Invoice Matching Under GST
Every month suppliers will be required to upload their
invoices to GSTN portal and those will be matched with the purchases from
customers. So, invoice matching is going to be a monthly affair for businesses.
Use of IT systems for bookkeeping and tax compliance
work will be seen even in many small and medium businesses from now on.
Tightly integrated IT systems will also help the
suppliers and buyers to match their invoices effectively. Invoice matching is a
very important part when it comes to trading.
In this article, we’ll see what is invoice matching,
how does it work, what tax payer needs to do every month and other 10 frequently
asked questions.
What Is Invoice Matching?
Matching all supplies taxable, bought by a buyer and
supplied by a supplier is known as Invoice Matching.
According to finance minister, “It is through the
invoice matching and automated return mechanism that the government can ensure
eligible input tax credit is accurately transferred between the states”.
GSTN is working towards the GST web application which
is hosted on the common portal to make invoice matching easy.
How does Invoice Matching
work?
Invoicing Matching is
very important because, under the GST law, the input tax credit of
purchased services and goods will be available only when the inward supply
details filed in buyer’s GSTR-2 return matches the outward supplies
details filed in supplier’s GSTR-1.
This interlink has been created by auto-population of
the data filed in supplier’s GSTR-1 and buyer’s GSTR-2. Hence, if these two
fields do not match then the buyer will be unable to claim the input tax credit
of paid taxes of the purchased goods or services or both. Compliance rating is
an incentive for businesses to file returns on time and the related compliance.
Basically, how invoice matching work is by matching
all the taxable GST supplies with all the taxable supplies received by the
buyer.
When the supplier files form GSTR1, the recipient can
identify the purchase with the help of auto populated form GSTR2A. After
necessary modifications are done, the recipient’s electronic credit ledger will
be credited with the input credit on a provisional basis.
If any modifications or additions are done to the
GSTR-2 form, it will be reflected on the GSTR-1A Form for the supplier.
When the Form GSTR-3 (Monthly Returns Form) is filled
by the supplier the input credit becomes available; payment tax should also be
considered while filling the monthly returns form. The acceptance of the input
tax credit will be notified in the GST MIS-1 Form.
Frequently Asked Questions
About Invoice Matching
1) Which items from the
invoices are matched?
During filing of form GSTR-2, GSTN portal matches
following fields:
GSTN of the supplier
GSTN of the recipient
Invoice/Debit Note number
Invoice/Debit Note date
Taxable value
Tax amount
2) Who should file
GSTR-2?
GSTR-2 or Statement of Inward Supplies is supposed to
be filed by recipient taxpayers. It should be filed on a monthly basis. In
GSTR-2 they can accept, reject, modify, or keep the outward supplies
information pending in the GSTR-1 to prepare the inward supplies details and
credit/debit notes.
GSTR-2 has to be filed irrespective of any business
activity during the given tax period.
Following entities are exempted from filing GSTR-2
Citizens who pay tax
under the composition scheme
Distributors of input
services
Non-resident Taxable
persons are filed in GSTR-5.
3) What is the time
limit to file GSTR-2?
The last date for filing
GSTR-2 will be on 15th of every month after the tax period.
For example – if you receive goods and services during
the month of August, then it should be filed before September 15.
This means that if goods and services received in a
month M, the GSTR 2 for the same should be filed on or before the day 15 in the
next month, i.e., M+1.
4) What are the late fee
charges?
A taxable receiver will be charged a late fee if filed
past due date.
The late charges for late filing of GSTR-2 are
automatically calculated after filing the return. These charges must be paid
before GSTR-3 is filed, and without these charges, GSTR-3 is considered
invalid.
The late fees if INR 100 a day as per the Act
(IGST/SGST/CGST) and are based on the inward supplies which are received by the
taxpayer (intra-state, interstate, or both). Based on the type of inward
supplies received, the charges may vary up to INR 300 (100+100+100) a day
(considering that the taxpayer is registered under all SGST/CGST and IGST
acts).
5) What are inward
supplies under GST?
Inward supplies include – all inward supplies of
services and goods, inward supplies of services for which reverse charge basis
tax is payable and inter-state inward supplies, credit or debit notes and also
supplementary invoices for the specified tax period.
6) What are the
conditions to file the inward supplies details of month in the GSTR-2 before
the month end (before the end of tax period)?
Following conditions have to be met .
Non-resident taxable
persons and casual dealers
Those taxpayers who have
applied for voluntary GST registration cancellation are allowed to file GSTR-2
before the current tax period end in case the taxpayers have received the
cancellation order.
