Best GST Reconciliation Software

What is GST Reconciliation Software?

GST reconciliation software is a specialized solution designed for Indian businesses that enable them to detect mismatches between sales and returns data. As a result, they ensure proper filing of GST returns while saving time and ensuring compliance.

GST reconciliation software helps businesses detect mismatches in the taxpayer's GSTR 2A and GSTR 3B. The GSTR 2A is the summary of the transaction of the taxpayer with their vendors as recorded in the vendors’ GSTR 1. Similarly, GSTR 3B is the summary of the same transaction recorded by the taxpayer. These two records should ideally be the same as they show the same transaction; however, there may be some discrepancies between the two because of the following reasons:

• Error in Recording

This is when there is an error while recording the total amount of the invoice, tax amount, HSN code, or the item description of the product. This error can be due to either of the parties involved. The payment reconciliation software helps both parties to assess the situation to ascertain which account shows the mistake and to rectify it.

• Error in Reporting

This is when either of the two GSTR, GSTR 2A or GSTR 3B, shows a transaction that is not recorded on the return end. A missing transaction in GSTR 2A means that the vendor has not recorded it in their accounts. In contrast, a missing transaction in GSTR 3B signifies that the transaction has not been recorded in the taxpayer’s account. This may be a result of the products being in transit. Account reconciliation software helps to detect such missing records and notify the parties so that they can record the transactions in their respective accounts.

Additionally, the GST reconciliation software also helps to detect any discrepancies between GSTR 3B and GSTR 1, which is the summary of the taxpayer’s sales. The data reconciliation software helps you rectify the discrepancies by accepting the records as shown in the GSTR 2A or by reporting the discrepancies to the vendor so that they can change their records.

What are the Benefits of Using Reconciliation Software

Using Reconciliation Software Solutions for cross-checking the different GSTRs help businesses in various ways. Some of the benefits of using GST reconciliation software are:

1. It saves the time of the employees by automatically cross-checking the data quickly and efficiently, eliminating the need to hire a professional.

2. The account reconciliation software eases the communication between the taxpayer and the vendors by sending the reports of discrepancies automatically.

3. The reconciliation software tools sieve through the large data in a precise and efficient manner, thereby reducing any chances of error in reconciliation.

4. The payment reconciliation software helps to reconcile the data recorded in the taxpayer's accounts with the various vendors to ensure that there is no error in recording the transactions by any parties, as well as to account for the goods in transition and Reconcile transitional ITC.

5. The automated reconciliation software helps businesses to claim the correct amount of Input Tax Credit and to detect any fraud or incorrect transactions as recorded by the vendor. This helps to minimize the overall risk of fraud by either party.

6. Moreover, the data reconciliation software also helps to cross-check GSTR 1 with GSTR 3B and other related documents, such as shipping bills which are submitted on ICEGATE in case of export, thus ensuring that all the data presented by the taxpayer is correct.

Features of GST Reconciliation Software

Before choosing GST Reconciliation Software for your business from among the various Reconciliation Software Solutions available in the market, there are some features that you should not compromise on. These pertinent features include:

1. The account reconciliation software should be able to manage large numbers of vendors and data. It should also be able to handle any significant expansion in the business.

2. There should be a seamless transfer of data from the ERP and other data sources to the reconciliation software and vice versa.

3. The automated reconciliation software should be able to provide detailed reports of any error along with insights on how to manage them.

3. Since the reconciliation process would need to be done every month, the reconciliation software tools should be quick and efficient so that they do not affect the day-to-day working of the business and can promptly meet the deadlines without any help from the workforce.

4. The reconciliation software should enable collaboration and data sharing between the owner and management of the business and the accounting team.

5. The software should also be able to adapt to changes as per the GST Act or Regulations through automated (preferred) or manual updates so that the returns filed by the business are always in compliance with the applicable rules and regulations.

6. The payment reconciliation software tools should be very sensitive to detect any error, however minute, and its cause correctly.

7. The software should have an adequate support team to address problems and provide solutions or alternatives.

8. Additionally, the software should also support offline mode.

Though this list contains the major features that GST reconciliation software must have, it is not exhaustive. Before choosing a reconciliation software, you should determine the needs and nature of the business, its vendors, size, and other such factors which may affect the efficiency of the account reconciliation software.

If possible, get a one-on-one consultation with the software providers to learn about the various available software. Then, make an educated decision while purchasing reconciliation software for your business.

Most of the software has a demo period during which you can judge the performance, efficiency, ease of use, and suitability of the software. Once you find the perfect fit for your business in terms of features, performance, and cost, you can start using it to apply for the Input Tax Credit without any hassle.

Latest Trends of GST Reconciliation software

Since the beginning of 2020, there have been several changes in GST regulations, from e-invoicing to the introduction of the QMRP scheme. In addition, businesses with a monthly turnover exceeding 50 lacks have been mandated to pay 1% of their GST amount in cash. These and several other changes in government guidelines have forced many to opt for specialized GST filing software.

Modern GST return software can automatically populate your GST details once you provide your GSTN number. A few such solutions can also calculate GST details on each transaction, simplifying daily business dealings while ensuring compliance. Besides reconciling accounts, most GST reconciliation software can compute returns based on both the old and new GST guidelines.

Most GST return software today is SaaS-based, allowing users to interact directly with the government portal. Besides offering top-notch security and a host of payment options, such tools also have advanced analytics and reporting features that continuously assess your organization’s financial health.

What are the advantages of the best GST Reconciliation software in India?

Besides ensuring compliance, saving time, and reducing paperwork, GST reconciliation software help businesses in the following areas:

• Electronic filing of dealer returns

• GST Invoice & ITC Report Generation

• Reconciliation with the online portal

• Maintenance of credit and cash ledgers

• Digitizing tax liability registers

• Electronic payment of taxes