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[Case Study] GST Reconciliation in Manufacturing Industry


[Case Study] GST Reconciliation in Manufacturing Industry

Manufacturing sector has emerged as one of the growing sectors in India in recent times. The introduction of GST, has provided a great boost to the manufacturing sector by eliminating the cascading taxes. This has resulted in reducing cost of production.

While the businesses and consumers are celebrating the boons of GST in the long run, the tax-team is forever on their foot to comply with this ever-evolving system. With new amendments and structures being introduced every month, complying with these amendments can become a tedious task for those in manufacturing industry, who has to deal with numerous invoices every month. And non-compliance due to the same can impact the reconciliation process and eventually the Annual returns.

Issues Faced in Reconciliation Process by a Manufacturing Company

IRISGST has numerous clients from multiple industries and manufacturing industry is one of it. One of our clients, a large manufacturing company was facing real issues in GST reconciliation and we thought to put some sense to it. Here are our findings:

Problem Statement: Reconciliation is a process of matching all your purchase data with your vendor’s outward supply data. However, for a Manufacturing Industry, procurement of multiple transactions is essential to carry out their day-to-day tasks. These transactions include,

  • Inwards supply of raw materials
  • Supply of good to and from Job Workers (If needed)
  • Outward supply of finished goods
And multiple transactions mean managing multiple invoices, coming in from multiple sources, spread across the nation. A minor mistake while recording these invoices can lead to: 

  • Mismatch in your vendors GSTR 2A and your records;
  • Mismatching Documentation pattern;
  • Missing Invoices;
  • Faulty ITC calculation.
Rectifying these errors require the user to scan across tons of invoices and cross verify the same details across the entire vendor database.

On the other hand, if these errors are left unchecked, this can greatly hamper the GST reconciliation process. This further affects ITC calculations leading to ITC mismatch in GSTR 9.

How IRIS Sapphire helped in maximizing ITC Match?

IRIS Sapphire, a product from the house of IRIS, leading GSP in the nation offers smart and advanced reconciliation features to tackle such issues.

  1. Understanding the Data: The journey begins with the analysis of invoice data. Depending on the volume of data, the ERP solution used and the way of data captured at client’s end, we first integrated the client data with our systems. While we can do API integration, considering the best suitable way, we transformed client’s data into GSTN validated data for bulk upload in IRIS Sapphire. IRIS Sapphire offers bulk upload for single PAN- multiple GSTIN or multiple PAN- multiple GSTIN in one-go.
  2. Rectification of Input Data: One of the most common issues faced by the manufacturing organisation is data inconsistency and documentation errors at input level. IRIS offers designated Account owners who understand the complexity of your input data and help with upload into IRIS systems. We worked with the client to get the missing data points as required by GSTN such as invoice numbers and helped them to streamline their GST data for easy ITC match.
  3. Bulk Download: Manufacturing concerns usually have vendors servicing to specific regions. So, vendor A can be supplying materials to entire north which will include GSTINs from Rajasthan, Haryana etc., while vendor 2 can be doing it to West and South which includes GSTINs from western and southern states, not to mention PAN changes as well. Thus, it becomes crucial to have a holistic view of the entire GSTR 2A from various vendors. IRIS Sapphire does the same for you. It lets you download your GSTR2A in bulk across multiple PAN.
  4. Smart Reconciliation: An automated module, smart reconciliation matches your uploaded 2P data with the 2A data based on invoice numbers. and gives a broader mismatch report. This can be further analysed using advanced reconciliation, which is user-triggered.
  5. Advance Reconciliation: A user-triggered event, advance reconciliation checks the mismatch data to further remove structural mismatches. This can be done for following parameters:
    1. Reconciliation Beyond financial year: Many-a-times, the year of the invoices filed by the user or the vendor do not match due to documentation error. This further leads to discrepancy during reconciliation. IRIS Sapphire’s Advance Reconciliation feature scans the invoices beyond the financial year for comparable invoice data to ensure a minimum discrepancy in your filings.
    2. Fuzzy Logic: While Reconciliation, many invoices remain unmatched because of difference in invoice recording format. Under such circumstances, fuzzy logic scans the invoices for similarities ‘contained’ in the invoice numbers to reduce chances of such mismatches
    3. Reconciliation beyond Invoice Numbers: However, if discrepancy still remains, IRIS Sapphire’s reconciliation process gives user option to remove invoice number matching altogether and find comparable invoices on the basis of invoice data such as Tax value, taxable amount etc. to minimize discrepancies.
    4. User Defined Tolerance: To further ensure the chances of finding a match, the user can define mismatch tolerance limit for various invoice parameters such as taxable amount, invoice value etc. Once the user has defined the limit IRIS Sapphire compares the invoices on values around the set boundary conditions to match data, instead of searching for exact value.
  6. Communicating with Vendors: As stated earlier, Manufacturers deal with multiple vendors, on account of discrepancy on vendor side, communication can get complicated. Nevertheless, with IRIS Sapphire’s My Network feature, the user can grant ledger access to its vendors, who can thus verify the data recorded by the user. Furthermore, for any discrepancy appearing in an invoice, the user can also send a communication mail to the respective vendor. This mail consists of the exact details of the mismatch found, allowing the user and the vendor to sort the differences in their recordings.
  7. Reports: Once the reconciliation process is over, users can generate multiple reports spread across varied parameters. One of the reports very important for manufacturing units is – vendor-wise report. This gives vendor-wise mismatch invoice report. This is very convenient as same vendors provide goods and services to multiple locations of manufacturing units spread across multiple GSTINs and sometimes even PAN.
Thus with IRIS Sapphire, we were able to provide a 100% ITC Match to our client using various smart algorithms and a team of experienced professionals working in tandem with the client.

In essence, IRIS Sapphire helps in:
  • Minimized Errors
  • Better Communication, and
  • Streamlined format

IRIS Sapphire GST Reconciliation has been built considering the requirements of various industries such as manufacturing, pharmaceuticals, automobiles etc. and has market tested logics to reconcile the buyer-supplier data across various parameters to reduce manual intervention.

To schedule a demo, visit GST Reconciliation or write to

About Neena Sethi


Neena Sethi, a Management Accountant, has been working with IRIS for over 7 years and is currently the Functional Analyst and Subject Matter Expert for IRIS' GST offerings and manages the Eway Bill Offering, IRIS Topaz. She has also been assisting the clients in return filing related queries. Prior to GST, she was involved in compliance and data analysis for the US markets. In her leisure time, she enjoys reading and travelling.

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