GSTR 2B vs PR: Reconciliation and ITC Claim Guide

After ingesting the purchase register in the Clear tool, compare it with form GSTR2B. If necessary, you can also compare it with GSTR2A. However, it's recommended to focus on GSTR2B as per government guidelines for filing GSTR3B.

Access the GST Dashboard on the Clear Compliance Cloud.

Navigate to the Reconciliation tab.

Select 2B versus PR reconciliation. This reconciliation can be performed at both PAN and GSTN levels.

Run the reconciliation at a Year-To-Date (YTD) level by clicking on Run new recon.

Choose the periods for 2B and PR that you want to reconcile. You have the flexibility to select different periods.

For instance, to run the reconciliation from April 24th to February 25th for the return period PR, select these dates. You have the option to specify different periods for 2B and PR.

We recommend running the reconciliation for both 2B and PR from April 24 to February 25 of the current month to ensure all unclaimed ITC and invoices are accounted for. The open ITC will be visible at the end of this process.

Again, select the PAN level for running this reconciliation.

Update the data connection with the GSTN by entering your username and password. An OTP will be generated for verification.

Once the GSTN is connected, download the data from the GST portal. This step ensures you are working with the most recent GSTR report.

Ingest the purchase register if necessary. If you've missed ingesting any item in the purchase register, refer to the previous step to complete this action. Since we've already uploaded our purchase register in the Clear tool as shown in previous tutorials, we'll skip this step.

Run the reconciliation. Once you initiate reconciliation, the system will process and open a tab displaying the results, which compare 2B versus PR.

Review the reconciliation results. The results will detail the matched and missing documents. For example, you might see 51 matched documents and 1192 documents missing in PR, providing a match status count.

Analyze the summary of match statuses. The reconciliation provides a summary that includes categories such as exact matches, manually linked, suggested mismatches, missing in 2B, and missing in PR. This summary also shows the PR percentage count and the action percentage count.

Download the reconciliation report. Click on Download Report to generate the report, which can be downloaded directly from this page or via the notification icon.

Examine the downloaded report. The report, also known as a matching report or a 2B versus PR reconciliation report, includes several columns that provide detailed information about the reconciliation.

Understand key columns in the report. One important column is the matching key, a 16-digit unique character key used for each line item in the report.

Even if your report contains up to 500,000 line items, the matching for each invoice is uniquely determined. The Match Status indicates whether the invoice from the Purchase Register (PR) matches with Form 2B. The Match Description explains the reconciliation rule or logic applied for matching. This allows you to see if the matching occurred at the PAN or GSTN level. Additionally, various sub-buckets help you analyze the data more effectively.

If there's a mismatch, the Mismatch Fields will pinpoint the discrepancies between Form 2B and the PR, indicating areas where you might need to follow up with the vendor.

Let's look at the vendor details, your GSTN details, and bill of entry details.

We'll now focus on importing goods.

Next, we'll discuss invoices and credit notes.

As mentioned earlier, there's a 16-digit character matching key unique to each line item, which helps identify the specific invoice in question. This section includes the Match Status, descriptions, sub-buckets, and Mismatch Fields, along with details on your vendor and tax information.

It also highlights any tax differences between Form 2B and the PR document. The Document Type can be an invoice, a credit note, or a debit note.

The transaction type could be B2B or B2BA.

You'll find information on the return period of the 2B document and the corresponding period as per the PR.

It's possible that the vendor reported your invoice in his GSTR-1 in a previous period, and you recorded it in the subsequent month in your PR. Lastly, the reverse charge status as per 2B might be 'yes', while as per PR, it's 'no'

Review the ITC Claim Eligibility PR column in the purchase register. If you've tagged ITC as ineligible, it will reflect as such. For invoices with multiple line items where some are eligible and others are ineligible, this column will display 'partial eligible'.

Analyze the detailed report that includes multiple columns. These columns highlight the GSTR filing date, the vendor's GSTN status, and the 3B filing status of previous invoices. This analysis helps determine whether to claim a particular invoice in GSTR3B after reconciliation.

Navigate to the tool once you've decided on your matched and unmatched ITC.

