The Indian Taxation system has noticed much transformation with the introduction of Goods and Services Tax (GST). The aim of introducing GST was to simplify the tax structure, but at the same time, it brought new challenges to the business in their input tax credit (ITC) claims. To ease this process, the government of India introduced GSTR- 2B, which plays a crucial role in ITC reconciliation.
In this blog, we will discuss the importance of GSTR- 2B and how it helps businesses optimize their ITC claims.
What is GSTR- 2B?
GSTR- 2B is an auto-generated Input Tax Credit statement (ITC) which is generated by the GST portal for all the taxpayers in the country, and the details available in the form are from the information provided by the suppliers in GSTR- 1/IFF, GSTR- 5 and GSTR- 6.
GSTR- 2 B form is generated monthly and helps you claim ITC easier. GSTR- 2B is a static version of GSTR- 2A because its details do not change and are generated regularly.
Importance of GSTR- 2B in ITC Reconciliation
1. Identifying Missing Invoices
GSTR- 2B is crucial in identifying any missing invoices when the suppliers file their application documents in the GST portal. When the GSTR- 2B reconciliation happens, you can determine if any invoices are missing. For instance, the supplier may not record the data of some of the invoices and may fail to upload them in the GST portal. This means that even if you have the records of the missing invoices in your books, they can go missing from the GST portal when the GST- 2B is generated.
However, the invoices in your purchase register should match the invoice and their current information in GSTR- 2B. And if you notice that any invoice is missing from the document, you can talk to the suppliers and check for the missing invoices, and in this way, if the invoice has been missed, it can be added by the suppliers in the next month.
2. Accurate Payment of GST
It is important to ensure that you pay the GST payment correctly. Because paying extra GST or paying less can create problems for you in the last few days. But by reconciling GSTR- 2B, you ensure that you are paying the accurate GST payments on the portal and at the right time, this will save you from penalties and time, and your overall GST filing process will go easy.
3. Check for Invoices with Errors
When you generate GSTR- 2B, you will notice all the invoice details updated by the suppliers, and you can cross-check if all the invoices are uploaded correctly or not. This system allows you to find invoices with errors and discover defaulter suppliers who mismanage the invoices uploading. This way, you can take better decisions while dealing with the suppliers.
4. Avoid Double Claim
GSTR- 2B allows you to save from claiming ITC twice, which may occur if you don’t reconcile, and this was a huge problem before the introduction of GSTR- 2B. But with the help of GSTR- 2B reconciliation, you can track which invoices have been used for claiming ITC.
5. Check For Unaccounted Invoices
Invoices may go missing in the books even if they are present in the GSTR- 2B form. The suppliers upload the invoices, but you cannot find them in your purchase register. This may happen if the period of reporting invoices generally is not the same for your supplier and you. This discrepancy in the accounting period can be a big difference when invoices are uploaded, and your purchases are registered. Moreover, you may not have accounted for debit or credit notes by the supplier, which may lead to a mismatch at the time of reconciliation.
The Bottom Line
GSTR-2 B plays an important role in ITC reconciliation for businesses these days. With its use, businesses can improve compliance, minimize errors in ITC claims and make their tax processes seamless.
Frequently Asked Questions (FAQs)
1. How to file GSTR- 2B?
It is an auto-populated form for every taxpayer based on information provided by the suppliers in their GSTR- 1/IFF, GSTR- 5 and GSTR- 6 returns.
2. How to file GSTR- 2B?
You can view and download GSTR- 2B form for a specific tax period. Go to services > Returns > Returns Dashboard > File Returns > GSTR 2B.
3. What is the purpose of GSTR- 2B?
Taxpayers use GSTR- 2B to ensure they receive the proper input tax credit on specific sections of the GSTR- 3B form.