Analyses & Reconciliation of GSTR 1, GSTR 2A, GSTR 3B as on 31st March 2021

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Analyses and Reconciliation of GSTR 1, GSTR 2A, GSTR 3B etc. as on March 31, 2021

Reverse Charge Mechanism

RCM means liability to pay the tax is on the person receiving goods/services instead of the person supplying the goods/services in respect following:

• Specified goods-Notification no. 4/2017 of central tax (rate), union territory tax (rate) and integrated tax (rate), all dated 28.06.2017, effective from 01.07.2017, as amended till date.

• Specified services-Notification no. 13/2017 of central tax (rate) and union territory tax (rate) & notification no. 10/2017 – integrated tax (rate) all dated 28.06.2017, effective from 01.07.2017, as amended till date.

Self-invoicing is to be done necessarily when the same is purchased from an unregistered supplier and the sequence/series of the invoice is to be maintained, as the unregistered supplier cannot issue a GST-compliant invoice, and thus a registered recipient becomes liable to pay taxes in this regard.

Reconciliation of GSTR-1 with GSTR-3B

If any discrepancies are found in Form GSTR-1 and GSTR-3B during any tax period(s), which leads to any non-payment or shortage of tax to be paid by the supplier, the same must be paid along with interest @ 18% as prescribed vide Notification No. 13/2017- Central Tax dated June 28, 2017.

It is, therefore, necessary to conduct this reconciliation for all tax period falling in FY 2020-21 to ensure that both the returns match, which wouldn’t give rise to any interest that may become payable at a later date. Further, if there is any excess tax paid, the same is to be recorded either for future adjustments or refund should be applied accordingly.

Reconciliation of GSTR-3B with GSTR-2A (ITC)

Reconciliation of Form GSTR-3B with Form GSTR-2A is an important exercise that businesses must not miss out. It helps businesses to claim the full ITC and also reverse any excess ITC claimed. In turn, the reconciliation before filing GSTR-3B will help avoid any potential demand notices from the tax authorities.

In case of excess ITC availed than the actual purchase invoices, the same need to be reversed along with interest @ 18% as prescribed vide Notification No. 13/2017- Central Tax dated June 28, 2017 and in case, ITC availed is less than the eligible purchase invoices, the same need to be claimed immediately.

Reconciliation of E-Way Bills with Returns (GSTR-1 and GSTR-3B)

It is crucial for registered persons to prepare timely reconciliations of outward supplies as declared in returns with the e-way bills generated by them or by their transporters. Suo-moto reconciliation by businesses would help them in pre-empting and correcting the differences in tax filings much before any notice is received from the department.

There can be instances where e-way bill sales are in excess or less than as shown in Form GSTR-1/ GSTR 3B and the same need to be checked with sale invoices and tax need to be paid accordingly.

Reconciliation of ITC ledgers

The ITC closing balance as on March 31, 2021 should match with ITC balance reflected on the GST common portal under the e-credit ledger and/ or cash deposited lying in e-cash ledger as per the books of accounts.

Reconciliation of GSTR-3B/GSTR-1 with Accounting entries

This process presumes that the mismatch between GST Output Liability and ITC reported in Form GSTR-3B vis-a -vis the books of accounts which can be due to various reasons ranging from typing errors to malfunctioning of data records maintained by the organization.

Reconciliations of B2B, B2C sales with Returns and books

B2B and B2C sales need to be reconciled with the Form GSTR-1 / GSTR-3B and the books of accounts for a fairer picture and to avoid an unwanted event in future where B2B sales wrongly shown as B2C sales and the recipient is not able to get the credit as per Form GSTR-2A and is asked for the tax and interest liability thereon.