gstr 2a reconciliation tool
Prachi Wankhede

Updated on January 25th, 2024


We cannot lay enough emphasis on the importance of the role of GSTR-2A Reconciliation process under GST.

It is one of the most important processes in the context that ensures that taxpayers do not have to pay the same taxes multiple times.

GSTR-2A Reconciliation helps in identifying the most precise amount of ITC that a taxpayer can claim & thus affects the business on a monetary level.

No business would want to invest their funds in paying excess taxes which is why businesses rather invest their time in accurate reconciliation of their data & accounts to claim full eligible Input Tax Credit. 

This blog is an ultimate guide on GST Reconciliation format & how you claim full ITC through correct reconciliation. Read till the end to find out the best method of reconciling your data! 

GSTR 2A Reconciliation in Excel (Live Demo) |Watch video now

This video will brief you about How to do GST reconciliation in excel with Live example.

What is GSTR-2A Reconciliation ?

gst returns

GSTR-2A reconciliation is the process of matching-

  • the data in form GSTR-2A (auto-populated from various suppliers' GSTR-1, GSTR-5 & GSTR-6) &
  • The data as per the purchase records of a business.

This process will identify inconsistencies in both the data through mismatches in the reconciliation.

Sometimes, suppliers may, for any reason, fail to furnish the invoices of the sale that they made to a recipient, in their GSTR-1 (sales return).

When this happens, the record of the transaction will not display in the recipient's purchase return GSTR-2A.

And, without the invoice record of the purchase in GSTR-2A, the recipient will not be allowed to claim the Input Tax Credit  on such transactions.

Earlier, the government allowed 100% provisional ITC even for the missing invoices, but recently, the CBIC has restricted the claim of provisional ITC to 10% of the total amount of eligible ITC.

This way, the invoices missing in GSTR-2A are a loss for the recipient as he will not be able to claim the full credit of his ITC.

Other than this, reconciling the two data will bring out & highlight any discrepancies in either of the two data & the accountants can fix the same to make the accounting more precise & organized. 

Why do I need GSTR-2A Reconciliation under GST?

gstr 2a reconciliation software
This is an important question, & you must know as to why is GSTR-2A one of the most vital reconciliations under GST.

So, Input Tax Credit is one of the main pillars of GST, as it helps in scrapping the cascading effect of taxes that existed in the previous tax regime of VAT & Service Taxes.

ITC is meant to ensure that taxpayers are not paying multiple taxes for the same purpose, which is the whole point of GST, to remove the tax on tax effect, & hence it becomes important to comply with this provision of GST.

This was the compliance perspective, if we look at ITC from the business perspective, Input Tax Credit under GST becomes an even more important aspect of GST.

If a business continues to pay unnecessary & multiple taxes, it will hamper their monetary balance resulting in losses & the wastage of working capital & revenue in GST.

If a tax has already been paid by the taxpayer as an input in the making of goods, he should not have to pay the same tax again while selling the finished goods, as per the ITC rules under CGST Act 2017.

Claim input tax credit

Businesses can save a lot of their working capital through the smooth flow of tax credits, which is the main agenda of Input Tax Credit under GST.

Hence it is vital, that businesses take advantage of this provision of ITC by accurately reconciling their GSTR-2A data with their purchase records.

Another important reason to reconcile GSTR-2A is to avoid the duplication of ITC claim, in other words, taxpayers may claim the same ITc more than once, or claim an ineligible ITC.

These errors can result in the reversal of ITC later along with interests, in major cases, there may even be a chance of notices & legal disputes.

GSTR-2A reconciliation is also significant for the annual return filing of Forms GSTR-9 & GSTR-9C.

Annual Return filings are the consolidation of the transactions carried out all year long & must be very accurate to avoid penalties & notices etc.

The ITC claimed by a taxpayer all year long is accounted for in GSTR-9 & GSTR-9C, and thus it is important to make sure that the ITC management is very clear & precise.

So, there is more than one reason to give reconciliation your time & ensure accuracy so you can claim 100% of your eligible ITC & avoid, non-compliance.

But reconciling can be tedious, as it is a lengthy process that requires a lot of focus & constant manual work.

Especially in the case of the high volume of data & transactions reconciliation can take up to days & yet may not come out as accurate, due to the manual errors that are quite common.

Watch video for GSTR-2A Reconciliation Tool Process

10% Provisional ITC for Mismatched/Missing Invoices

Understand step by step process of how to reconcile GSTR-3B and GSTR-2A and find out mismatch in GSTR-3B and GSTR-2A .

You can claim ITC in GSTR-3B that auto-populates in your GSTR-2A from your supplier's GSTR-1.

But what happens if the supplier does not declare or wrongly declares the invoices of their sale return- GSTR-1?

In such cases, you can still claim the credits, but it will be called Provisional Credit instead of ITC.

Earlier taxpayers were allowed to claim 100% PC if the recipient had all the valid supporting documents, however, this has been capped by the GSTN to a smaller percentage since December 2019.

This rule is called the 10% provisional credit rule as per which, for any missing invoices in their GSTR-2A, a taxpayer can only claim 10% of the actual eligible ITC.

How to reconcile GSTR-2A- Brief guide using GSTHero!

gstr 2a reconciliation tool

Traditionally, GSTR-2A or Input tax credit  reconciliation is done manually by the accountants or CAs for the businesses. But this can be very time & effort consuming & yet may end up containing errors as they come along for free with the manual work.

