success of GST, it’s important that the Centre and states work together and take decisions with consensus as they have been doing till now,” said Pratik Jain, leader of indirect taxes at PwC.

REVENUE IN FOCUS
The council gave “necessary guidance” to officers for analysing the impact of tax exemptions and concessions, the tax base and compliance measures needed to keep pace with revenue needs, a government statement said.

The officers’ committee, which made a presentation of GST data before the council, didn’t make any direct or indirect suggestions on tax rates. The minister said it would further analyse the data and come up with a report with its recommendations, which would be taken up at the next council meeting.

Maximising GST revenue has been one of the focus areas for the government. Collections remained below Rs 1 lakh crore for three continuous months, before it crossed the mark in November.

The council, meanwhile, took certain steps against tax evasion. It slashed the input tax credit to 10% from 20% of eligible credit if invoices or debit notes were not reflected in filings. To check fake invoice, it allowed officers to take suitable action to block credits that they believed were fraudulently claimed.

COMPENSATION FOR STATES
States raised the issue of a delay in the release of compensation that they were promised against any revenue loss from the implementation of GST. Some of them were apprehensive about the availability of funds to be distributed in the future.

“The Centre will not have appropriate funds to compensate states after February,” West Bengal finance minister Amit Mitra said. He said the government withheld payment to states despite having Rs 42,000 crore in its kitty.

Asked about the issue, Sitharaman said that during the discussions everyone recognised that an instalment of the compensation was released a few days ago.

The Centre had on Monday released Rs 35,298 crore as compensation to states. “There’s no gap (in communication) within the council. In the council and in the Rajya Sabha, I have explained in detail how we remain committed to cooperative federalism and to honour the promises given on GST,” she said.

CHANGES IN A FEW RATES
Sitharaman said the council decided to tax woven and non-woven bags at 18%, compared with 12% at present.

It exempted from tax the upfront amount payable for long-term lease of industrial and financial infrastructure plots by any entity that is owned 20% or more by the Centre or state governments.

On lotteries, the new unified rate of 28% will be applicable from March 1, 2020, revenue secretary Ajay Bhushan Pandey said.

The tax is levied on the face value of the lottery tickets, inclusive of the prize money to be distributed to the winners, margin of agents, retailers and distributors.

State governments and the lottery industry had represented to the council on the issue and it had set up a group of ministers to examine it. The council, which had considered the issue in its July meeting, then referred it to the attorney general for his view. But, divergences continued among states, prompting the decision by vote.

Source: Economic-Times

XaTTaX is Best GST Software, Simplify your Financial matters with GST eFiling Software for Return Filing & GST Billing Software in India.

  • Automate Invoicing and get Paid Faster
  • Integration with all popular accounting software
  • Manage your GST and E-WayBill Software anytime anywhere using multiple devices

Get Our GST Software DEMO and E-WAY BILL DEMO for FREE

E-invoice
GST: CBIC notifies E-Invoice System, Mandatory for Businesses with Rs 100cr Turnover from April 1, 2020

GST: CBIC notifies E-Invoice System, Mandatory for Businesses with Rs 100cr Turnover from April 1, 2020

Comments 0 Comment

The Central Board of Indirect Taxes and Customs ( CBIC ) has notified E-Invoice System mandatory for business with Rs. 100 crores turnover from April 1st, 2020.

The E-invoice will be mandatory for both these businesses categories. For businesses having turnover less than 100 Crore, it would remain voluntary and on trial basis from 1st April 2020.

The upcoming ‘E-invoicing’ system will be a boon to MSMEs as it will open the facility of instant bank loans for MSMEs. With the new system of E-invoicing, banks may not require a plethora of physical documents and their validation processes rather they can do MSMEs’ ratings for the loan on the basis of their e-invoicing. Also, the E-invoicing will bring in ease of doing business as it will pre-populate the GST returns besides reducing the reconciliation problems.

