Objective:

Match Purchases as per books and ITC Claimed as per GSTR 3B

Process involved:

1. Accounting for Purchases in Accordance with Book Records: Explanation provided separately.
2. Preparation of Detailed Purchase Invoices File. This process is explained as follows:

(A) The task involves creating a “Purchases Invoices Detailed” file for each client, following the format available in the checklists folder. This file will include a comprehensive list of all the purchase invoices claimed in GSTR 3B. Typically, these invoices will align with those in GSTR 2B, assuming that we claim Input Tax Credit (ITC) in line with GSTR 2B without making any modifications to the system-generated GSTR 3B. If the ITC amount recorded in GSTR 3B differs from that in GSTR 2B, a reconciliation of individual invoices is necessary. We must adjust the “Detailed Purchase Invoices” file to account for these variances.

(B) Ultimately, when we compile the monthly summary of the “Purchases Invoices Detailed” file, it is crucial that this summary matches with the data in GSTR 3B. This ensures that we have a solid basis for the ITC claims made in GSTR 3B, down to the level of individual invoices.

Now, Compare Between:

1. Entries Recorded in the Books/Tally
2. Entries in the “Purchases Invoices Detailed” File

This comparison will yield two scenarios:

(I) List of Purchases Recorded in the Books but Absent in the “Purchases Invoices Detailed” File:

We need to communicate this list of invoices to the client, prompting them to follow up with their vendors to ensure the uploading of these invoices in their GSTR 1, subsequently reflecting in GSTR 2B. Until these invoices are reflected in GSTR 2B, the Input Tax Credit (ITC) ledger should be maintained separately, ensuring that the closing balance of the Main ITC ledger aligns with the closing balance as per the GST Portal.

(II) List of Purchases Present in the “Purchases Invoices Detailed” File but Not Recorded in Financial Records/Tally: In this case, we need to incorporate these invoices into the Financial Records/Tally if they relate to the client’s transactions.