Reconciliation or matching data between the books of account and the tax returns is perhaps the most important process of any tax regime. It is more so under the Goods and Services Tax regime as there is a provision for Input Tax Credit. The government is, therefore, on its toes to ensure that taxpayers comply with the rules and regulations of the new tax regime.
Why is GST reconciliation required?
• GST provisions state that taxpayers will only be able to claim ITC if their invoices are present as part of their 2A data or vendor data. Therefore, taxpayers need to reconcile their ITC whenever their purchase register and the GSTR 2A data are not matching.
• Reconciliation is also necessary to ensure that correct declaration is made in the annual returns. GST returns are filed on a monthly or quarterly basis and after the end of the financial year, annual returns are filed after the consolidation of data. Reconciliation is necessary to avoid any duplication of data and to ensure the correctness of the data for error-free return filing.
There are deadlines for making amendments in GST returns or for claiming ITC. A taxpayer must do the following before September of a financial year or the due date of the Annual Returns:
• Claim any eligible ITC against invoices for the previous financial year (2017-18)
• Report/File amendments against information submitted during GST return filing for the tax period under consideration (as of now, the period between July 2017 – April 2018)
• Complete any pending redistribution of ITC for the financial year under consideration into eligible and non-eligible proportions
• Bring into focus CDNs that have been brought against any invoices that were raised in the FY under consideration
• Amendments to be made in the return filed during the said period (2017-18) by people who have availed GST composition scheme but do not use it
So, without reconciliation, taxpayers will not be able to claim Input Tax Credit. Furthermore, businesses will not be able to file their Annual Returns without reconciliation and this will cause them to earn the wrath of the tax authorities. Read More at: enComply