In the Notification, the CBIC has also notified the GST electronic portals for the generation of e-invoice and E-Invoice Rules.

Having done a full preparation for last 6 months to introduce E-invoicing system, the government has decided to start ‘E-invoicing’ in a phased manner for generating business to business (B2B) invoices on a voluntary basis. It has been decided by the government that businesses having a turnover of Rs.500 Crore or more would take up E-invoicing from 1 st January 2020 on voluntary and trail basis while the businesses with a turnover of Rs.100 Crore or more would start E-invoicing on voluntary and trial basis from 1st February 2020. However, from 1st April 2020, the E-invoicing will be mandatory for both these businesses categories. For businesses having turnover less than 100 Crore, it would remain voluntary and on trial basis from 1st April 2020.

The basic aim behind the adoption of the e-invoice system is to facilitate convenience to the taxpayers by further simplifying the GST Return system. Through E-invoicing the tax department would help the businesses and taxpayers by pre-populating the returns and this would also result in reducing the reconciliation problems. Actually the fundamental principle behind introducing the e-invoicing is to put the technology at the service of the people to create ease of living and ease of doing business.

The E-invoicing system would help to generate invoice in a standard format so that invoice generated on one system can be read by another system and reporting of e-invoice to a central system becomes possible. The adoption of these standards would not impact the users of invoice; however, all the accounting software would adopt the new e-invoice standard wherein they would re-align their data access and retrieval in the standard format.

The generation of e-invoice will be the responsibility of the taxpayer who will be required to report the same to Invoice Registration Portal (IRP) of GST. This portal will generate a unique Invoice Reference Number (IRN) and digitally sign the e-invoice and also generate a QR code. The QR Code will contain vital parameters of the e-invoice and return the same to the taxpayer who generated the document in the first place. The IRP will also send the signed e-invoice to the recipient of the document on the email provided in the e-invoice.

E-invoice would not mean the generation of invoices from a central portal of the tax department. The taxpayer would continue to use his accounting system/ERP or excel based tools or any such tool for creating the electronic invoice as s/he is using today. To achieve this goal there would be a need to standardize the format in which electronic data of an Invoice will be shared between various stakeholders to ensure interoperability of the data.

Source: TaxScan.

XaTTaX is Best GST Software, Simplify your Financial matters with GST eFiling Software for Return Filing & GST Billing Software in India.

  • Automate Invoicing and get Paid Faster
  • Integration with all popular accounting software
  • Manage your GST and E-WayBill Software anytime anywhere using multiple devices

Get Our GST Software DEMO and E-WAY BILL DEMO for FREE

gstr-3b
CBIC enables RESET option for GSTR-3B in GST Portal

CBIC enables RESET option for GSTR-3B in GST Portal

Comments 0 Comment

The Central Board of Indirect Taxes and Customs ( CBIC ) has enabled RESET option for GSTR-3B in Goods and Services Tax ( GST ) Portal.

This facility can be used in GST Portal where GST Return submitted but it is not filed.

GSTR-3B is a monthly return. All regular taxpayers need to file this return till March 2019. You can file your return on GST Portal.

The Goods and Service Tax (GST) mandates the filing of GSTR 3B return even by those taxpayers with nil returns. It is a monthly self-declaration form that has to be filed by all taxpayers irrespective of the returns.

Get Your GST Returns Filed Easily and
Effortlessly!!!

Our GST software enables you to file your GST returns free of any hassle. Get more details by writing to us at gst@xattax.in. 

Source: TaxScan.
GST Compensation
Five state finance ministers lash out at Centre over delay in GST compensation

Five state finance ministers lash out at Centre over delay in GST compensation

Comments 0 Comment

Five opposition-ruled states on November hit out at the Centre over delays in releasing GST compensation saying their finances are in dire strait due to delays. AAP-ruled Delhi, TMC-run West Bengal, Congress-ruled Punjab and Rajasthan and Left-run Kerala in a joint statement said compensation since August is pending, making running administration difficult in the states.

