ITC disputes the mismatch of GSTR-1 & GSTR-2A

GSTR stands for “Goods and Services Tax Return,” an essential component of the GST system all over India. GSTR is the document to be duly filed periodically by the registered taxpayers. All the transactions of purchase, sale, and ITC of all businesses are recorded, which provides the tax authorities with essential information to calculate the tax liability and ensure the taxpayers fulfill their tax obligations.

There are different GSTRs serving a specific purpose to be compiled by the taxpayers.

1. GSTR-1 – This return records all the outward supplies or sales made by the taxpayer. It includes details of all the sales made to the registered as well as the unregistered individuals.

2. GSTR-2A – This return provides details of inward supplies of goods or services for a particular period of time. This form is integrated with GSTR-1 to help taxpayers determine the ITC claims.

3. GSTR-2B – This is an auto-generated form which includes information about all inbound supplies received from registered vendors. This form summarizes the information provided by vendors when filing their returns and is used to ensure the accuracy of their GST returns.

4. GSTR-3B – This is the summary of the return, which is supposed to be filed by the taxpayers monthly and quarterly (optional). It includes details of outward supplies, ITC, and overall tax liability. It helps fulfill the taxpayer’s liability obligation.

5. GSTR-4 – This return is solely for the composition taxpayers subject to lower tax rates and businesses with restrictions on ITC claims. This return is to be filed quarterly.

6. GSTR-5 – This return is for non-resident foreign taxpayers who have business in India and are required to submit their reports.

7. GSTR-6 – This return is filed by the Input Service Distributors, who need to declare details of their ITC received and distributor for a specific time period.

8. GSTR-7 – This return contains details of the TDS (Tax Deducted at Source) under GST.

9. GSTR-8 – This return is to be filed by the e-commerce operators who have to state their TCS (Tax at Source) on transactions made on their online platforms.

10. GSTR-9 – This return is the summary of the annual return of the registered taxpayer, which provides all the details of the purchase, sales, outward supplies, and ITC of that specific business. It is a consolidated statement of the monthly and quarterly (GSTR-1 & GSTR-3B) filed.

11. GSTR-9C – This return is a reconciliation cum certificate form which businesses with a turnover above a specified threshold. This statement is integrated with GSTR-9.

Reasons for mismatch in GSTR-2A & GSTR-1:

Errors in GSTR-1:

Some mistakes might occur while filling GSTR-1. Incorrect invoice numbers, GST numbers, or any such mistakes can directly reflect in the GSTR-2A as it is interconnected. GSTR-2A is auto-generated on the basis of GSTR-1. Hence, any mistake in the GSTR-1 will directly reflect in GSTR-2A.

1. Missing Invoice:

If the supplier forgets to include any invoice in GSTR-1, the receipts data might also not include that specific invoice in its GSTR-2A, resulting in a mismatch of the data.

2. Time Difference:

There might be a time difference between the suppliers’ upload of GSTR-1 and the recipient’s GSTR-2A. This might cause a temporary mismatch until the data is synchronized.

3. Data Upload Issues:

Due to technical glitches, there might be a problem in uploading the data. This may result in a mismatch of both returns.

4. Amendments:

If the supplier has made any amendment in GSTR-1 and these changes are made after the recipient has filed GSTR-2A, this mismatch might take some time to reflect the data. Until then, this error might occur.

5. ITC Reversals:

Sometimes, the input tax credit claimed by the recipient is reversed due to non-payment or other reasons. This will cause a mismatch between the credit claimed by the recipient and the data in GSTR-2A.

6. Non-Compliance:

If the supplier does not file GSTR-1, the integrated data might not show up in the recipients’ GSTR-2A.

Preventive measures to avoid mismatch in GSTR-1 & GSTR-2A:

• Regularly reconcile the data in GSTR-2A with your purchase records and invoices. This can help you identify discrepancies early and take corrective action promptly.
• Maintain open communication with your suppliers regarding the invoices and data they are reporting in their GSTR-1. If you notice any discrepancies, reach out to them to clarify the issue.
• Ensure that you and your suppliers adhere to the prescribed timelines for filing GSTR-1 and GSTR-2A returns. This reduces the chances of discrepancies due to timing differences.
• While filing GSTR-1, ensure that you provide accurate invoice details, including invoice number, date, value, and tax rates. Any errors in data entry can lead to mismatches.
• Verify the authenticity of invoices and supporting documents received from suppliers before claiming the input tax credit.
• Utilize accounting and GST software that can help automate the reconciliation process. Such software can compare your purchase data with GSTR-2A and flag any discrepancies.
• Avoid duplicate entries of invoices in your records. Duplicate entries can lead to discrepancies when matching with GSTR-2A.
• Keep a detailed record of all invoices, purchase orders, and other relevant documents. This makes it easier to verify the information in GSTR-2A.
• Conduct periodic internal audits and compliance checks to identify any issues related to GST compliance, including GSTR-1 and GSTR-2A mismatches.

Scenario explaining the mismatch in GSTR-1 & GSTR-2A:

Suppose you run a business that manufactures electronic devices. One of your suppliers provides microchips, which are crucial components for your products. You regularly purchase microchips from this supplier and claim input tax credits based on the invoices they provide.

Your supplier consistently supplies microchips and provides invoices for each transaction. In their GSTR-1, your supplier accurately reports microchip sales, including invoice details, dates, quantities, values, and tax rates.

You routinely review your GSTR-2A to match transactions with your records, and GSTR-2A is auto-integrated with your supplier’s GSTR-1 data. One month, you spot a discrepancy in GSTR-2A: an invoice for a microchip purchase needs to be included, despite having the invoice and supporting documents. You contact your supplier regarding the missing invoice; they confirm the oversight in their GSTR-1 reporting. Your supplier rectifies the error by amending their GSTR-1 to include the missing invoice, resolving the discrepancy, and updating your GSTR-2A accordingly.

This example illustrates how even minor errors or oversights in the supplier’s reporting can lead to mismatches between GSTR-1 and GSTR-2A. Regular reconciliation, communication, and supplier collaboration are crucial to identifying and resolving such discrepancies.