What is Invoice Matching?
It is very important to understand in order to avail accurate ITC and avoid any litigation later on.
Invoice matching is a mechanism under which all the taxable supplies made under GST will be matched against all the taxable supplies received by the buyer. GSTN which has been conferred to set up the IT infrastructure for GST rollout in India is already burning the midnight oil to build the algorithm and put all the logic into the GST web application hosted on the common portal.
Why is it Important?
Invoice matching is relevant because, under the Goods and Services Tax law, input tax credit of purchase of goods and/or services will only be available if the details of inward supply filed under GSTR-2 return of buyer matches with the details of outward supplies filed in GSTR-1 of the supplier. This interlinking has been done by way of auto-population of data filed in GSTR-1 of supplier into GSTR-2 of the buyer. Refer the following example below to understand.
Invoice Matching Under GST
Unless this matching reconciles the buyer will not be able to claim the input tax credit of taxes paid on purchase of input goods and/or services or both. Thus it becomes highly critical for businesses to be highly compliant under the GST regime. Compliance rating has been devised to tempt all the businesses for timely return filing and related compliance.
Now that you know the relevance of invoice matching under GST, you must be wondering what next? As next steps, businesses must have the sensitivity of importance of information systems and timely compliance. This is high time to start examining GST compliant ERP systems and GST software and start mapping business processes with these systems. Implementation of these systems may be time-consuming and eventually non-compliant businesses may lose on business opportunities during the initial phase of GST rollout.