When the Goods and Service Tax (GST) subsumed 17 different central and state levies from July 1, 2017, states were promised that they will be compensated for any loss of tax revenues for five years due to the introduction of the new levy. The compensation was to be paid on a monthly basis but the same has not bee released so far for the months of August and September and that of October would be due soon.

In all, some Rs 10,000 crore is due to the five states, the finance ministers of the opposition ruled states said.

BJP-ruled states too would not have got compensation but they haven’t yet spoken about it.

The central government has so far commented on the issue nor has it given out reason for the delay.

Speaking to reporters, West Bengal Finance Minister Amit Mitra said, “We thought we will make an appeal to Union Finance Minister (Nirmala Sitharaman) saying that she must personally look into this and not violate the constitutional provisions as passed by Parliament of India.”

All the states are in distress if this compensation which is due to them is not given, he said.

“It is a dangerous situation, there is no precedence before,” he said, adding this is the first time in history that there has been a delay.

“States have not received GST compensation for August and September which is against constitutional amendment where it was stated clearly that states when they fall below 14 per cent rate of growth of their GST (revenue), they will get compensation by the Centre. So far we have been receiving compensation,” he said.

As far as West Bengal is concerned, the pending amount stands at Rs 1,500 crore, he said.

Kerala Finance Minister Thomas Isaac said the state was supposed to get Rs 1,600 crore.

“Kerala (is) under overdraft for almost one week now. This is Centre-engineered crisis in the state finance. It has never happened in the history of India. Something drastic has to be done,” Issac said.

Punjab is also under threat of overdraft if the dues are not released immediately, state Finance Minister Manpreet Singh Badal said.

Punjab is awaiting Rs 2,100 crore as compensation while arrears stand at Rs 2,000 crore, Badal said.

Echoing similar concerns, Delhi Deputy Chief Minister Manish Sisodia said due to delay in payment, finances of states are under pressure. The GST compensation due to Delhi is Rs 2,355 crore.

In their joint statement, the ministers said no explanation whatsoever has been furnished for this delay and as a result, states are facing acute pressure on fiscal health and some are already resorting to overdrafts.

“GST comprises nearly 60 per cent of the tax revenues of states. Many states are already facing deficits up to 50 per cent of the total GST. Such huge deficits have the potential to disrupt the budget and planning processes in a host of areas literally bringing activities of the States to a grinding halt,” it said.

It was recalled that the assurance of GST compensation was a necessary enabler in states agreeing to subsume their fiscal sovereignty into GST. This was preceded by long deliberations within the Empowered Committee where many states had apprehensions about being able to obtain uninterrupted compensation, it added.

“It was only after the required provisions for compensation were incorporated in the Constitution that States agreed to join the GST. The current delay has shaken the confidence of the States who have so far supported GST in a spirit of rare bonhomie. Despite many challenges from time-to-time States have extended their support to all major decisions of the GST Council,” the statement said.

They also suggested that the matter should be placed on the agenda of the next meeting of the GST Council and a healthy mechanism be evolved to provide compensation in future with due urgency and judiciousness.

Source: Money-Control

XaTTaX is Best GST Software, Simplify your Financial matters with GST eFiling Software for Return Filing & GST Billing Software in India.

  • Automate Invoicing and get Paid Faster
  • Integration with all popular accounting software
  • Manage your GST and E-WayBill Software anytime anywhere using multiple devices

Get Our GST Software DEMO and E-WAY BILL DEMO for FREE

GSTN
Return filing system is working fine: GSTN

Return filing system is working fine: GSTN

Comments 0 Comment

GST Network on Monday said the return filing system is working fine. The statement comes a day after certain complaints made on the social media regarding the GSTN system not functioning.

GSTN said that the GST return filing system is working within expected limits. “Had it not been so, how more than 11.52 lakh GSTR3B (October) returns could have been filed yesterday with about 1.82 lakh returns filed in a peak hour,” it said.

