ITC Reconciliation
& Advisory
Mismatches between your purchase register, GSTR-2A, and GSTR-2B can cost you lakhs in disallowed Input Tax Credit. TaxClue reconciles every invoice, identifies root causes, advises on eligible vs blocked ITC, and ensures your claims are airtight before any GST scrutiny.
GSTR-2A vs GSTR-2B vs Purchase Register
Every ITC claim starts with understanding three data sources and how they differ. Purchase Register — your internal books, all purchase invoices received. GSTR-2A — dynamic, updates as suppliers file/amend returns anytime. GSTR-2B — static, locked monthly on 14th, based on supplier's cut-off date filing. GSTR-3B ITC claim must reconcile with GSTR-2B — the primary basis for ITC eligibility.
Under Rule 36(4) of the CGST Rules, ITC claimed in GSTR-3B cannot exceed the ITC reflected in GSTR-2B by more than 5% (maximum claim = 105% of GSTR-2B). Any claim beyond this is provisional and at risk of disallowance. If a supplier has not filed their GSTR-1, their invoices won't appear in your GSTR-2B — and your ITC claim on those invoices is at risk.
ITC Mismatch Is the #1 Source of GST Demand Notices
The GST department runs automated system comparisons between your GSTR-3B ITC claims and your GSTR-2B data every month. Any excess claim beyond 105% of GSTR-2B triggers an automatic ASMT-10 scrutiny notice. TaxClue performs monthly reconciliation to catch these before the department does — turning a potential demand into a routine accounting adjustment.
Types of ITC Mismatches & What Causes Them
ITC Claimed > GSTR-2B (High Risk)
You claimed ITC that isn't in GSTR-2B — either supplier didn't file GSTR-1 or filed it late. Department will issue ASMT-10. Reversal + 18% interest required.
Supplier GSTIN Invalid / Cancelled
Invoice from a vendor whose GST registration was cancelled — ITC on such invoices is ineligible even if reflected in 2A earlier.
Invoice Details Mismatch
Invoice number, date, GSTIN, or amount in your books differs slightly from what's in GSTR-2B — portal mismatch blocks auto-match.
Supplier Filed Late / In Wrong Month
Supplier filed GSTR-1 in month 2 for an invoice dated month 1 — appears in your GSTR-2B one month late, causing timing mismatch.
ITC in 2B But Not in Books
Supplier filed GSTR-1 with your invoice but your accountant didn't book it — missed ITC that's legitimately claimable.
Section 17(5) Blocked Credits
ITC on motor vehicles, food, club memberships, personal use, immovable property construction — permanently blocked even if GST was paid.
TaxClue's ITC Reconciliation Process
Data Collection
We collect your purchase register (Excel / Tally export), GSTR-2B downloads for the reconciliation period, GSTR-3B ITC claimed, and GSTR-2A for reference. All data is consolidated into a single working file.
Invoice-Level Three-Way Match
Every invoice in your purchase register is matched against GSTR-2B at GSTIN + invoice number + date + amount level. Matched invoices (clean ITC), mismatched invoices (needs action), and unmatched invoices (risk) are separately identified.
Root Cause Classification
Each mismatch is classified: supplier non-filing, timing difference, invoice detail error, blocked credit, ineligible purchase, or GSTIN error. Classification drives the action — reversal, follow-up with supplier, carry-forward to next month, or correction.
Supplier Follow-Up Tracking
For mismatches caused by supplier non-filing, we prepare a supplier-wise list with invoice details for your follow-up. Regular suppliers who consistently delay filing are flagged — contractual GST compliance clauses are recommended for repeat offenders.
Blocked & Ineligible ITC Review
All ITC claimed is reviewed against Section 17(5) blocked categories. Any blocked ITC that has been inadvertently claimed is identified for reversal in the current GSTR-3B — before the department raises a notice.
Rule 42/43 Reversal Calculation
If your business has both taxable and exempt supplies, we calculate the mandatory proportionate reversal for the period. This is incorporated into the GSTR-3B filing directly.
Reconciliation Report & Advisory
A complete ITC reconciliation report is delivered showing: clean ITC (claimable), ITC to defer (timing), ITC to reverse (blocked/ineligible), ITC to recover (missed), and ITC at risk (supplier non-filing). Every figure is backed by invoice-level evidence.
Section 17(5) Blocked Credits — ITC You Can NEVER Claim
| Category | Examples | Exception (ITC Allowed) |
|---|---|---|
| Motor vehicles < 13 seats | Cars, SUVs purchased for business use | If used for: further supply, transport of persons (taxi), driving training |
| Food & beverages | Restaurant bills, staff canteen, corporate meals | If business is in food supply (restaurant/hotel) |
| Membership in clubs | Golf club, social club, holiday club memberships | No exception — always blocked |
| Travel benefits to employees | LTA, vacations, outbound trips not related to work | No exception — always blocked |
| Works contract on immovable property | Construction, renovation of office building | Allowed for: plant & machinery construction |
| Goods / services for personal consumption | Any purchase for personal use by owner/director | No exception — always blocked |
| Goods lost / destroyed / stolen | Inventory written off due to fire, theft, expiry | No exception — ITC must be reversed |
ITC Risk Checklist
Why Choose TaxClue?
Invoice-Level Reconciliation
Every invoice matched against GSTR-2B — not just totals.
Maximum ITC Recovery
Find missed ITC in 2B that your books didn't capture.
Rule 42/43 Calculated
Proportionate reversal for mixed taxable/exempt businesses.
Blocked Credit Audit
Catch Section 17(5) claims before the dept catches you.
Supplier Compliance Tracking
Know which suppliers are putting your ITC at risk.
CA Advisory
Expert guidance on complex ITC eligibility questions.
Frequently Asked Questions
ITC Reconciliation Done Right, Every Month
Stop losing ITC to mismatches, blocked credits, and lapsed claims. TaxClue reconciles every invoice, every month — so your ITC claims are bulletproof.
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