Three-Way ITC Reconciliation Workbook

A three-way Input Tax Credit match compares three data sources side by side: (1) the buyer's own purchase register from the ERP or accounting system — the record of every purchase invoice the buyer has booked, (2) the auto-populated GSTR-2B download from the GST portal — the record of every outward-supply invoice the buyer's suppliers have reported filing in their own GSTR-1, and (3) the buyer's action on each GSTR-2B invoice in the Invoice Management System (IMS) on the GST portal — Accept, Reject, or Pending. All three must agree for the Input Tax Credit to be defensibly claimable in Table 4 of the monthly GSTR-3B. A two-way match against GSTR-2B alone misses the IMS layer: from January 2025, the recommendatory action on IMS became mandatory for the ITC on any invoice to become computable in GSTR-2B, so a buyer who reconciles only against GSTR-2B without checking IMS action taken can find themselves either claiming ITC that was actually Rejected in IMS (a Rule 36(4) ceiling exposure) or deferring ITC that was Accepted (a lost-cash-flow exposure). The workbook categorises every invoice from either source into one of six buckets: MATCHED (present in both sources, amount within tolerance, IMS Accept) — the population that can safely be claimed in Table 4; NOT IN GSTR-2B (present in the purchase register but missing from GSTR-2B) — the at-risk queue that drives the supplier follow-up list; NOT IN PURCHASE REGISTER (present in GSTR-2B but missing from the purchase register) — the ghost-invoice investigation queue that surfaces suspicious supplier filings or ERP booking gaps; IMS REJECT (marked Reject in IMS) — correctly not claimed; IMS PENDING (marked Pending in IMS) — deferred to a later tax period, subject to the Section 16(4) November 30 hard-stop; and Section 17(5) BLOCKED — flagged as ineligible under the blocked-credit list, correctly not claimed.

Section 16(4) of the CGST Act sets a permanent-loss deadline of November 30 of the following financial year for claiming Input Tax Credit on any invoice or debit note of the previous FY. An invoice dated between April 2025 and March 2026 (financial year 2025-26) must be claimed on or before November 30, 2026 — the last date for filing the November 2026 GSTR-3B under Circular 170/02/2022-GST. After that date, the ITC is permanently lost: there is no appeal, no rectification, no belated claim. The at-risk queue in the workbook is the subset of purchase-register invoices for the selected fiscal year that are present in the purchase register but missing from GSTR-2B — the population where the buyer has booked the purchase and paid the supplier, but the supplier has not yet reported the outward supply in their GSTR-1 or has reported it with mismatched details. The days-remaining counter for each row is computed as (deadline − today), with the deadline auto-computed from the selected fiscal year. The queue is priority-sorted on the composite score (at-risk ITC value ÷ max(days remaining, 1)) — the rows with the largest ITC exposure closest to the deadline surface at the top of the queue. A supplier follow-up list is then generated from the queue: one row per delinquent supplier GSTIN with the cumulative at-risk ITC value across all their invoices, the oldest invoice date, the days remaining to Section 16(4) deadline, and the invoice count. That follow-up list is the operational artefact the AP team works from to chase the delinquent suppliers into filing their GSTR-1.

The Invoice Management System (IMS) rolled out on the GST portal on 1 October 2024. When a supplier files their GSTR-1, every outward-supply invoice they report is auto-populated into the buyer's IMS. The buyer then chooses one of three actions on each invoice: Accept, Reject, or Pending. Only Accepted invoices flow into the buyer's auto-populated GSTR-2B for the tax period and count toward the ITC claim in Table 4 of the buyer's GSTR-3B. IMS Reject means the buyer does not recognise the invoice — the supplier can then amend the invoice in GSTR-1A or in a subsequent GSTR-1 and re-flow it into the buyer's IMS; until re-flow and Accept, no ITC is claimable. IMS Pending means the buyer defers the acceptance decision to a later tax period — a common use case is a Bill of Entry received close to month-end where the buyer has not yet completed the goods-receipt-note booking. Legally, the ITC on an IMS Pending invoice is deferred but is not lost, provided the deferral does not push the claim past the Section 16(4) November 30 deadline of the following FY. The workbook categorises IMS Reject rows and IMS Pending rows into their own buckets rather than treating them as unclaimed exceptions. IMS Reject rows are shown as correctly-not-claimed with an audit trail. IMS Pending rows are shown with the Section 16(4) days-remaining counter alongside the invoice date — so the buyer can see at a glance which deferred invoices are approaching permanent loss and need to be resolved by IMS Accept before the November 30 deadline of the following FY.