7) Until what time can a
taxpayer claim ITC?
Input tax credit can be claimed till the end of 12
months from the date of issue of original debit note/invoice or from when the
annual return is filed, whichever comes first.
In the case of a gap greater than one year from the
date of filing GSTR 3 and the original debit date/invoice, there will be no
transfer of electronic credit ledger.
8) What are the
conditions to be fulfilled before filing GSTR-2?
The following conditions need to be fulfilled before
filing GSTR-2 the taxpaying receiver:
One has to be a
registered normal dealer and have a GSTIN which is active.
One should have a valid
User ID and password.
One should have a valid
and unrevoked/non-expired digital signature, if mandatory. (Digital signature
is mandatory for LLPs, companies, and FLLPs).
One should have an
Aadhaar number along with a mobile number which is valid if they wish to use E-sign
option.
For canceled GSTINs,
GSTR-2 can be filed, but it is not mandatory.
The GSTR-1 filing due
date of that tax period has lapsed.
9) What are the
conditions to be fulfilled after filing GSTR-2?
After the successful filing
of GSTR-2 return, an ARN is generated. If filed offline by uploading XML file,
then a temporary ID is generated. Only on successful submission is the ARN
generated.
On successful submission
of GSTR-2, an email and SMS is sent to the taxpayer.
The DSC or E-sign affixed
return once submitted; the return passes on to ‘The Central Board of Excise and
Customs – the central tax authority (CBEC)’ and The UT or state of
registration’.
If there are any
additions or amendments, auto-population of counter-party supplier taxpayer’s
details will happen in GSTR -1A/GSTR-5A.
Electronic Credit Ledger
should be updated.
10) Are there any
rules for invoice matching?
Businesses need to upload
the invoices and bills in a certain format. Government has published a list of
mandatory elements that every GST invoice should contain. For
example, its mandatory to mention GSTN of customer and place of supply of goods
or services.
How To Avoid Mistakes
During Invoice Matching
If you try to manually match the vendor invoices with
purchase bills, errors are bound to happen. There are lot of GST return filing
tools that can help you fetch the vendor bills and match it online. However, it
will be tedious to spend time in importing bills and exporting invoices
manually.
Email id :-
vkasolution@gmail.com
Mobile No :-
+91-844-863-2113
Invoice Matching Under GST
Every month suppliers will be required to upload their
invoices to GSTN portal and those will be matched with the purchases from
customers. So, invoice matching is going to be a monthly affair for businesses.
Use of IT systems for bookkeeping and tax compliance
work will be seen even in many small and medium businesses from now on.
Tightly integrated IT systems will also help the
suppliers and buyers to match their invoices effectively. Invoice matching is a
very important part when it comes to trading.
In this article, we’ll see what is invoice matching,
how does it work, what tax payer needs to do every month and other 10 frequently
asked questions.
What Is Invoice Matching?
Matching all supplies taxable, bought by a buyer and
supplied by a supplier is known as Invoice Matching.
According to finance minister, “It is through the
invoice matching and automated return mechanism that the government can ensure
eligible input tax credit is accurately transferred between the states”.
GSTN is working towards the GST web application which
is hosted on the common portal to make invoice matching easy.
How does Invoice Matching
work?
Invoicing Matching is
very important because, under the GST law, the input tax credit of
purchased services and goods will be available only when the inward supply
details filed in buyer’s GSTR-2 return matches the outward supplies
details filed in supplier’s GSTR-1.
This interlink has been created by auto-population of
the data filed in supplier’s GSTR-1 and buyer’s GSTR-2. Hence, if these two
fields do not match then the buyer will be unable to claim the input tax credit
of paid taxes of the purchased goods or services or both. Compliance rating is
an incentive for businesses to file returns on time and the related compliance.
Basically, how invoice matching work is by matching
all the taxable GST supplies with all the taxable supplies received by the
buyer.
When the supplier files form GSTR1, the recipient can
identify the purchase with the help of auto populated form GSTR2A. After
necessary modifications are done, the recipient’s electronic credit ledger will
be credited with the input credit on a provisional basis.
If any modifications or additions are done to the
GSTR-2 form, it will be reflected on the GSTR-1A Form for the supplier.
When the Form GSTR-3 (Monthly Returns Form) is filled
by the supplier the input credit becomes available; payment tax should also be
considered while filling the monthly returns form. The acceptance of the input
tax credit will be notified in the GST MIS-1 Form.
Frequently Asked Questions
About Invoice Matching
1) Which items from the
invoices are matched?
