Enterprise’s

Checklist for Novigoting Annuol GST

Reconciliotions for FY 22-23

Important Steps and the Ultimate Solution for Enterprises

By Clear

Tobie of Contents
Annual GST Reconciliation and its Importance 01
Consequences of Not Doing an Annual GST Reconciliation . .. .. .. .. - - . - - 03
Sources and Reports to Perform Annual GST Reconciliation
Steps for Annual GST Reconciliation 05
• ITC reconciliation 05
• Sales reconciliation ...............................-.-.-....-.-.-.-.-......-.-.. 07
Challenges Faced in Annual GST Reconciliation 09
How to Simplify Annual GST Reconciliation 22-25 11

Annuol GST Reconciliotion and

it’s lmportonce
Reconciliation is an important task that every business, large or small, registered under Goods and Services Tax (GST) must
carry out. While we understand that any regular reconciliation involves comparing two data sets for consistency, the
annual reconciliation traverses beyond the reconciliations done regularly during the year while
filing GSTR-1 or GSTR-GB.

Annual GST reconciliations also involve harmonising financial reporting data while ensuring an accurate and complete
closure of GST reporting for the financial year. The yearly GST reconciliation is similar to the monthly/frequent
reconciliations but with
additional checkpoints.

Accordingly, it requires matching the yearly sales and purchase datasets as filed in the GSTR-1, GSTR-GB, or appearing in
GSTR-2A, GSTR-2B, and the books of accounts.
Similar to the regular periodic reconciliations, the annual reconciliation also involves reconciliations of the General Ledgers
(GL), e-invoices, and e-way bills with the respective GST returns and sales/purchase registers. Additionally, for annual ITC
reconciliation, the GSTR-2A is preferred over the GSTR-2B. It involves the adjustment of advances during the financial year
and the reversal of ineligible input tax credit (ITC)
previously claimed.
Annual reconciliation needs data consolidation for the entire fnancial year 2022-25, including those invoices or documents
belonging toa financial year that have been reported or corrected in the following financial year up to 50th November
2025 or the
date of filing the annual return (GSTR—9), whichever is earlier.

After the annual reconciliation is done, most big enterprises must file GSTR—9 and GSTR-9C on or before the 51st of
December 2023 for 22-25. Hence, for an enterprise other thana small business, any actions based on the annual
reconciliations for 22—23 must be taken in GSTR-1 and GSTR-3B returns of October 2025, due on 11th November
2023 and 20th November 2023.

Clear - Enterprise’s Checklist for Novigoting Annuol GST Reconciliotions for FY 22-23 01
The taxpayer must take suitable action for any mismatches and missing entries that may call for effective vendor
communication, reporting and amendment steps in GST returns. It ensures timely ITC claims and payment of tax dues for
the relevant financial year, avoiding any adverse impact on the working capital and, in turn, the profitability
of the taxpayer’s business.

The following ore the benefits of annual GST reconciliation-

s Ensures that a precise tax liability for the year is discharged
• Helps in identifying and claiming optimal and eligible ITC, previously not claimed
• Helps in accurate reporting of purchases and sales in the GST returns
• Identification of mismatches between the GST returns and timely amendments
• Enables the timely issuance of credit or debit notes
• Avoids scrutiny notices with the automated return scrutiny system.
• Avoids suspension/cancellation of GST registration
• Enables accurate disclosures in Form DCD (for businesses subjected to Income
tax audit).

Consequences of Not Doing on Annuol GST

Reconciliotion
Now that we know what annual GST reconciliation is and its benefits, learn the
consequences of skipping it before the deadlines.
Loss of money towards interest/late fee on unreported taxes
Recent developments such as DRC-01B/C intimations and automated return scrutiny for discrepancies need more frequent
sales, ITC and tax liability reconciliations. But if the same is not done until October 2025 returns for FY22-25, report such
omitted taxes
while filing GSTR—9 with interest.

