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GST reconciliation in India is substantially more complex than a simple purchase register match. It involves at least four returns, a dynamic ITC ledger, and regulatory rules that change which credits are available and when. This glossary defines every term your GST and finance teams need to work through reconciliation accurately and within the timelines set by the GST Council.
GST Filing Terms
GSTIN (Goods and Services Tax Identification Number) — A 15-digit registration number assigned to every GST-registered entity. The first two digits indicate the state code, the next ten are the PAN, digits 13 and 14 indicate the registration number within the state, and digit 15 is a checksum. Incorrect GSTINs in invoices are one of the most common causes of ITC mismatches.
GSTR-1 — A monthly (or quarterly under QRMP) return filed by the supplier, reporting all outward taxable supplies — B2B invoices, credit notes, debit notes, and amendments. GSTR-1 data forms the basis of the recipient’s GSTR-2A and GSTR-2B. Errors in GSTR-1 must be corrected by the supplier before the recipient can claim the correct ITC.
GSTR-2A — A dynamic, read-only statement that reflects inward supply details auto-populated from suppliers’ GSTR-1 filings. It updates in real time whenever a supplier files or amends. Used for visibility but not for determining claimable ITC.
GSTR-2B — A static, auto-drafted ITC statement generated on the 14th of each month. It shows only invoices uploaded by suppliers on or before the cut-off date of the previous month’s GSTR-1 filing. GSTR-2B is the legally operative document for ITC claims in that month’s GSTR-3B.
GSTR-3B — A monthly self-declared summary return in which the taxpayer reports aggregate outward and inward supplies and pays the net GST liability. ITC claims are made in GSTR-3B based on GSTR-2B data. Excess ITC claimed over GSTR-2B entitlement attracts interest at 18% per annum.
GSTR-9 — The annual return filed by regular taxpayers, reconciling all monthly GSTR-1 and GSTR-3B filings for the financial year. Discrepancies between monthly returns and GSTR-9 are a common source of GST notices.
GSTR-9C — The reconciliation statement that accompanies GSTR-9 for taxpayers with aggregate turnover above Rs 5 crore. It must be self-certified by the taxpayer and reconciles audited financials with the annual GST return.
E-Invoice — A GST invoice generated through the Invoice Registration Portal (IRP) and authenticated with a unique IRN and QR code. Mandatory for businesses above specified turnover thresholds. E-invoices flow directly into GSTR-1 via the IRP, reducing manual data entry errors in outward supply reporting.
IRN (Invoice Reference Number) — A unique 64-character alphanumeric hash generated by the IRP for each e-invoice. IRN serves as the government’s authentication of a B2B invoice and is a prerequisite for ITC eligibility for recipients of e-invoice-mandated suppliers.
QR Code on Invoice — A machine-readable code on authenticated e-invoices containing key fields: GSTIN of supplier and recipient, IRN, invoice number and date, taxable value, and tax amounts. Recipients scan it to verify invoice authenticity before recording ITC.
E-Way Bill — An electronic document required for movement of goods valued above Rs 50,000. While not directly a return, E-way bill data is cross-referenced during GST audits to verify that supplies reported in GSTR-1 correspond to actual physical movement of goods.
Tax Period — The period for which a taxpayer is required to file a GST return — typically one calendar month for monthly filers, or one quarter for QRMP filers. ITC eligibility under GSTR-2B is anchored to the tax period in which the supplier’s invoice appears.
Annual Return — See GSTR-9 above. The annual return deadline is typically 31 December of the following financial year, and it is the final opportunity to claim ITC or report omissions from monthly returns.
Aggregate Turnover — Total value of all taxable, exempt, zero-rated, and inter-state supplies made by a person under a PAN across all GSTINs in India. Aggregate turnover determines filing frequency, e-invoice applicability, and audit requirements.
Composition Scheme — A simplified GST scheme for small taxpayers with turnover up to Rs 1.5 crore (Rs 75 lakh for some states). Composition dealers cannot issue tax invoices, cannot collect GST from customers, and cannot claim ITC — making them invisible in GSTR-2B for recipients.
ITC and Input Side
Input Tax Credit (ITC) — The mechanism that allows a registered buyer to offset GST paid on inputs against GST collected on outputs, resulting in tax being levied only on value added at each stage. ITC can be claimed only when the supplier has filed the invoice in GSTR-1 and it appears in the recipient’s GSTR-2B.
ITC Reversal — A mandatory reduction in claimed ITC under specific GST provisions — for example, when inputs are used for exempt supplies, when Rule 42 applies for mixed-use inputs, or when a supplier cancels an invoice. Reversals must be reported in GSTR-3B and tracked in the ITC ledger.
Blocked ITC (Section 17(5)) — Categories of inputs on which ITC cannot be claimed regardless of business use. These include motor vehicles (with limited exceptions), food and beverages, outdoor catering, health and life insurance (except for employees under statute), and works contract services for construction of immovable property. Finance teams must identify and exclude these from ITC claims during reconciliation.
Credit Note / Debit Note — A credit note is issued by the supplier to reduce the invoice value (for returns, price revisions, or post-sale discounts). A debit note is issued to increase it. Both affect the ITC the recipient can claim and must be matched against corresponding purchase register entries.
Reverse Charge Mechanism (RCM) — A provision where the liability to pay GST shifts from the supplier to the recipient. Under RCM, the recipient both pays GST to the government and claims ITC on the same transaction (subject to usage conditions). RCM transactions do not appear in GSTR-2B and must be tracked separately.
Zero-Rated Supply — Exports of goods and services and supplies to SEZs, where GST rate is 0% but the supplier is eligible to claim refund of input taxes. Finance teams reconcile zero-rated supplies when processing refund claims under GSTR-1 and GSTR-9.
Exempt Supply — Supplies on which no GST is charged and for which no ITC is available on inputs used. Common examples include healthcare, basic food items, and educational services. ITC attributable to exempt supplies must be reversed under Rule 42/43.
Reconciliation and Compliance
ITC Leakage — ITC that the business is entitled to but fails to claim because of supplier non-filing, invoice data mismatch, or missed deadlines. ITC leakage directly increases effective cost. Structured reconciliation between the purchase register and GSTR-2B is the primary tool for detecting and recovering leakage before year-end.
GSTR-2B Cut-Off Date — The deadline (typically the 13th of each month) by which suppliers must file their GSTR-1 for the previous month for their invoices to appear in the recipient’s GSTR-2B for that period. Invoices uploaded after this date appear in the following month’s GSTR-2B, creating a timing lag in ITC claims.
IMS (Invoice Management System) — A GST portal feature introduced in FY 2024-25 that allows recipients to accept, reject, or mark invoices as pending directly against their GSTR-2B. Accepted invoices flow into GSTR-3B automatically; rejected invoices trigger corrections by the supplier. IMS changes the reconciliation workflow by making recipient action explicit.
Recipient Mismatch — A reconciliation discrepancy where an invoice appears in GSTR-2B but does not match any record in the recipient’s purchase register — or vice versa. Common causes include GSTIN errors, invoice number format differences, and timing differences between supplier filing and recipient booking. Resolving recipient mismatches is a core function of GST reconciliation tools.
Reconciliation Statement — In GST context, this refers to the formal matching of purchase register data with GSTR-2B, and of outward supply data with GSTR-1. It is also the term used for GSTR-9C, the annual reconciliation statement linking audited accounts to filed returns.