Input Tax Credit Reconciliation

Why credit goes missing

• The supplier has not filed their GSTR-1 for the period
• The supplier reported the invoice against the wrong GSTIN
• The invoice number or date in their filing does not match yours
• The invoice was reported in a later period than you booked it
• The place of supply was reported wrongly, changing the tax head
• A credit note was issued by the supplier that you have not accounted for

The claim window closes

Credit for a financial year cannot be claimed indefinitely. The Act fixes an outer date, tied to the filing of a return for a period in the following financial year or the annual return, whichever is earlier.

Once that date passes, credit that was genuinely yours is simply lost. This is why reconciliation is a monthly discipline rather than something to catch up on at year end — by the time an annual reconciliation finds the gap, the window may already have shut.

What reconciliation produces

• A list of invoices in your books but not in GSTR-2B, to be chased with suppliers
• A list of invoices in GSTR-2B but not in your books, which may be misdirected or missed
• Differences in tax amount or head between the two
• Credit that is ineligible under Section 17(5) and must not be claimed
• A supplier-wise summary showing who is consistently non-compliant
• The reversal required where payment to a supplier is outstanding beyond the permitted period

The 180-day payment rule

Credit claimed on an invoice must be reversed where you have not paid the supplier within one hundred and eighty days of the invoice date. It can be reclaimed once payment is made.

Businesses that stretch payables often overlook this, and it surfaces during departmental scrutiny as a demand with interest attached.

How we handle it

1. 1 Extracting the data Your purchase register and the GSTR-2B statements for the period are pulled together in comparable form.
2. 2 Matching Invoices are matched on GSTIN, invoice number, date and value, and the exceptions listed.
3. 3 Classifying differences Each mismatch is classified — supplier not filed, wrong GSTIN, timing difference, or an error in your own books.
4. 4 Supplier follow-up We prepare supplier-wise communications so the ones who have not filed can be chased before the window closes.
5. 5 Eligibility review Credit blocked under Section 17(5) is identified and excluded, and any reversal under the 180-day rule computed.
6. 6 Reporting You receive a reconciliation statement showing claimable credit, credit at risk, and the action needed on each.

Frequently asked questions