Input tax credit: reconciling GSTR-2B before you file

Why GSTR-2B matters

Under section 16(2)(aa) of the CGST Act, you can claim input tax credit (ITC) on a purchase only if your supplier has reported the invoice and it appears in your GSTR-2B. If the ITC you claim in GSTR-3B is higher than what your GSTR-2B supports, the GST system can flag the difference and ask you to explain it or pay it back.

GSTR-2B is a fixed monthly statement of the ITC available to you, generated on the 14th of the following month. Since the introduction of the Invoice Management System (IMS), you can also accept, reject or keep invoices pending before GSTR-2B is finalised. This makes a regular review even more important.

A monthly reconciliation routine

1. Close your purchase register for the month, with every supplier invoice entered.
2. Review invoices on IMS. Accept the ones that match your books, reject the incorrect ones and keep doubtful ones pending.
3. Download GSTR-2B once it is generated, and match it invoice by invoice against your books on GSTIN, invoice number, date, taxable value and tax.
4. Sort the differences into three groups: invoices in your books but not in GSTR-2B, invoices in GSTR-2B but not in your books, and value mismatches.
5. Claim ITC in GSTR-3B based on GSTR-2B, and reverse credit that is blocked under section 17(5) or otherwise ineligible.
6. Track pending invoices and claim them in a later month, once they appear, within the time limit.

Why invoices don’t match

• The supplier reported the invoice under a wrong GSTIN, or has not filed GSTR-1 at all.
• Typing errors in invoice numbers or dates, on either side.
• Quarterly filers whose invoices appear in your GSTR-2B only after the quarter ends.
• Amendments and credit notes reported in a later period.
• Imports and reverse-charge purchases, which need to be checked separately.

Other checks worth adding

• The 180-day payment rule. If you don’t pay a supplier within 180 days of the invoice date, the ITC on it must be reversed. You can reclaim it once you pay.
• Supplier compliance. Keep a list of suppliers who regularly file late. Follow up with them early, or reconsider whether to keep buying from them.
• Year-end tie-up. Reconcile the full year’s ITC as per your books, GSTR-3B and GSTR-2B before you prepare the annual return.

How we can help

We run the monthly GSTR-2B reconciliation as part of our GST compliance service. We follow up on supplier mismatches and prepare your GSTR-3B, so your claims are supported before you file.

This article is for general information only and is not professional advice. Laws and procedures change through amendments, notifications and circulars. Please consult us before acting on it.