Tax credit within the correction window
Differences found in the same year can often still be corrected by the counterparty. Found later, the same difference is usually a permanent cost.
Data & Technology
Data Reconciliation Services
Structured reconciliation of bank, GST, TDS, subledger, settlement and inventory data against your books, delivered as reconciliation statements, an aged exception register and adjusting entries for approval.
Overview
A reconciliation is not a report. It is the control that tells you whether every other number you publish can be relied on.
The position is common enough to be predictable. The bank book carries entries from two years ago that nobody can identify. Input tax credit claimed in the return does not agree with GSTR-2B, and the difference has never been split into vendors who filed late and vendors who never filed at all. TDS receivable in the books does not match Form 26AS, so credit is either overstated or being left unclaimed. Marketplace settlements are booked at the gross invoice value while cash arrives net of commission, shipping and returns. Subledger control accounts differ from the general ledger and the difference is carried forward each month.
This engagement clears those positions and leaves behind a repeatable process, so the same differences do not accumulate again over the following year.
Scope of engagement
Streams are selected at scoping. Volume per stream and the number of periods and GST registrations drive the effort.
Each additional bank account, GST registration, gateway or marketplace channel is counted as a separate stream.
- Bank statement to bank book, across every operating, collection, borrowing and foreign currency account, with unreconciled items aged and classified rather than carried forward
- GSTR-2B to the purchase register, with mismatches split into not reported by the vendor, reported in a later period, reported under a different GSTIN, and error in your own records
- GSTR-1 to the sales register and to the e-invoice data reported to the invoice registration portal, including credit note treatment
- GSTR-3B to the books, covering output liability, credit availed and payments made, with the data set prepared for GSTR-9 and GSTR-9C
- Form 26AS and the annual information statement to TDS receivable in the books, with a follow-up list of customers who have not reported a deduction
- TDS payable in the books to challans and to the quarterly returns in Forms 24Q, 26Q and 27Q, including short deduction and late deposit identification
- Payment gateway settlement files to sales, to bank credits and to the merchant discount rate charged, so that fees are recorded as expense rather than lost in a net receipt
- Marketplace settlement reports to the sales register, covering commission, shipping recovery, returns and tax collected at source under Section 52 of the CGST Act, with the credit reflected in the portal reconciled to the books
- Customer and vendor ledgers to counterparty statements of account, with balance confirmations obtained and differences resolved
- Every subledger to its general ledger control account: receivables, payables, inventory, fixed assets, advances and employee claims
- Fixed asset register to the ledger, with depreciation recomputed and disposals traced
- Physical stock count to book stock, and the stock statement submitted to your lender against the same ledger
- Payroll register to the general ledger and to PF, ESI and Form 24Q data
- Intercompany and inter-branch balances, eliminated and agreed on both sides
- Opening balance and open item reconciliation where an accounting system has been migrated
Deliverables
- Reconciliation statement per stream showing opening difference, items identified, items cleared and closing difference
- Exception register with each item aged, classified by root cause and assigned an owner
- Root cause summary showing which process failures generate the largest share of exceptions
- Schedule of proposed adjusting entries, each with a working paper and a reason, prepared for your approval
- Vendor and customer follow-up lists where the correction sits with a counterparty
- Unresolved difference note stating what could not be cleared and why
- Written reconciliation procedure for each stream, with matching rules, tolerances and frequency
- Monthly reconciliation pack where the engagement continues on retainer
Process
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Scoping and data collection
Streams, periods and entities are agreed. We list precisely which files are needed, in which format, and confirm extraction is possible before the engagement starts rather than discovering a gap midway.
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Rule design and first pass
Matching rules and tolerances are set per stream, then run. Automated matching clears the bulk of the population, leaving an exception set that is small enough to examine properly.
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Exception investigation
Each exception is traced to source, classified by cause, and assigned an owner. Items requiring a counterparty response go onto the follow-up list with a date.
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Adjustment and clearance
Adjusting entries are drafted with working papers and submitted for approval. Your team posts them. The reconciliation is then rerun so the closing difference is evidenced, not asserted.
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Procedure handover
Matching rules, tolerances, frequency and ownership are written up as a standing procedure so the reconciliation runs monthly afterwards, whether by your team or on retainer.
Benefits
Balances that are evidenced
Confirmed counterparty balances and cleared control accounts remove the schedules auditors most often push back on.
Process defects made visible
Classifying exceptions by cause shows which upstream process is generating them, so the fix goes where the error starts.
Clean migration positions
Reconciling old and new systems before go-live prevents the unexplained opening difference that otherwise sits in suspense indefinitely.
