Cases of mismatches in GST returns

GST returns (GSTR) mismatch refers to the disparity in sales value mentioned in GSTR-3B with GSTR-2B or GSTR-2A. Due to this discrepancy, a business owner can get a legal notice from the tax department of India. In fact, a delay in reconciling the issue can lead to the suspension of their GST registration. This is why a business entity needs to be aware of every aspect of this GST mismatch.

Possible GST mismatches

Following are some of the tentative data disparities found in GST records:

  • Turnover mismatches in GSTR-3B and GSTR-1
  • Discrepancy in Input Tax Credit (ITC) stated in GSTR-3B and the ITC mentioned in GSTR-2A
  • Different tax rates applied to the inward and outward supply of the similar item
  • Non-payment of charges aftera delay in filing the GST returns
  • Negligence to settle differential taxes

You must be careful while filing your GSTRs so that you do not commit these errors.

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Reason for GST mismatch

There are some possible reasons that lead to this mismatch, as mentioned below:

  • New changes in sales invoices
  • Debit/credit note issuance
  • Some invoices are mentioned in GSTR-3B but not in GSTR-1

Apart from this, some taxpayers intentionally reduce the sales amount or the output in order to escape their tax liabilities while filing GST returns. Following are some unethical acts that leads to this GSTR data disparity:

  • When registered business owners receive payments from unregistered dealers, they create random credit notes. They use the notes as vouchers to adjust the sales (in most cases, they do not register the sales).
  • Some business entities also issue multiple invoices of small amounts in the name of unregistered dealers while sending their items.
  • On some occasions, they change the inputs of invoices after selling goods and receiving payments from unregistered dealers.

What is GST reconciliation? 

If there is any mismatch in GST returns, you need to rectify those errors. This process is called GST reconciliation. It helps in matching the details of sales/purchases in GST returns. 

You can claim Input Tax Credit (ITC) only after completing the GST reconciliation process. Nevertheless, you need to present invoice of GSTR-2B for this.

There are a few things that you need to keep in mind while completing GST reconciliation. These are as follows:

  • GST laws mandate certain deadlines to amend the data mismatch reflected within GSTRs. According to the CGST Act 2017, a registered individual is entitled to claim ITC either during GSTR filing or on 30th September (whichever comes earlier).
  • Section 36 of the CGST Act allows individuals to claim provisional ITC when invoices regarding GSTR-2B are not present. However, they can claim up to 5% of the amount reflected on the GSTR-2B as ITC. Let’s assume the total ITC of an individual should have been Rs. 2,000, but the GSTR-2B shows an ITC of Rs. 1,600. In this scenario, individuals can claim an Input Tax Credit amount of Rs. 1,600 x 105% = Rs. 1,680.

GST documents are vital if you need to apply for a business loan; therefore, being aware of the various aspects of GST and GST returns is vital for aspiring business persons. In conclusion, being aware of the GST mismatch, you can take necessary measures to avoid this circumstance. This way, you will be able to evade any probable inconveniences or legal penalties that can arise owing to the data discrepancy.

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