13+ Years, More than 25000 clients, and 3,000+ filings done
Overview
As per the mechanism under GST law, a registered person can set off the tax already paid on inputs, while paying tax on outputs. This mechanism is known as Input Tax Credit which can be availed while assessing tax liability. For instance, a person has tax liability on final products/output of Rs. 500 but if he has already paid tax of Rs. 300 during input or purchase for the final product, then that person can claim a credit of Rs. 300 and only has to deposit Rs. 200 as his tax liability.
ITC Reconciliation is an important practice as it ensures that the credit is correctly claimed by the entity. It also reduces the risk of reversal of Input Tax Credit, levy of interest, and penalty by the government for claiming undue/ ineligible credit.
What Is The Process?
1. Information Gathering
The first step is sharing information pertaining to the invoices by the client with our team. Our team shall then generate e-invoices after the relevant invoices and login information are provided by the client.
2. E-Invoice Generation
E-invoice is then generated online through the concerned portal. The IRN generated is shared with the client.
Documents Required
- An invoice issued by the supplier for the supply of goods and services or both as per the GST law
- The debit note issued by the supplier to the recipient in case of the taxable value or tax payable mentioned in the invoice is less than the taxable value or tax payable on such supply of goods and services or both
- Bill of Entry
- An invoice or credit note is to be issued by the Input Service Distributor (ISD) as per the invoice rules under GST.
- A bill of supply issued by the supplier of goods and services or both as per the invoice rules under GST
Testimonials
Get Started
Frequently Asked Questions
1. What are the basic conditions for availment of Input Tax Credit?
The basic conditions are:
- Possession of tax invoice or other documents
- Filing of return by the recipient
- Payment of tax to government by supplier
- Receipt of goods or services or both
- Uploading of the invoice and filing of return by the supplier
2. What are the exceptions to availing Input Tax Credit?
A registered person would not be entitled to claim/take ITC in respect of:
- Taxes paid in respect of non-business supplies
- Taxes paid in respect of exempted supplies
- Taxes paid in respect of certain inward supplies mentioned in Section-17(5) of the CGST Act (blocked credits)
3. What are the issues faced during GST reconciliation?
The following are common issues faced during GST reconciliation:
- The invoice numbers used by the purchaser to record transactions do not match with the seller’s invoices received in GSTR-2A. The reason could be that they both are following a different convention.
- The purchaser does business in multiple states, and the seller has raised the invoice using another GSTIN instead of the actual purchaser GSTIN.
- Both the purchaser and supplier have recorded invoices in different return periods.
- The invoice data recorded by the purchaser does not match that of the seller. The reason behind this could be that the date of recording the invoices was different at both places. In this case, the purchaser might be at fault, at they should enter the date mentioned in the sales invoice.
- The invoice value for both supplier and purchaser differs by a minor value as both parties have a different practice of rounding off.
4. Is there any limit on availment of Input Tax Credit for invoicing not appearing in GSTR-2A?
A restriction on availment of ITC was imposed vide insertion of Rule 36(4) where ITC in respect of those invoices that have not been uploaded by the supplier, would not exceed 5% of the total eligible ITC for that month (20% up to 31.12.2019). Eligible ITC means the total tax in respect of those invoices, which is otherwise available to the assessee. This restriction would not apply to documents issued in respect of RCM supplies, credit received from ISD, and IGST paid on imports.
5. What shall the invoice contain in order to be eligible for ITC?
The recipient would be eligible for ITC even if the invoice contains below contents:
- Amount of tax charged
- Description of goods/services
- Value of supply
- GSTIN of supplier and recipient
- Place of supply