In the Document View section, select the Exact and Suggested categories for the invoices you intend to claim.

Mark those invoices as Claim, effectively freezing the ITC. This action locks the invoices in the tool, indicating they are claimed for a specific month and should not be included in reconciliation for the next month.

Go to the Actions tab, click on Claim ITC, and select the claim month.

Choose whether to accept the PR value. It is generally recommended to accept the PR value if it is accurate.

Click on Save. The ITC claim action status will update to 'Claim ITC' and will reflect under the claim month as February 25th.

You also have the option to mark any invoices as pending. If an invoice was mistakenly claimed in a previous month, you can reverse this action in the current month.

To reverse an invoice, click on the invoice and select 'Reverse' under the reversal options. This corrects any erroneous claim from a previous month.

Choose the type of ITC reversal from the three options provided: normal ITC reversal, 180-day reversal, or permanent ITC reversal.

If you need to reverse ITC because an invoice was incorrectly marked as eligible in your purchase register, tag it as ineligible here.

Use the "Reject" option if you decide not to include a specific purchase register (PR) document or "to be" document in the reconciliation process. Once rejected, these documents will permanently be excluded from reconciliation, and their ITC will be lost.

You can reset actions multiple times until your filing is complete. Additionally, add any necessary remarks to PR or "to be" documents.

If you haven't downloaded a report from the summary section, download it directly from the document view. Here, you can apply multiple filters and download the filtered data.

To freeze ITC using the clear tool, utilize the matching key filter to search for up to 3,000 invoices. Copy the matching key from the reconciliation report, paste it here, and manage the invoices directly on the tool.

If using the Excel uploader, access the reconciliation report, and use the columns provided to determine which ITC to claim. Select the invoice month, accept the PR value, and ensure the correct claim by typing in the desired claim amount. The tool is not case-sensitive and will correct minor spelling errors.

we'll guide you through the process of linking and delinking documents in your system, which is essential for maintaining accurate records in scenarios like missing invoices in reports such as 2B and PR. You'll also learn how to save these actions and further manage your reconciliation settings according to your organization's needs.

Step 1: To link two documents that are missing in both 2B and PR reports, locate the missing entries. Enter "link here" in the designated field, and specify the matching keys for both documents using a comma to separate them. This action will link the two invoices together.

Step 2: If you need to delink the documents that are currently linked, simply type "delink" in the required field. This will separate the documents into their respective categories of 'Missing in 2B' and 'Missing in PR'.

Step 3: After selecting the necessary actions for all the documents in your PR report, ensure to save your report.

Step 4: Navigate to the Actions tab in the tool. Here, you'll find the option to 'ingest ITC via Excel'.

Step 5: Upload the Excel file in the designated area. This file should contain all the remarks and actions you've previously taken against each document. Once uploaded, these actions will reflect in the Actions tab.

Step 6: To customize the reconciliation logic according to your organization’s needs, go to the Settings menu.

Step 7: Select Customize Recon Logic. Here, you can set parameters such as tolerance limits and choose whether to follow a conservative approach or not.

Step 8: Customize your reconciliation rules. You have the option to adjust the match status of documents, for example, changing a status from 'mismatch' to 'suggested'.

Step 9: If any rule feels too aggressive, you have the option to disable it. This flexibility helps in tailoring the process to better fit your company’s procedures.

By following these steps, you'll be able to efficiently manage document linking and delinking, and customize reconciliation settings to better align with your organizational standards. This ensures both accuracy and compliance in your financial reporting.

The system initially attempts to find a match based on all the parameters. If these parameters match exactly, it categorizes the transaction accordingly. If not, it moves to the next applicable rule. You have the option to set separate tolerance limits for tax value and taxable value.

Step 1: Click on Save to apply the settings.

This process outlines how the reconciliation logics function.

Please note that the description mentioned in the rules

is identical to what is seen in the match.

This description appears in column M of the reconciliation report,

providing clear visibility and understanding of why a particular document matches a specific rule. Following this reconciliation process, you're able to freeze the ITC and generate Table 4, which will be covered in our next video. This upcoming tutorial will explain how to generate Table 4 and prepare GSTR3B from it. Thank you