During filing of form GSTR-2, GSTN portal matches
following fields:
GSTN of the supplier
GSTN of the recipient
Invoice/Debit Note number
Invoice/Debit Note date
Taxable value
Tax amount
2) Who should file
GSTR-2?
GSTR-2 or Statement of Inward Supplies is supposed to
be filed by recipient taxpayers. It should be filed on a monthly basis. In
GSTR-2 they can accept, reject, modify, or keep the outward supplies
information pending in the GSTR-1 to prepare the inward supplies details and
credit/debit notes.
GSTR-2 has to be filed irrespective of any business
activity during the given tax period.
Following entities are exempted from filing GSTR-2
Citizens who pay tax
under the composition scheme
Distributors of input
services
Non-resident Taxable
persons are filed in GSTR-5.
3) What is the time
limit to file GSTR-2?
The last date for filing
GSTR-2 will be on 15th of every month after the tax period.
For example – if you receive goods and services during
the month of August, then it should be filed before September 15.
This means that if goods and services received in a
month M, the GSTR 2 for the same should be filed on or before the day 15 in the
next month, i.e., M+1.
4) What are the late fee
charges?
A taxable receiver will be charged a late fee if filed
past due date.
The late charges for late filing of GSTR-2 are
automatically calculated after filing the return. These charges must be paid
before GSTR-3 is filed, and without these charges, GSTR-3 is considered
invalid.
The late fees if INR 100 a day as per the Act
(IGST/SGST/CGST) and are based on the inward supplies which are received by the
taxpayer (intra-state, interstate, or both). Based on the type of inward
supplies received, the charges may vary up to INR 300 (100+100+100) a day
(considering that the taxpayer is registered under all SGST/CGST and IGST
acts).
5) What are inward
supplies under GST?
Inward supplies include – all inward supplies of
services and goods, inward supplies of services for which reverse charge basis
tax is payable and inter-state inward supplies, credit or debit notes and also
supplementary invoices for the specified tax period.
6) What are the
conditions to file the inward supplies details of month in the GSTR-2 before
the month end (before the end of tax period)?
Following conditions have to be met .
Non-resident taxable
persons and casual dealers
Those taxpayers who have
applied for voluntary GST registration cancellation are allowed to file GSTR-2
before the current tax period end in case the taxpayers have received the
cancellation order.
7) Until what time can a
taxpayer claim ITC?
Input tax credit can be claimed till the end of 12
months from the date of issue of original debit note/invoice or from when the
annual return is filed, whichever comes first.
In the case of a gap greater than one year from the
date of filing GSTR 3 and the original debit date/invoice, there will be no
transfer of electronic credit ledger.
8) What are the
conditions to be fulfilled before filing GSTR-2?
The following conditions need to be fulfilled before
filing GSTR-2 the taxpaying receiver:
One has to be a
registered normal dealer and have a GSTIN which is active.
One should have a valid
User ID and password.
One should have a valid
and unrevoked/non-expired digital signature, if mandatory. (Digital signature
is mandatory for LLPs, companies, and FLLPs).
One should have an
Aadhaar number along with a mobile number which is valid if they wish to use E-sign
option.
For canceled GSTINs,
GSTR-2 can be filed, but it is not mandatory.
The GSTR-1 filing due
date of that tax period has lapsed.
9) What are the
conditions to be fulfilled after filing GSTR-2?
After the successful filing
of GSTR-2 return, an ARN is generated. If filed offline by uploading XML file,
then a temporary ID is generated. Only on successful submission is the ARN
generated.
On successful submission
of GSTR-2, an email and SMS is sent to the taxpayer.
The DSC or E-sign affixed
return once submitted; the return passes on to ‘The Central Board of Excise and
Customs – the central tax authority (CBEC)’ and The UT or state of
registration’.
If there are any
additions or amendments, auto-population of counter-party supplier taxpayer’s
details will happen in GSTR -1A/GSTR-5A.
Electronic Credit Ledger
should be updated.
10) Are there any
rules for invoice matching?
Businesses need to upload
the invoices and bills in a certain format. Government has published a list of
mandatory elements that every GST invoice should contain. For
example, its mandatory to mention GSTN of customer and place of supply of goods
or services.
How To Avoid Mistakes
During Invoice Matching
If you try to manually match the vendor invoices with
purchase bills, errors are bound to happen. There are lot of GST return filing
tools that can help you fetch the vendor bills and match it online. However, it
will be tedious to spend time in importing bills and exporting invoices
manually.
Email id :-
vkasolution@gmail.com
Mobile No :-
+91-844-863-2113
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