Maximize your ITC with GST MIS Reports

There are different kinds of GST MIS reports that offer multiple benefits. It aids businesses in performing a thorough analysis of mismatches, learning about total GST turnover, maximum ITC utilization, and other key decision-making criteria.

The government has been making several amendments in the system in order to ensure that taxpayers claim ITC correctly. There are several factors when it comes to maximizing your ITC, apt GST reconciliation being one. In this article, we will discuss, how GST MIS Reports can help you maximize your ITC.

What is a GST MIS Report?

GST MIS reports offers a comprehensive understanding of the firm’s GST compliance status and other GST-related issues, enabling teams to make timely, informed decisions that will either prevent the company from suffering losses or open up new revenue streams.

IRIS GST Software offers multiple GST MIS Reports that simplifies your GST reconciliation process and aids you in ITC maximization. You can also read: 7 Ways CFOs can use MIS reports.

What is ITC – Input Tax Credit?

Input Tax Credit or ITC is the tax that a business pays on a purchase and that it can use to reduce its tax liability when it makes a sale. In other words, businesses can reduce their tax liability by claiming credit to the extent of GST paid on purchases. Goods and Services Tax (GST) is an integrated tax system where every purchase by a business should be matched with a sale by another business. This makes flow of credit across an entire supply chain a seamless process.

The ultimate objective of every taxpayer is to maximize ITC claim while following all the conditions and rules of GST law.

An Indian enterprise must verify the ITC details before claiming it in Form GSTR-3B for a tax period. It involves regular reconciliation of GSTR-2B/2A with books of accounts. Further, it requires frequent follow-ups with suppliers who have not reported tax invoices or debit notes. All these require a robust and smart solution that requires the least manual effort!

What is GSTR-2A/2B reconciliation?

The reconciliation process involves matching or checking the data that has been uploaded by your suppliers with that of your purchase data in your books. As the supplier’s uploaded information is available to you in GSTR-2A/ GSTR 2B, you can use that statement and then compare it with your books to check for any discrepancies. This shows you if every transaction that has taken place between the two of you has been accurately recorded or if any invoices are missing. Any data that is missing can cause future troubles and make you liable to pay penalties in the form of interest and other fees as specified by the GST authority.

What is the importance of GSTR-2A/2B for businesses?

On January 1, 2022, the Finance Ministry launched the 100% invoice matching criteria and made it mandatory for all businesses. The Benefit of provisional ITC claims is no longer available. It means the amount of ITC reported in GSTR-3B will be a total of actual ITC in GSTR-2B. The provisional ITC of 5% of actual ITC in GSTR-2B will no longer be allowed

Essentially, any business that wishes to claim the ITC will have to show 100% parity between their filed returns and supporting invoices. In simple words, you will only be able to claim ITC if the concerned invoice is present in GSTR-2A/GSTR2B. The Benefit of provisional ITC claims is no longer available.

Here are a few reasons why GSTR-2A/2B reconciliation is important for businesses

1. Loss of ITC

If the supplier has failed to upload an invoice, then it means the taxpayer cannot claim ITC because ITC will be allowed only on the reflecting on GSTR-2A/GSTR-2B statement. This will have a major impact on the working capital especially if this is done constantly by the supplier where he does not upload the invoices despite constant reminders for the same. It may not seem like a lot in the beginning but for MSMEs, this can make a huge difference because they need capital for running the business smoothly without hassles. ITC reconciliation ensures this loss of ITC does not occur and the taxpayer can claim the correct ITC on time.

2. Claiming excess credit/Incorrect values

The GSTR – 2A/2B reconciliation will prevent you from claiming ITC on the invoices that are reported in the GSTR-2A or GSTR-2B. For example, you may claim ITC on all the inward supplies in GSTR-3B return but, there are few that are not uploaded by the supplier. This results in an excess claim and may attract interest and penalties. There are situations where the invoices are uploaded, but the values are incorrect. Reconciling helps you identify such invoices and get those ratified with the supplier.

3. Notice from department

The GST authority will send show cause notices to the taxpayer if there is a mismatch between GSTR-2A/GSTR-2B and GSTR-3B with ITC. Without GSTR – 2A reconciliation or 2B, the mismatch cannot be caught on time by the taxpayer thereby causing trouble in the future. With the help of reconciliation, the taxpayer will be claiming the correct ITC and thereby not attract such problems with the authorities. The notice asks the taxpayer about the reason behind the mismatch. If any documents are missing or the taxpayer cannot verify the same within the stipulated time, they will face penalties and may have to reverse along with interest.

4. Avoid duplicate or ineligible ITC

The GSTR – 2A reconciliation prevents ineligible or duplicate ITC claims. There are prescribed guidelines that need to be fulfilled to be eligible to claim ITC. Similarly, for certain notified supplies, products or services, ITC claim is blocked, meaning you cannot claim on such supplies. For example, ITC can not be claimed for those purchases used for making exempt supplies, something that is consumed for personal use etc., GSTR-2B/GSTR-2A reconciliation helps you to avoid ITC claims on ineligible supplies. It is also possible that you may claim tax credit on the same invoice multiple times, resulting in excess credit.