Loss of lnput Tox Credit (ITC) for FY 22-23

Claim ITC in the GSTR—GB only if the invoice is present in GSTR—2B, subject to conditions. Further, no fresh ITC
claims for FY22-25 can be made in GSTR-9. Businesses cannot act later on if they missed annual reconciliation reporting
deadline for
changes in ITC pertaining to FY22-25.
Feor of concellotion of GST Registrotion
With effect from 22nd December 2020, the GST law requires officers to suspend the GST registration for major
discrepancies between the GSTR—KB vis Ó vis the
GSTR-2A/2B and the GSTR-1. In extreme cases, this could further lead to cancellation
of GST registration. Annual GST reconciliations gives you a chance to identify such discrepancies, if any across FY22-25.

Potential GST notices for major discrepancies

Businesses risk receiving potential GST notices if they fail to complete their annual GST reconciliation before filing the
GSTR—9 return. Demand notices could be for unreported, under-reported, or unpaid taxes on reverse charge or excess ITC
claimed.
Notices ore now real-time rather than an annual check by the taxman! DRC-1B
and DRC—01C intimations points at the discrepancies among GSTR—GB, GSTR—1 and GSTR-2B, demanding timely
response in seven days- either the taxes paid or
differences justified with reasons.

Sources and Reports to Perform Annuol GST

Reconciliotion
Businesses must pull out their sales register, purchase register, various expense ledgers, ITC and ITC reversal ledgers, and
the tax ledgers for CGST, SGST, and IGST components for the twelve months based on closed books of accounts.
Businesses must also extract GST return filing data for nineteen months, covering April to
October‘s returns following the financial year, as a monthly filer.

You‘ll need the following ready-to-use reports, available on Clear, to make annual
GST reconciliation hassle—free and quicker!
• Multi-month GSTR-2A report: Displays GSTR—2A data across different tax periods in a single place. Use this report
for any misses due to timing differences in invoice
reporting.

° Multi-month GSTR-2B report: Even though the GSTR-2A data is mostly relevant for
annual GST reconciliation, this report, similar to the multi—month GSTR—2A, still remains relevant as taxpayers would
have referred to it for their regular filings.

• GSTR-3B vs GSTR-1 vs soles register report: Provides a three-way comparison of

sales data for every section or table of the GSTR—1 and the GSTR—GB with the books of accounts.

• GSTR-3B vs GSTR-2B vs purchase register report: Provides a three-way comparison

of ITC for every section or table of the GSTR—GB with the GSTR—2B and the books of accounts.

• e-Way bill (GSTR-1) vs Soles Register report: Allows taxpayers to identify missing
e-way bills data in either of the records, revalidate and file accurate GSTR-1.
• e-Invoice (GSTR-1) vs Soles Register report: Allows taxpayers to identify missing e-
invoices data, revalidate and file accurate GSTR—1.
• PAN-IeveI summory reports of the obove will assist in filing the annual income tax
retUrn and taX aUdit repOrt.

Steps for Annuol GST Reconciliotion

Taxpayers can ensure accurate GST reporting by following systematic approach by consolidating the values, reconciling
the data, and making the declaration. Also, taxpayers must bifurcate changes relating to previous years in the relevant
financial year for better reconciliation and accurate reporting in GSTR-9. Let’s look at the steps for
the annual GST reconciliation in 22—23:

Step 1: File GST returns in GSTR-1 and GSTR-3B to dote, especially for 22-23
The taxpayers must mandatorily file all the periodic GST returns for the financial year 2022-23. Businesses should have
ideally fled their returns for March 2025 in April 2025 by carrying out one round of yearly reconciliations for any
adjustments, ITC reversals, etc. If any GST returns are yet to be filed within the due date, these should be filed along with
interest or late fees as applicable. The matching and reconciliation process cannot be
conducted until all pending GST returns for 22-25 are filed.

Step 2: Taxpayers should compare data and identify the mismatches

The taxpayers should identify the mismatches and correct the relevant entries in the books of accounts. GST return data and
data from books must be made compatible/ comparable. However, manual intervention involves greater effort and more
time, leading to errors and invalidating the entire purpose of reconciliation. Automating this step with a SaaS-based GST
solution, such as Clear, makes it easier for teams and
solves data—handling complexities.

