Invoice Matching Under Gst

Invoice matching is a concept wherein all the taxable supplies procured by a buyer and supplied by a seller are matched. The Government, through this concept, seeks to ensure the accurate transfer of

Input Tax Credit (ITC) between the states and the parties in a transaction. This article is a brief account of this concept and its importance under the current tax system. Know more about invoice matching on LEDGERS GST Software.

Importance of Invoice Matching

The procurer of goods is eligible to claim

Input Tax Credit (ITC) for specified transactions. This benefit can only be claimed when the details of inward supply filled by the purchaser in GSTR-2 matches with the details of outward supply filled by the supplier in GSTR-1. Hence the need for this mechanism.

How Does it Work?

As has been described, invoice matching is a mechanism wherein all taxable

GST supplies are matched with the ones received by the purchaser. The Interlink is formed by auto-population of the data filed in supplier’s GSTR-1 and procurer’s GSTR-2. Given that reason, it is considerably important for the buyer to ensure the matching of data, without which he/she will not be eligible to claim input Tax Credit (ITC). Once the supplier files form GSTR-1 for the supplies made by him/her; the recipient of the supply, or in other words the procurer, would be able to identify the purchase using the auto-populated form GSTR2A. This would enable the procurer, after making the essential changes, to credit his/her electronic credit ledger with the input credit on a provisional basis. Any modifications or additions done to the GSTR-2 form will be reflected on the supplier’s GSTR-1A Form.

Claiming Input Tax Credit

Input Tax Credit can be claimed by a procurer as soon as the supplier of goods files Form GSTR-3. The acceptance of Input Tax Credit (ITC) must be specified in Form GST MIS-1.

Components to be Matched

The following details must be matched in the GSTN portal while filing Form GST-2:

GSTN of the supplier
GSTN of the recipient
Invoice/Debit Note number
Invoice/Debit Note date
Taxable value
Tax amount

Know more about

GST invoice format.

What is Form GSTR-2?

GSTR-2 is a statement of inward supplies that must be filed by the recipient taxpayers every month. Using this form, they could be able to accept, reject, modify or maintain the outward supplies information pending in GSTR-1.

Time-Limit

GSTR-2 for the preceding tax period must be filed within the 15

th of every month. Delays in filing the same would incur penalties amounting to Rs.100 per day, without remitting which Form GSTR-3 cannot be filed.

Conditions for Filing GSTR-2

A few conditions must be adhered with before filing this form. Let’s examine them:

The dealer must be registered with the act and must possess an active GSTIN.
LLP’s and companies must have a valid and unrevoked/non-expired digital signature.
The concerned person or entity must be in custody of an Aadhar number and mobile number to use the E-sign option.

Exemptions

The persons specified below are exempted from filing GSTR-2:

Taxpayers covered under the composition scheme.
Input service distributors.
Non-resident taxable persons.

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Frequently Asked Questions

Common questions about Invoice Matching Under GST Compliance for Tax Precision.

Invoice matching under GST is a concept where all taxable supplies procured by a buyer and supplied by a seller are matched. It aims to ensure accurate transfer of Input Tax Credit (ITC) between states and parties involved in a transaction.

Invoice matching is crucial because a buyer can claim Input Tax Credit (ITC) only when the details of inward supply filled in GSTR-2 match with the outward supply details filled in GSTR-1 by the supplier. It ensures proper ITC claims.

The supplier files GSTR-1 for outward supplies. The recipient can then identify the purchase in auto-populated GSTR-2A and claim provisional ITC after making necessary changes. Modifications in GSTR-2 will reflect in the supplier's GSTR-1A.

The following details must be matched: GSTIN of supplier, GSTIN of recipient, invoice/debit note number, invoice/debit note date, taxable value, and tax amount.

A buyer can claim ITC as soon as the supplier files GSTR-3. The ITC acceptance must be specified in Form GST MIS-1.

GSTR-2 for the preceding tax period must be filed by the 15th of every month. Delays in filing may attract penalties of Rs. 100 per day.

The dealer must be registered with GST, have an active GSTIN, and a valid digital signature (for companies/LLPs). Alternatively, they must have an Aadhaar number and mobile number for e-sign.

Taxpayers under the composition scheme, input service distributors, and non-resident taxable persons are exempted from filing GSTR-2.

The auto-population of data from the supplier's GSTR-1 in the recipient's GSTR-2A enables the latter to identify the purchases and claim provisional ITC after necessary modifications.

If the data does not match between GSTR-1 and GSTR-2, the buyer will not be eligible to claim Input Tax Credit (ITC) for that transaction, affecting their tax liability and compliance.