A monthly ITC reconciliation playbook

Since input tax credit became tied to your auto-populated GSTR-2B, reconciliation stopped being good housekeeping and became a direct line item on your P&L. Credit that doesn't appear in 2B — because a vendor filed late, filed wrong, or didn't file at all — is credit you cannot claim that month.

Here is the monthly routine we run for clients.

Step 1: Pull and match

Download GSTR-2B for the period and match it, invoice by invoice, against your purchase register. You're looking for four buckets:

• Matched — in both, agreeing. Claim it.
• In 2B, not in books — investigate before claiming.
• In books, not in 2B — the risk bucket. Credit is not yet available.
• Mismatched values — reconcile the difference.

Step 2: Chase the gaps

For everything in books but not in 2B, the cause is almost always the supplier. Categorise:

1. Vendor hasn't filed GSTR-1 yet → follow up, may appear next period.
2. Vendor filed under the wrong GSTIN or period → ask them to amend.
3. Vendor won't or can't comply → a commercial and recovery question.

The earlier you chase, the more likely the credit lands within the claim window.

Step 3: Apply the rules

Before claiming, run the eligibility checks:

• Is the credit blocked under Section 17(5)?
• Does any reversal apply — non-payment within 180 days, exempt-supply attribution, write-offs?
• Is it within the time limit for claiming?

Step 4: Document and file

Keep the reconciliation working papers with the return. If a query ever comes, the reconciliation is your answer — it shows you claimed only eligible, available credit, and why.

Why this matters

Businesses that reconcile monthly recover credit that businesses reconciling annually simply lose. The discipline is unglamorous, but over a year it is often the single largest controllable item in your indirect-tax cost.

If reconciliation is slipping, or you suspect credit is leaking, a one-off review will tell you how much — and a monthly process will stop it recurring.