Industries served
Retail and e-commerce brings marketplace and gateway settlement volume, returns and tax collected at source. Manufacturing brings stock counts, job work movement, subcontractor balances and lender stock statements. Financial services brings high transaction counts, custodian and clearing statements, and daily cash positions. Technology and SaaS brings subscription billing platforms, foreign inward remittance and multi-currency settlement. Healthcare brings payer settlement, discount and disallowance adjustments, and consultant payouts.
Typical timeline
- Scoping and data collection: 3 to 5 business days
- Rule design and first matching pass: 5 to 10 business days
- Exception investigation: 2 to 4 weeks, driven by exception volume and counterparty response
- Adjustment, approval and rerun: 1 week
- Procedure documentation and handover: 3 to 5 business days
- Recurring monthly cycle on retainer: 5 to 8 business days after each close
Engagement model
Contracted either as a defined clean-up engagement priced against agreed streams, periods and volumes, or as a monthly retainer once the standing procedure is in place. Retainers carry a minimum term of three months and thirty days written notice on either side.
Delivery is virtual, using read access to your accounting system, statement and return downloads, and a shared exception register you can see at any point during the engagement rather than only at the end. Preparation and approval stay separate throughout.
What is not included
- Posting entries in your books on our own authority. Every adjustment is approved by you first, in writing, entry by entry.
- Any audit opinion, review conclusion or certificate. A reconciliation statement is not assurance.
- Forensic investigation of suspected fraud, which is a separate engagement with a different method and a different evidence standard.
- Filing of GST returns, TDS returns or income tax returns, and signing of any of them.
- Representation before tax authorities on a mismatch, notice or assessment arising from the reconciliation.
- Recovery of input tax credit that has passed the time limit for correction, or that a vendor has not reported and will not report.
- Legal action against a counterparty who refuses to confirm a balance or correct a return.
- Bookkeeping and voucher entry, and clearing a posting backlog so that data becomes reconcilable. If the ledger is not current, that work is scoped separately and comes first.
- Physical stock counting and asset verification at your premises. We reconcile the count sheet you produce.
- Bank operating rights. No client funds pass through us at any point.
Where a difference cannot be resolved with the records available, we say so and record it as an unresolved item rather than absorbing it into a balancing entry.
Frequently asked questions
The streams are agreed before we start. Typically bank statements to the bank book, GSTR-2B to the purchase register, GSTR-1 and e-invoice data to the sales register and to GSTR-3B, Form 26AS and the annual information statement to TDS receivable, TDS payable to challans and quarterly returns, payment gateway and marketplace settlements to sales and bank, every subledger to its general ledger control account, the fixed asset register to the ledger, and payroll to the general ledger and statutory challans.
No. We prepare each adjusting entry with the supporting working paper and the reason, and your team reviews and posts it. Some clients grant us posting access in their accounting system for efficiency; even then, nothing is posted without written approval on the specific entry. Preparing and approving stay separate, which is the point of the exercise.
As far back as you have data, though the value falls with age. A GST credit mismatch found within the same financial year can often still be corrected by the vendor. One found three years later usually cannot. We recommend clearing the current year first, then working backwards, and we tell you when going further back stops being worth the fee.
No. Reconciliation identifies differences and classifies them. It is a normal accounting control, and most exceptions turn out to be timing, coding or a missing document. If a pattern emerges that suggests something other than error, we stop, report it to you in writing, and recommend a separate forensic engagement. We do not convert a reconciliation into an investigation without your instruction.
Substantially, yes. Bank, gateway and subledger matching can run on rules with only the exceptions reaching a person. GSTR-2B and Form 26AS matching automate well on invoice number, GSTIN or PAN, and amount. What does not automate is judgement on why a difference exists. We build the rules, then report on the exception population, which is where the work actually is.
A reconciliation statement per stream showing opening difference, items identified, items cleared and closing difference; an exception register with each item aged and assigned an owner and a root cause; a schedule of proposed adjusting entries with working papers; and a written note on the differences that could not be resolved and why.
It makes it more important. Migration reconciliation compares the closing trial balance and open item listing in the old system against the opening position in the new one, line by line, including partly settled invoices, advances, credit notes and retention balances. An unexplained difference at cutover becomes a permanent suspense balance, so it is treated as a blocker rather than an adjustment.
Related services
- Data Analytics & Business Intelligence where the reconciled data should feed a governed reporting layer.
- Accounts Payable (AP) Management where GSTR-2B differences point to a control gap in the purchase cycle.
- GST Advisory & Compliance where a reconciliation difference becomes a position to be argued rather than corrected.