Let’s understand the ITC and sales reconciliation in detail:

ITC reconciliotion
There have been various ITC reporting developments, such as changes in Table-4 format, DRC—OIC intimations and the
introduction of the electronic ITC reversal and reclaim statement in 2022 and 2025.
These need inward supplies and tax credits to be regularly reconciled to identify and
correct mismatches. However, if you’ve missed the regular periodic reconciliation,

don‘t miss the following checkpoints for the annual ITC reconciliation:
• Claim ITC belonging toa relevant financial year if not claimed earlier (Appearing in
the GSTR-2A/2B for the relevant periods but not in the GSTR-GB filed returns).
• Do vendor—wise reconciliations to identify and communicate with vendors where any
ITC claimed in earlier returns, now need to be reversed due to underreporting by the vendor for FY 22—23.

• Ensure to check GSTR-2A, the dynamic returns, to date for yearly reconciliation to not
miss out on the TDS and TCS credits.
• Reverse any ITC, being ineligible, whether temporary or permanent in nature and ensure reporting of reclaims
belonging to that financial year if missed earlier. Refer to CGST Rules 57, A2, 45, etc. Report the opening balance for the
electronic credit reversal and reclaim statement for ITC reversed from April 2022 to date but not
reclaimed.

• Ensure any adjustments to ITC reported via debit notes or credit notes issued by
vendors in FY 22-25 against purchase invoices are reported for the financial year.
• Check if the corresponding taxes are deposited by the vendors with the government.
• File amendments pertaining to rectified information reported in the GST returns filed
ina financial year.
• Check the purchase register for 22-23 and various expense ledgers, such as bank
charges, stock insurance premium accounts, etc, to look for any omissions in the GSTR-GB or adjustments.
• Check taxes payable versus those paid under the Reverse Charge Mechanism (RCM)
and pending ITC claims for the financial year towards goods/services used for business.

• Compare the annual Income Tax Return (ITR) with the Annual GST Return (GSTR-9).
• Keep the purchases and input tax general ledger at par with the purchase register, except for certain exceptional line
items, such as intra-company stock transfers and
cross charges.

Soles reconciliotion
Before fling the annual return, a reconciliation of outward supplies or sales will ensure that the tax liability is accurately
reported without omissions for 22—23. Such sales data must match the details reported in the GSTR-1 and GSTR-GB filed
between April 2022 and October 2023. Further, developments such as DRC—01B and automated return
scrutiny have necessitated the need for frequent sales and tax liability reconciliations.

Details of taxes paid during the year need to be mentioned, and this must tally with the
total taxes disclosed and paid in the GSTR—GB. Don’t miss the following checkpoints for the annual sales and tax liability
reconciliation:

• Verify if HSN classification of goods and services is complete and accurate.

• Identify differences in tax liability between the GSTR—1 and GSTR—GB to avoid
duplication or cases of missed reporting.

• Find out if any supplies were reported under the wrong tables in the GSTR-GB while
compared to the GSTR—1.
• Identify if any inter—state supplies made to unregistered persons were omitted in the
GSTR-GB.
• Identify the value of supplies correctly shown but tax paid under the wrong head.
• Match table of exports at 6A of the GSTR—1 vis ó vis corresponding declaracion in the
GSTR-KB.
• latch table of exports at 6A of the GSTR-1 vis ó vis details of shipping bills submitted
on ICEGATE.
• Identify if e-invoices have been generated accurately for all applicable sales and
whether all e—invoices have been reported in GSTR—1.v
• Keep the revenue and output tax general ledger at par with the sales register, except
for certain exceptional line items such as intra-PAN transactions.
Step 3: Communication with the vendors and customers is the next crucial step
After identifying the mismatches, the immediate next step is to follow up with your vendors and customers to rectify them.
Coordinating with vendors and customers via regular communication regularly reduces your burden during annual
reconciliation.
However, manually doing this task would be a huge and time—consuming task.

Step 4: Make disclosures related to 22-23

The GST laws do not allow the revision of tax returns filed in the previous periods. However, it allows filing the corrected
entries via amendments made in the next periodic return. These amendment entries should be filed in the GSTR—1 and
GSTR—ZB,
accordingly.
There could be cases where sales invoices are not accounted for in the sales register/ books, but the corresponding e—
invoices are generated based on data pulled from the invoicing solution. Entries must be posted in the books of accounts
while doing the annual reconciliation.
The taxpayers should report all the rectified sale or purchase transactions for the financial year 2022—23 by 30th November
or the annual return date, whichever is earlier. This annual reconciliation is the last chance for the taxpayers to report and
correct all
differences filed in tax returns for the financial year 22—23.

