Input Tax Credit (ITC) Reconciliation

Ensuring Proper ITC Claim and Avoiding
Mismatches

Don't Let ITC Mismatches Cost Your Business!

Every rupee counts when running a business, and Input Tax Credit (ITC) is no exception. If your ITC claims don't match government records, you might lose out on tax savings or face penalties. That's why ITC reconciliation is essential—and that's where Tax360 can help.

What is Input Tax Credit (ITC)?

ITC allows businesses to set off the GST paid on purchases against the GST payable on sales (outputs). However, to avail of ITC, businesses must ensure that:
  • The supplier has uploaded invoices in GSTR-1
  • The invoice details match in GSTR-2B (Auto-generated ITC statement)
  • GST has been paid in full by the supplier
  • The purchase is used for business purposes

Why Does ITC Reconciliation Matter?

You pay GST on purchases, but you only get the credit when everything checks out:
  • Your supplier files their returns on time
  • Invoice details match tax records
  • All details—GSTIN, amounts, dates—are accurate

If any of these go wrong, you lose ITC! But don't worry—Tax360 makes ITC reconciliation effortless for businesses.

Why is ITC Reconciliation Important?

Key Aspects Impact of Non-Reconciliation
Mismatched Invoices ITC claims get denied
Delayed Filing by Suppliers ITC gets blocked until the supplier files returns
Wrong GSTIN Details Claims become ineligible
Unmatched Tax Amount Tax authorities may demand recovery
Non-Compliant Vendors Business cash flow gets impacted

1. GSTR-1: Reporting Outward Supplies (Sales)

GSTR-1 is a detailed report of all sales made during the tax period.

  • Step-1

    Matching Purchases with GSTR-2B Compare your purchase register with auto-generated GSTR-2B to identify mismatches in invoice details, GSTIN, and tax amounts.

  • Step-2

    Supplier Follow-Ups Ensure suppliers file GSTR-1 on time to prevent missing invoices in GSTR-2B.

  • Step-3

    Resolving DiscrepanciesRectify mismatches by correcting errors in your purchase records or requesting suppliers to amend incorrect filings.

  • Step-4

    Final ITC Claim FilingClaim only the eligible ITC to avoid compliance issues and interest liabilities.
Union Budget 2025-26

Key ITC & Tax Updates

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Stricter ITC Claim Rules

ITC will be denied if suppliers fail to file returns for consecutive tax periods.

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New Deduction Limits

Additional deductions introduced for business expenses that qualify under revised tax slabs.

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Presumptive Taxation Changes

Increased threshold for small businesses under presumptive taxation to reduce compliance burden.

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Three-Year Filing Restriction

Businesses can no longer file pending GST returns beyond three years, making timely compliance more critical.

How Tax360 Helps Businesses with ITC Reconciliation
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Automated ITC Matching

We reconcile your purchase records with GSTR-2B for error-free claims.

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Error Resolution Support

We assist in resolving invoice mismatches and supplier-related issues.

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Supplier Compliance Monitoring

Our experts track supplier filings to prevent ITC loss.

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Timely ITC Optimization

Maximize your eligible tax credits while ensuring compliance.

Get Expert Assistance for ITC Reconciliation

Avoid ITC mismatches and claim every eligible rupee with Tax360!

Talk to an Expert
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