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Best GST Reconciliation Software In India

Finding the best GST Reconciliation Software for your business is now faster and easier! Compare prices, reviews, features, and get free consultation to find the perfect software.

Table of Contents

As per the Goods and Services Tax Act, also known as the GST Act, suppliers are required to pay the GST only on the value-added by them to the products and services. However, in the case of products that are purchased by the suppliers from other vendors for selling further, whether in the same form or after working on it, suppliers have to pay the GST on the purchase amount as well. This leads to double taxation on the cost of purchase. To prevent this, the GST Act has a provision for Input Tax Credit (ITC), under which the suppliers can ask for a tax credit on the portion of the amount of the product on which they had paid Input Tax that is GST while purchasing. The process of applying for the Input Tax Credit is simple yet detailed and time-consuming. Allocating an employee or hiring a professional to do it causes an unnecessary burden on the business which can be forgone by adapting GST Software.

What is GST Reconciliation Software?

GST reconciliation software helps businesses to detect any mismatch in the GSTR 2A and the GSTR 3B of the taxpayer. The GSTR 2A is the summary of the transaction of the taxpayer with their vendors as recorded in the vendors’ GSTR 1. Similarly, the GSTR 3B is the summary of the same transaction as 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 the parties to assess the situation in order 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, show a transaction which is not recorded on the return end. A missing transaction in the GSTR 2A means that the vendor has not recorded the transaction in their accounts, while a missing transaction in the 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 the GSTR 3B and GSTR 1, which is the summary of the taxpayer’s sales. The data reconciliation software helps you to rectify the discrepancies either 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.

Benefits of Using Reconciliation Software

Using Reconciliation Software Solutions for cross-checking the different GSTR 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 of hiring 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 the GSTR 1 with the 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 sources of data 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/or 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 regulation.

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

7. The software should have an adequate support team to address any problem faced by you and provide solutions or alternatives.

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

Though this list contains the major features that a 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 and then take an educated decision while purchasing a 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 the features, performance as well as cost, you can start using it to apply for the Input Tax Credit without any hassle.

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Priyanshi KhandelwalBy Priyanshi Khandelwal | Last Updated: October 29, 2020

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