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A junior accountant hears many names for reconciliation (bank, vendor, ledger, gateway, GSTR-2B) and cannot tell how they relate or which one applies to a given difference.
Every reconciliation is the same act: compare record A with record B for the same period and explain differences. The type is defined only by which two records are compared and how often.
A single list of the business's reconciliations with record A, record B, frequency and owner for each, starting with bank and cash.
The accountant knows which pair of records to pull for any difference, and the business runs each type on a fixed rhythm with sign-off.
Reconciliation means checking two records of the same money against each other and explaining any difference. The main types you will meet in an Indian business are bank, cash, vendor, customer, ledger, intercompany, payment gateway and tax (TDS and GST). They work the same way and differ only in which two records are compared.
What are the main types, and what does each compare?
| Type | Record A | Record B | Usual frequency | Indian example |
|---|---|---|---|---|
| Bank | Cash book or bank ledger | Bank statement | Monthly, or daily for busy accounts | HDFC current account ledger vs the HDFC statement |
| Cash | Cash book | Physical cash count | Daily for counters | Shop drawer count at closing |
| Vendor (creditor) | Your supplier ledger | Supplier’s statement of account | Monthly or quarterly | Steel supplier statement vs Tally ledger |
| Customer (debtor) | Your customer ledger | Customer’s ledger or confirmation | Quarterly, and at year end | Balance confirmation from a distributor |
| General ledger | Ledger account balance | A sub-ledger or schedule | Monthly | Debtors control account vs debtors ageing |
| Intercompany | Your books for a group company | That company’s books for you | Monthly | Parent’s receivable vs subsidiary’s payable |
| Gateway / marketplace | Sales or orders | Settlement report and bank credit | Daily or weekly | Razorpay or Amazon payout vs orders |
| TDS | TDS receivable in your books | Form 26AS, or Form 168 from tax year 2026-27 | Quarterly | Customer deducted TDS on a professional fee |
| GST | Purchase register | GSTR-2B | Monthly | Input tax credit check before filing GSTR-3B |
Two lines on each is enough to start. Each type has its own detailed guide on this site, and the reconciliation statement article covers how the bank, TDS and GST statements are laid out.
A worked example: one ₹1,18,000 sale in five reconciliations
You sell services worth ₹1,00,000 plus 18 percent GST of ₹18,000 to a corporate customer. The invoice total is ₹1,18,000. The customer deducts TDS of ₹10,000 at 10 percent on the ₹1,00,000 fee (assume the professional-fee TDS rate applies) and pays you ₹1,08,000.
| Reconciliation | What you check for this sale |
|---|---|
| Customer ledger | Invoice of ₹1,18,000 is cleared by a receipt of ₹1,08,000 and TDS of ₹10,000 |
| Bank | The ₹1,08,000 credit on the bank statement matches the receipt entry |
| TDS | The ₹10,000 appears against your PAN in the TDS credit statement |
| GST | The ₹18,000 output tax is in your GSTR-1 and GSTR-3B for the month |
| Gateway | If the customer paid through a payment gateway, the settlement report shows ₹1,08,000 less fees |
If any one of these does not agree, the sale is not fully closed. That is why one transaction can sit in five different reconciliations.
Which type should a small business start with?
Start with bank. Almost every rupee you receive or pay passes through a bank account, and the bank statement is a record you did not create, so it is the strongest check on your books. Then add cash, customers, vendors and tax credits.
For the statutory audit, auditors typically expect to see:
- Bank reconciliations for each account as at 31 March
- Debtor and creditor balance confirmations or reconciliations for major parties
- TDS receivable agreed to the TDS credit statement
- GST input tax credit agreed to GSTR-2B and the annual return
- Loan balances agreed to lender statements
- The fixed asset register agreed to the ledger
What do all types have in common?
Every reconciliation, whatever its name, has the same parts:
- A date and two balances. The balance per your books and the balance per the other record on the same date.
- Reconciling items. The entries that explain the difference.
- Timing differences versus errors. Timing differences, such as a cheque not yet presented, clear on their own. Errors, such as a wrong amount keyed, need a correcting entry.
- A check that reaches zero. After listing the items, the adjusted balances must agree. Any amount left over is unexplained and must be investigated, not hidden.
- Sign-off. One person prepares, another reviews.
Once you understand these five parts for a bank reconciliation, you understand them for every type.
What to read next
- Next in this series: What is balance sheet reconciliation? Which accounts to reconcile and how often
- What is a reconciliation statement? Formats for bank, TDS and GST
- What is financial reconciliation in India?
- For one place to run these checks, see reconciliation software for Indian finance teams
Content authored by practitioners with experience at Amazon India, Intuit QuickBooks, and the Tata Group. Meet the team →