Also, on November 18, more than 8.14 lakh returns were filed, while on Wednesday, over 9.23 lakh GSTR 3B returns were filed by 4.00 pm and filing is going on smooth with 6.30 lakh returns filed between 12 to 4 pm, it said.

GSTN said any online system has to have a load threshold and for GST return filing system, it is at 1.5 lakh returns filing at a particular moment. If this threshold is reached, the site shows a message asking the taxpayer to wait for his turn in a few minutes, it said.

Referring to complaints, GSTN said it could have been possible that some filers may have momentarily experienced being logged out at the load threshold of 1.5 lakh returns load at a particular point of time or some difficulty due to any local issue at the taxpayer filers’ end.

GSTN said the taxpayers are requested that they should not wait till the last three days to file their returns as normally there may be huge rush of return filing on these days.

Source: Economic-Times

XaTTaX is Best GST Software, Simplify your Financial matters with GST eFiling Software for Return Filing & GST Billing Software in India.

  • Automate Invoicing and get Paid Faster
  • Integration with all popular accounting software
  • Manage your GST and E-WayBill Software anytime anywhere using multiple devices

Get Our GST Software DEMO and E-WAY BILL DEMO for FREE

gst
No GST on CXO salaries: Government set to clarify

No GST on CXO salaries: Government set to clarify

Comments 0 Comment

The government is looking to clarify that goods and services tax (GST) should not be applicable on salaries of chief executives sitting in head offices, two people in the know said.

This comes after the tax department started raising queries on how companies have dealt with this issue. ET had first written on November 14 that some of the top companies headquartered in Pune, Mumbai and New Delhi have started receiving queries from the tax department on cross-charging of CEO and CFO salaries.

According to a person close to the development the Central Board of Excise and Customs (CBEC), is set to clarify that common function like Human Resources should be out of the GST gamut.

“The intention of the GST law was never to tax salary and any other interpretation should be avoided as this would lead to prolonged litigation. Salary cannot be under the GST net and there is an urgent need for a clarification around this,” said Rohit Jain, partner, ELP, a law firm.

The tax department has started questioning top companies and banks if they were passing on some of the common costs like salaries of chief executives to their branch offices.

The department wants companies to proportionately distribute common costs from head office to branch offices and treat this as a supply. Once this is treated as a supply, 10% of it has to be added to the cost and 18% GST could be levied on the total amount.

Industry trackers say that ideally this would be a revenue neutral transaction but still impact the cash flows of the company.

Source: Economic-Times

Ease Your GST Retrun Filing & Invoice with XaTTaX- GST Software 

Source: Business-Standard.
gst registration
Non-filers of GST returns may face cancellation of registration

Non-filers of GST returns may face cancellation of registration

Comments 0 Comment

The Goods & Services Tax (GST) Administration plans to act tough with non-filers of returns and cancel their registration. It has also decided to update the progress made in this regard on a daily basis.

Filing of returns helps tax authorities to estimate the tax liability and find out how much tax has been paid. The problem here is that nearly 20 per cent of assessees do not file their returns, which affects GST collections.

The Central Board of Indirect Taxes & Customs (CBIC) held a meeting with the Principal Chief Commissioner and Commissioner of GST & Customs on November 13. According to sources, PK Dash, Chairman, CBIC, expressed his displeasure in the progress of cancellation of registration of non-filers who have not filed GSTR 3B (showing tax payments) returns for six or more than six return periods and are liable to action under GST law.

“…the task of cancellation of registration of such non-filers of GST returns should be taken on priority basis and should be furnished by November 25, ” a communication sent from the office of the Principal Chief Commissioner of GST & Central Excise, Mumbai to Principal Commissioner/Commissioner posted in its jurisdiction. It has also asked for reports to be sent on a daily basis.

