1. What is GST Reconciliation?
GST reconciliation is the process of matching the purchases of a company with the sales of its suppliers for a given period to identify and resolve any gaps.
2. How to do GST Reconciliation?
GST Reconciliation is usually a comparison of GSTR-2A and Purchase Register. GSTR-2A is auto-generated based on the sales returns (GSTR-1) filed by suppliers. This must be downloaded from the government GST portal.The data should be compared against the purchase data of the company, usually stored as Purchase Register entries in an Accounting system. Mismatches and missing entries must be identified and corrective measures must be taken. Suppliers have to be notified in many cases, while company’s own Purchase Register entries need to be corrected in a few cases. Manual reconciliation is tedious and error-prone. ThoughtGST does all the work through automation in the click of a few buttons. (see - How It Works )
3. What is Input Tax Credit?
Input Tax Credit (ITC) is the tax businesses pay on purchases that can be used to reduce tax liability on sales. ITC can be claimed on Goods and Services intended for furtherance of business. A critical rule is that ITC can be claimed only if the supplier has upload the invoice to GSTN and paid GST to the government.
4. How to claim Input Tax Credit?
Input Tax Credit can be claimed in GSTR-3B in the current GST regime. Entry is made manually and care should be taken not to claim ITC in excess which may lead to government action or claim lower ITC than eligible locking up working capital.
ThoughtGST helps not only to calculate accurate ITC but also to maximise ITC claim.
5. How does ThoughtGST help you in maximizing Input Tax Credit and claim accurate ITC?
ThoughtGST ITC CORNER gives a summary view of differences between GSTR-3B and GSTR-2A in an instance for any period since launch of GST till date.
ThoughtGST SMART RECON does in-depth comparison of supplier data in GSTR-2A against company’s own Purchase Register. Detailed report is generated with classification of matches, mismatches and missing invoices. Advanced features like supplier notification are included. The entire process take a few seconds.
6. How can businesses benefit by maximizing the ITC?
By maximizing ITC, businesses reduce tax liability, increase working capital and prevent revenue leakage (10% on average and as high as 30% in some cases).