Rule 37 and Rule 37A of the CGST Rules 2017 are the two mandatory ITC-reversal triggers on a matched (already-claimed) invoice, but they are driven by different post-claim events. Rule 37 is buyer-behaviour driven: if the buyer has not paid the supplier the invoice consideration (including the applicable GST component) within 180 days of the invoice date, the buyer must reverse the ITC previously claimed on that invoice, along with interest under Section 50, in the GSTR-3B for the tax period in which the 180-day window expires. Re-claim of the reversed ITC is permitted once payment is made, but the interest paid is not recoverable. Rule 37A is supplier-behaviour driven: if the supplier's own GSTR-3B for the tax period in which the outward supply was originally reported in GSTR-1 has not been filed on or before 30 September of the following financial year, the buyer's ITC on that invoice must be reversed in the GSTR-3B for October of the following financial year. Re-claim is permitted once the supplier files their delinquent GSTR-3B. The workbook flags Rule 37 automatically because the trigger — invoice age past 180 days — is computable from the purchase-register data on hand: every MATCHED row whose invoice date is more than 180 days old carries a Rule 37 flag prompting the buyer to verify the payment status against the AP ledger and reverse the ITC if the supplier is unpaid. Rule 37A is not auto-flagged because the trigger requires the supplier's GSTR-3B filing status, which is not one of the workbook's two input sources; the runbook (linked in the About section) walks the Rule 37A cross-check separately using the GST portal supplier-filing dashboard.

A finance team working with a spreadsheet-and-reviewer workflow can walk 50 to 100 purchase invoices per period through a three-way match against GSTR-2B and IMS. The workbook supports 100+ rows per source and is designed for the mid-market monthly close where a controller wants an audit-defensible three-way match artefact for the ICFR walk-through under Section 143(3)(i) of the Companies Act 2013. At the volume of a mid-size business processing thousands of purchase invoices per month across dozens of supplier GSTINs, the manual walk-through cannot complete before the GSTR-3B monthly filing deadline (20th of the following month) — let alone before the Section 16(4) November 30 hard-stop for the previous FY. Four breakpoint symptoms recur in customer walk-throughs: (a) the at-risk queue is not maintained as a first-class output — it is reconstructed from scratch each month from a fresh GSTR-2B download, so aging on the delinquent suppliers is lost; (b) the supplier follow-up list is generated ad-hoc over email with no aging tracker, so the same suppliers are chased every month without accountability; (c) the Rule 37 180-day payment check is done via a manual AP aging report cross-referenced by hand to the matched-ITC list, so the reversal is often missed or reversed late with cascading interest exposure; (d) ghost invoices — supplier-filed invoices in GSTR-2B with no purchase-register counterpart — are discovered only when GSTR-3B is reconciled to GSTR-2B post-filing, past the point at which they could have been Rejected in IMS in the current period. When these breakpoint symptoms appear, the reconciliation function needs the at-risk ITC queue as a first-class output with an automated aging queue and escalation triggers, and a continuously-refreshed detection layer that surfaces new ghost invoices and Rule 37 candidates without a manual monthly walk. TransactIG operationalises those outputs as customer-facing artefacts for enterprise customers — ISO 27001:2022, AWS Mumbai, DPDP-aligned, implementation two to four weeks. The workbook here is the diagnostic; the production platform is the treatment.