Conditions for cancellation
Section 29 of the Central Goods & Services Tax (CGST) Act prescribes conditions for cancellation of registration and fulfilment of any of these will invite action. These include contravention of the provisions of the Act, a composition scheme assessee not filing returns for three consecutive tax periods, any non-composition assessee not furnished returns for a continuous period of six months, not commencing business within six month from the voluntary registration, and registration obtained by means of fraud, wilful misstatement or suppression of facts. The Act clearly provides that registration will not be cancelled without giving the person an opportunity of being heard.

According to GST Law, a registered person will have to file returns either monthly (normal supplier) or on a quarterly basis (supplier opting for composition scheme). An ISD (Input Service Distributor) will have to file monthly returns showing details of credit distributed during the particular month. A person required to deduct tax (TDS or Tax Deducted at Source) and persons required to collect tax (TCS or Tax Collected at Source) will also have to file monthly returns showing the amount deducted/collected and other specified details. A non-resident taxable person will also have to file returns for the period of activity undertaken.

The law is very clear here that the cancellation of registration will not affect the liability of the person to pay the tax and other dues. Every registered person whose registration is cancelled will pay an amount, by way of debit in the electronic credit ledger or electronic cash ledger, equivalent to the credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock or capital goods or plant and machinery on the day immediately preceding the date of such cancellation or the output tax payable on such goods, whichever is higher.

Source: The-Hindu-Business-Line

Get Your GST Returns Filed Easily and
Effortlessly!!!

Our GST software enables you to file your GST returns free of any hassle. Get more details by writing to us at gst@xattax.in.

gst reconciliation software free
Know in Detail about the Importance of GST Reconciliation

Know in Detail about the Importance of GST Reconciliation

Comments 0 Comment

What do you mean by GST Reconciliation?

The concept of GST reconciliation and matching is not new as far as the taxpayers are concerned. In fact, this process has been modeled upon the former VAT and excise laws. Previously, matching of data between tax returns and the books of accounts was quite easy for most of the enterprises. Suppose if the department that is responsible for processing the returns came across some discrepancies, the taxpayer would be sent the communications, following which further inspection and audits would be done.

In the GST system, this process has gained much importance, as the rationality of the Input Tax Credit used by the businesses is being regularly checked by the GST personnel. Further, under this regime, the taxpayers are required to reconcile their data each month along with the data declared by their vendors. The return filing and processing are automated semantically, and the GST returns are inter-connected.

Some of the Common Errors which Occur During GST Reconciliation

Below given are some of the mismatches which occur during the reconciliation process:

  • Variances between the amount of credit in GSTR 3B and GSTR 2A or/and
  • Alterations in the provisional credit claimed and the actual credit which is claimable. Normally, this situation happens during transition phases
  • Differences between GSTR 3B and GSTR 1

Scrutiny notices would be sent to the taxpayers if there are any variations observed between these returns.

Mismatches can occur due to several reasons. Some of the common reasons are:

  1. Though the vendor has not declared liability on the supplies which have been already done with, the businesses have already taken credit for such purchases in the GST returns. If the businesses did not carry out the necessary follow up with the vendor to make sure that the liability is declared, the risks pertaining to such credits getting rejected may increase
  2. The mistakes which occur in the already furnished details. Mismatches can occur in the fields like the date and number of the debit note/invoice, the GSTIN of the supplier/recipient, etc. Further, if amendments are made in the GST returns of the month succeeding the relevant month during which the mistakes happened, it may lead to mismatches as well
  3. Mismatches occur in the credit availed and the liability declared by the vendor. In fact, the reasons for these variations should be recognized and reconciled accordingly
  4. Though the liability has been declared by the vendor, the credit is not availed in the GST return. Such credits should be utilized at the earliest before the due date of September returns or annual returns.

How to Select a Software/Tool which Enables Quicker Reconciliation and Guarantees 100% Compliance?

