GST is a complex law requiring lots of compliance. Previously, businesses were required to face so many under various laws.
Now, since most of them are abolished and integrated into one single law i.e., GST, compliances are more under GST.
All the transactions taking place into a business is entangled with GST. And this is the reason, even small mistake in any transaction, whether or not because of GST can make a difference.
This is the reason; reconciliation is a need in every area on accounting.
In this article, we are going to see the difficulties that are faced in an organisation while reconciling GST.
But before that we must understand the term reconciliation.What is Reconciliation?
Various types of Reconciliation under GST
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Reconciliation of Sales Register with GSTR-1 where we have to check whether all the sales details are correctly entered.
Reconciliation of Sales Register with GSTR-3B where we have to check that whether total sales and taxes are accurate or not.
Reconciliation of Purchase Register with GSTR-2A/2B where we check purchase details that are in our books with that of purchase details entered by the suppliers.
Reconciliation of Purchase Register with GSTR-3B where we check details of purchase and total purchase details.
Reconciliation of GSTR-1 with GSTR-3B where we check the sales details entered invoice by invoice and total in the return.
Reconciliation of GSTR-2A/2B with GSTR-3B where we check the purchase details entered invoice by invoice by every supplier and total in the return.
Reconciliation of GSTR-1 with E-invoices. All the e-invoices generated gets reflected under GSTR-1
Reconciliation of GSTR-1 with E-way bill. E-way bills are generated when there is movement of goods involved in any transaction.
Apart from the above-mentioned reconciliations, there are various other reconciliations that are needed to be done.
So, it is obvious that when there are so many reconciliations, errors are bound to happen.
Errors faced during GST reconciliation
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Missing invoice
It is possible that while filing any return, or even at the time of data entry, some invoice remains unentered. While reconciling, such invoice might come to the notice of the person checking it.
Duplication
When same entry is entered twice, it is known as error of duplication. We need to check that there is no such clerical mistake taken place.
Date / Period
If the entry is made on an incorrect date which does not match with invoice date, then the entry will get added to that period and will be shown in that period’s return.
Incorrect invoice number
Sometimes the invoice number at both the places do not match, while doing reconciliation, it may come to the notice of person checking it. Invoice number play an important role under GST because under GST, invoice-wise details needed to be entered.
Incorrect GSTIN of Customer
Details are uploaded invoice by invoice under GST. Customer will get the credit of GST paid by them only after uploading correct details his supplier. While reconciling, we can come to know
Incorrect Amounts
In every single invoice, there are multiple amounts involved such as, Net Taxable amount, GST amount, Total amount etc., so if any single amount does not match, problem will arise and to resolve such problem, one has to search that where the problem is.
Incorrect Rate GST
Different goods have different rates, and rates are required to be correctly mentioned, otherwise, if correct rate is not mentioned, more or less GST will get imposed. And it is not good to pay more or less GST.
Apart from this there are so many difficulties
Difficulties Faced During GST reconciliation:
Non-availability of efficient staff
Employees are the backbone of every organisation. Appropriate staff should be placed at appropriate position. Person making invoice, entering data into enterprises system, filing returns etc. all the staff should perform their duties correctly. In case, an organisation is not having appropriate staff, a greater number of errors will take place and correcting them will not be easy. Therefore, human resource department is given very importance because appointing correct person at correct position is very important.
Misplacement of physical invoices
Documentation plays a vital role in accounting. Preparing correct document and preserving it at a safe place is duty of an organisation. It is possible that sometimes, physical invoices get misplaced. In that case, it will not be possible to reconcile that whether correct document is entered or not.
Mismatch of Books and Returns
Books and returns must tally. Sometimes, it is possible that at the time of reconciliation, some previous periods figure in books and return do not match. In that case we need to first correct and match the mistakes and then move ahead.
Incorrectly entered data
If any particular type of data is entered incorrectly, for example rate of GST, then entire accounting will become erroneous. Therefore, we need to update and correct such mistake and error first, and then start reconciliation.
Voluminous transactions
When in an organisation, volume of transactions is high, entering all the transactions on time is itself very difficult. Reconciling it on time in such a situation becomes more tough. Therefore, an organisation must set up such a structure reconciliation takes place on real time. This will help the organisation to correctly move ahead. Otherwise, it will be very tiresome to check and find any mistake when we reconcile after a long time.
Insufficient training
Staff require proper training before they are handed over with any particular job. Insufficient training may lead to incorrect work. Which may cost to an organisation a lot. Therefore, providing proper training to staff is important. An organisation must take all requisite measures to give proper training to its staff. For entering data, for filing returns and also for reconciliation, staff should be adequately trained and examined.
Reconciliation is a very important task in every aspect of an organisation. It should be given appropriate attention.
Keeping in mind above points, a management of the company shall put perform the task of reconciliation accordingly.
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