But these errors can affect your Business adversely, as you may end up-

  1. Claiming less ITC
  2. Claiming more than the eligible ITC
  3. Claiming ineligible ITC
  4. Claiming double or duplicate ITC, etc.

And so, you will need some help to make your reconciliation thorough & accurate.

GSTHero's Advanced GSTR-2A Reconciliation Tool or you can it is best GSTR-2A reconciliation software available in the market for achieving accurate reconciliation so you can claim 100% accurate ITC.

GSTHero's Advanced Reconciliation tool is stacked with features & configuration options to ease your work & save your time by half, in the reconciliation.

Watch video tutorial for GSTR-2A Reconciliation in GSTHero

The tool is highly automated & provides you smart suggestions to eliminate the manual work, making your reconciliation precise, less time-consuming & more automated.

Here is a brief step-wise guide on how you can reconcile your GSTR-2A with your Books of accounts in the matter of a few hours with GSTHero's advanced reconciliation tool-

  1. Login to GSTHero's cloud-based dashboard
  2. Download your GSTR-2A from GSTHero within a few seconds (from the GSTN it would take about 20 mins)
  3. Upload your purchase records to GSTHero
  4. Click on the reconcile button
  5. The reconcile window will be displayed containing all the records from the GSTR-2A & your Purchase Register
  6. You will see the sections- Matched records, Mismatched records & missing records in a supplier-wise table
  7. You can set the mismatch tolerance value given in the configuration feature, to smart match more records quicker & in bulk
  8. When the matched records value increases & there are no more possible matches based on the tolerance value, you can take actions on individual supplier-wise records.
  9. Here, GSTHero will suggest you possible match suggestions, that you can use to match bulk invoices that mismatched due to minor differences
  10. You can also, accept, reject & mark the invoices pending depending on you
  11. When you are done taking action on all the records, click on 'Save & Next'.

The entire process, even in case of high volume, will not take half as much time as it would take to do the process manually.

The smart suggestions & the data configuration features are highly prominent & will reduce your time & efforts whilst making the reconciliation very precise.

For more details, visit our website & get a more detailed live demo of the working of the Advanced Reconciliation Tool.

Additional Note for claiming Max ITC under GST 

inout tax credit under GST

Identify your eligibility for ITC

Identify your eligibility for ITC in transactions, and claim only the eligible ITC.

Missing, mismatched & Unmatched Invoices

While reconciliation you will come across the three types of invoices, for each case, your ITC claim status will change with each scenario-
  • Missing Invoices- 10% Provisional ITC of the eligible ITC
  • Mismatched Invoices- If matched later or by making minor changes, then full ITC if the invoices remain mismatched even then, then no ITC
  • Unmatched Invoices- No ITC
  • The ITC Rules-

    The ITC Rules- As mentioned in the above section, you must follow the ITC rules carefully in order to claim maximum & eligible ITC only.

    Time limit- 

    Time limit- You cannot claim ITC for any time period after the September of the following FY as per rules.

    Hence it is essential to claim ITC within the defined timeline

    The process for claiming ITC

    The process for claiming ITC is, you first reconcile the GSTR-2A data with your purchase registers & then calculate the ITC you want to claim.

    You then declare & furnish this detail in Table 4 of your GSTR-3B & claim the ITC there accordingly. It may look like a small & clear process, but the reconciliation bit itself can be a pile of work.

    GSTR-2A Reconciliation Tips

    Since Reconciliation plays such a vital role in ITC here are some reconciliation tips for you-
  • HSN Codes- HSN Code mismatch in invoices can cost you your ITC, so ensure to match & enter correct 8/6/4 digit HSN codes in invoices.
  • Vendor Compliance- While matching the invoices ensure to identify & notify the incompliant vendors to file their returns on time.
  • Supplies from small businesses- Even in the case of small businesses, the tax payment is a monthly activity, whereas, tax filing may be a quarterly activity,
  • in such cases, you can only claim the ITC when the vendors file their GST returns.
  • Place of supply mismatch- One of the common big error that causes you to claim incorrect ITC is the mismatch in place of supply, say because of different GTINs.
  • For such cases, you can reconcile on a PAN level using GSTHero's Advanced Reconciliation Tool.
  • Conclusion

    A thorough reconciliation is the ultimate key to claiming maximum & eligible (correct/valid) ITC.

    As easy as it sounds, reconciliation is in fact not an easy task even for a huge accounting team, especially when the data volume increases in the case of large businesses.

    It can get tedious & consume time & effort to match such a high volume of invoices & even so, the reconciliation may contain some flaws.

    Businesses can take the help of GSPs in such aspects & one such relevant GSP is GSTHero.

    GSTHero is an authorized GSP that provides software solutions & services to businesses to comply better with GST & its aspects, in the most effective & productive way.

    GSTHero's GSTR-2A reconciliation in tally Tool is the best tool to deal with ITC & Reconciliation under GST, reconciliation of GSTR-2A with books with its advanced filters, custom data configuration options, auto-match options, vendor communication feature, automation of data population & more.

    GSTHero GST reconciliation software will eliminate your efforts & reduce your time & effort investment while delivering precise results so you can claim maximum eligible ITC for your business.

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    Prachi Wankhede

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