A powerful technological solution can address all of the GST reconciliation challenges in an effective manner, which in turn helps to add value to the business concerned. Some of the features which are essential for the matching and reconciliation purposes include:

  • The GST reconciliation software should have the ability to deal with huge chunks of data
  • A business owner should be able to get the data into the reconciliation system quite easily from any type of source like Excel, ERP, bill books, etc.
  • It should make the entire process seamless and efficient during each month, that the business owner can stay relaxed
  • Proactive reminders and the availability of an automated system in order to minimize human interventions would also help in making the process of reconciliation more efficient
  • The software/tool must be exceptionally intelligent to tackle any missing/wrong information like wrong dates, invoice numbers, tax rates, sale value, missing items, etc. The GST reconciliation software should be capable of providing reconciliation efficiently in all these instances
  • It should be capable of providing in-depth reporting and insights which can help deal with the challenges successfully
  • Given the fact that the GST rules keep on changing from time to time, the tool/software should be able to evolve quickly and operate as per the changes in the rules.

Carrying Out GST Reconciliation in Five Easy Steps

The reconciliation process under the GST system is all about matching the data filed by the suppliers with that of the recipients and recording all the transactions that happened during that time. Further, this process guarantees that no transactions or procurements are excluded or wrongly stated in the GST returns.

The taxpayers are required to reconcile their data with that of the vendors regularly in order to claim the Input Tax Credit (ITC) for which they are eligible. Though reconciliation is simple, it may be time-consuming as the taxpayers need to watch out on a continuous basis for any discrepancies or mismatches that may have a serious impact on the ITC claim.

Below given are five steps to handle the reconciliation process easily:

1. Under the GST reconciliation process for the relevant financial year, it is mandatory that the taxpayers need to file the entire periodic GST return. Even if the due date of a certain GST return is overlooked, it needs to be filed along with the interest or the late fee, whichever is applicable. In fact, if the GST returns are not filed in time, it may affect the matching and reconciliation procedure. Further, the taxpayers are required to keep their books of accounts up-to-date and align the tax returns in accordance with the same. Moreover, unless the entire GST returns are filed, the taxpayers would not be able to claim the ITC

2. It is important for the books of accounts and the GST return to be in agreement with each other for the purpose of claiming ITC. In addition, the taxpayers need to keep a check on the taxes paid as per the reverse charge system while they claim ITC on purchases. However, a taxpayer can benefit from the credit of taxes paid according to the reverse charge system only if the goods and/or services are utilized or would be utilized for the sake of business

3. The taxpayers need to find out the mismatches and make corrections in the relevant entries in the books of accounts. Further, they also need to amend these details in the upcoming GST return filing period. Though the GST laws do not allow to revise tax returns filed during the previous periods, they permit to file the corrected entries through an amendment return in the subsequent periodic return. Further, these entries need to be filed in GSTR 1 and GSTR 3B as well.

Ensure that the purchase register is carefully matched with GSTR 3B (uploaded on a monthly basis) and GSTR 2A details (uploaded by the supplier). It is essential to streamline the GSTR 3B return, the books of accounts, and the GSTR 2A form to avail the ITC completely on the related purchases, or else, the taxpayer may lose the ITC claim, which ends up in paying extra taxes

4. The communication between the vendors and customers is important as it results in the relentless reporting of the details as far as the GST returns are concerned. Further, the chances of omission, mismatches, or incorrect entries are considerably minimized when both the suppliers and the recipients coordinate their details and then file the GST returns. It is also important to find out the non-compliant vendors, interact with them, and address their issues which will further help the recipients to maximize their ITC. Currently, there are many best GST reconciliation software available which could provide help in minimizing the communication gap between the recipients and the suppliers. This kind of software allows the users to send a reconciliation mismatch report to the suppliers or vendors to address any issue regarding the same

5. Finally, the taxpayers are required to report all the corrected sale or purchase transactions of the relevant financial year, for the September returns.

In short, GST reconciliation is an ongoing process that should be carried out periodically in order to claim maximum credit and also to evade mismatches to a greater extent.