Chollenges Foced in the Annuol GST

Reconciliotion
Varying data formats and reporting systems among businesses
A major challenge in reconciliation is that both suppliers and recipients may have different conventions, systems, or formats
for storing invoice numbers and other invoice data. That can leave unreconciled amounts on the table due to incomplete
invoice numbers, value mismatches due to rounding off, etc. Taxpayers face this during regular
return filing but may still continue to face it at the time of the annual GST reconciliation.

Nudging vendors at the lost minute becomes on uphill task

The annual GST reconciliation for FY 22—23 can help you to identify and nudge vendors ahead of time for any missing
ITC entries in the GSTR-2A/2B. It is because changes can be reported by your vendors in any GSTR—1, latest in October
2023 or quarter ending September 2023 filed utmost by 50th November 2025. Further, obtain vendor confirmations for
payment of taxes for FY 22—23 towards ITC claimed by your enterprise. You will agree that communication and follow-
ups involving huge data volume manually
with vendors tend to get stressful and time—consuming, especially with deadlines.

Keeping track of ever-changing GST portal validations

Annual GST reconciliation requires data to be pulled from the GST portal. The GST portal features and validations are
updated very frequently. It becomes difficult for taxpayers to learn and adapt to the changes quickly.
For instance, a recent update requires taxpayers to ensure that there are no major ITC discrepancies between GSTR—2B and
GSTR—GB. Otherwise, the taxpayer would invite DRC-01C intimations from the GST portal, leaving them with seven
days to respond with either a tax payment or a justification of the differences with reasons. The update makes frequent
reconciliations a necessity more than ever before. It is best to meet annual GST compliance through a software service
provider that caters to both GST law—related
and portal updates faster and accurately.

Reconciling ITC reversals and reclaims manually is a herculeon task

Nlost of the time, taxpayers pay attention to ITC reversals after the year ends, which are classified as temporary (can be
reclaimed later upon satisfying conditions) and permanent (not allowed for reclaims). The tension builds up at the time of
annual
reconciliation.
One must reconcile the inward supplies and ITC reversed data at the end of the financial year to ensure that all such ITC
amounts that were previously reversed but now eligible ore reclaimed on time, failing which, ITC may be lost. With more
line items and limited time, this task may become challenging if carried out manually or through
conventional methods.

Further, errors or duplications can arise if one missed reporting as per the modified format of Table-4 in the GSTR-GB of
any tax period. The recent update to report the opening balance of ITC reversed but not reclaimed by 30th November 2023
on the GST portal puts additional pressure on the teams for maintaining an accurate electronic
credit reversal and reclaim statement.

Reconciling advances received and adjustments thereof is challenging

The taxpayer must link invoices against the advances received across the fnancial year to avoid duplications, especially
taxable sales. With
Clear - Enterprise’s some for
Checklist of Novigoting
the sales invoices belonging
Annuol GST to FY22—2Z
Reconciliotions reported in the subsequent
for FY 22-23 IO year between April 2025

How to Simplify Annuol GST Reconciliotion 22-23

Lack of technology makes annual GST reconciliation, especially with high data volumes, time—consuming and strainful.
An automated solution makes it easier and error—free for enterprises to ensure compliance.
Look for the following features while choosing a suitable GST reconciliation solution for
your enterprise, Your ideal solution for annual GST reconciliation must:

• Be able to handle a massive amount of data.

• Automate reconciliation with seamless ERP integration and two-way data flow.
• Facilitate easy data sharing and team collaboration.
• Have evolve faster and in line with the regulatory changes.
• Be smart to handle any case of missing or incorrect information.
• Be cloud-based, Al-run, real-time and proactive.
• Have an automatic real-time application of pre-defined rules.
• Facilitate proactive and automatic reminders to reduce human intervention.
• Be capable of assessing missed/delayed ITC in the GSTR—2B and allow teams to
activate vendor payment blocking of the GST value in case of missing invoices.
• Allow two-way vendor communication on the GST solution via a built-in tool.