5. Identify habitual defaulter suppliers

The GSTR-2A reconciliation will uncover the habitual defaulters who either make mistakes or fail to upload the invoices in their GSTR-1. If a taxpayer finds such suppliers, it is advisable to take action depending on how many times they have made the mistakes and the gravity of those mistakes.

For example, one way to tackle this issue is to look for new suppliers by the taxpayer to ensure this problem doesn’t persist in the future. Else, the taxpayer must make it clear that if they wish to do business with them, they must ensure reporting of invoices on time.

Reconciliation with IRIS GST and how MIS Reports Help

All this time, while the ITC computation was more of an internal process, with GST and the changing rules, the dependency of ITC computation has grown on external data sources i.e. reporting of invoices by vendors on the GST portal. For Government, the data reported by vendors is the basis for monitoring ITC claims by the recipient. Hence, it becomes essential to compare and match the internal and external versions of the same data. In other words, GST Reconciliation is more of a need than a choice to maximize ITC claim.

IRIS GST ensures that your GSTR-2B data is fetched without manual intervention. Our advanced reconciliation engine matches data between books and GSTR-2B to identify gaps, with the option to define custom matching logic and claim 100% ITC in GSTR-3B.

After reconciliation, the next thing required is a neat and meaningful compilation of the results to deep dive into the transactions that need attention. Deriving insights and analyzing the same data from different perspectives is the pressing need, so as to achieve the goal of maximizing ITC claim. Also, given that a business entity could have many GST registrations, getting a group level view with an option to drill down to the GSTIN level is a desirable option to have.

The GST MIS report is an additional feature that enables top management or decision-makers to quickly assess the compliance level. MIS reports will offer a thorough analysis of mismatches, total GST turnover, maximum ITC utilization, and other decision-making criteria.

How GST MIS Reports can help you maximize your ITC

There are several significant MIS Reports offered by IRIS GST Software that businesses can use to ensure accurate GST reconciliation thus maximizing their ITC. Large and mid-size businesses and even MSMEs have a number of transactions every month. Managing the data, taking care of GST filings and now also generating e-invoices are some of the common practices that require expert attention. When dealing with critical data in large numbers, errors and mismatches are bound to happen.

IRIS GST provides insights and useful reports based on ITC booked as per Purchase register, ITC available/ineligible as per GSTR 2A/2B. Further analysis bases on reconciliation result where the organisation can identify how much ITC has booked and how it has claimed over the period of time. MIS Reports presents your tedious data in a comprehensible mannerl way so that the organisation can use and maximize their ITC claim and minimize their ITC loss.

Following are the features/analytics that are provided by the MIS Reports related to ITC reconciliation:

Summary of ITC reconciliation results at the group level that can be drill down to GSTIN level
ITC Reconciliation result for two financial years based on Purchase register as well as on supplier data
Categorization of invoices bases on ITC reconciliation category
Supplier wise ITC summary based on GSTR 2B for Multiple financial year considering the effect of amendment, debit note and credit note
Correlation between purchase register and GSTR 3B, when you booked invoice in books of accounts and in which month ITC has claimed in GSTR 3B.
Period wise analysis of purchase register where the ITC still have not been marked for GSTR 3B.
Analysis based on in which month purchase has booked and in which month of GSTR 2B it is available.
Month wise analysis of ITC Utilization and Tax liability discharge by Cash Payment

GST MIS Reports by IRIS GST Software

Now that you know how important GST MIS Reports can be, why don’t you try them for yourself?

The GST MIS report is IRIS GST Software’s smart feature that enables top management or decision-makers to quickly assess the compliance level. MIS reports will offer a thorough analysis of mismatches, total GST turnover, maximum ITC utilization, and other decision-making criteria. You get…

Easy Download Format: You can download the MIS Reports easily at any time with a single click.
Source Agnostic: IRIS also offers comparative reports even if the user has not filed the returns through IRIS GST software. The details for comparative data is fetched directly from the GST portal and reports are prepared in less than a minute.
Comprehensive: MIS Reports are prepared at the GSTIN level, PAN level or group level, which helps the CFO or tax heads to analyze and compare the details at the group/company level. This assists them in decision-making.
Microsoft Excel® Format: MIS Reports are provided in Microsoft Excel® downloads along with the base data which are used to prepare the report.
Multiple Financial Years: Reports can be downloaded for multiple filing periods and multiple financial years.
Graphical Representation: Analyse your data in a simplified way through the analytical dashboard powered with powerful charts and graphs.

Want to learn more about all the MIS Reports provided by IRIS GST Software? Reach out to us with all your queries at support@irisgst.com

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