Ultimate Guide to eliminate challenges in filing GSTR-2

GSTR-1 filing related activities are completed and the filing GSTR-2 is in process.

The last date for filing GSTR-2 is now 30th Nov. 2017. The magnitude of work involved in GSTR 2 is not as simple as it may seem. Perhaps it requires more attention to get the numbers right for correct input credit.

The magnitude of impact on suppliers, business owners & even GSTP’s is major.

If you are a business owner, GSTR- 2 impact

Then probably one of your biggest worry is whether you’ll be able to claim all your rightful Input Tax Credit? You want to ensure that your GSTR-2 return does not get rejected in the GSTN portal.

If you are a supplier, GSTR- 2 impact

Then you have to be careful during filing of GSTR 1, as any wrong entry here can lead to the passing of credit to the wrong person & then further litigation issues.

Even GSTP’s

They have to be very watchful while uploading these files for clients when multiple invoices get modified in the invoice matching process.

How does one update the books with the new details? This can be boggling when there are hundreds of invoices.

We believe in all these cases; solutions which are most reliable are:

  1. Overview of the work by a Chartered Accountant (GST Expert).
  2. Accounting software solutions like Tally version 6.2
  3. Outsourcing the job to Accounting firms.

After GSTR 1, you are obviously wondering how to file GSTR-2 returns for all your clients quickly and correctly?

In this blog post, we will understand the challenges involved in filing GSTR-2 and how these could be met with the following solution:

  1. Overview of the work by a Chartered Accountant.
  2. Accounting software solutions like Tally version 6.2
  3. Outsourcing the job to Accounting firms. 

Invoice Reconciliation is Central to GSTR-2

In the earlier VAT regime, businesses used to file self-assessed returns to get their Input Tax Credit.

However, in the current GST regime, businesses will get Input Tax Credit based on invoices uploaded by their suppliers.
Thereby, it is now imperative for both the buyer and the supplier to reconcile invoices together. This process is a central prerequisite for filing GSTR-2 returns.
For a buyer, the GSTN portal auto-populates GSTR-2 with invoices reported by the supplier. The buyer is required to cross-check these details with his books and confirm their correctness, before submitting his GSTR-2.

Simple, isn’t? Let us understand why this simple-sounding process is beset with a certain degree of complexities.

Challenges in Filing GSTR-2 Returns

  1. The GSTN portal auto-populates a read-only GSTR-2A form with invoice entries made by suppliers. These invoices don’t necessarily come arranged in the same order as maintained in the buyer’s books. The buyer has to go through each line item to check for correctness before accepting the invoices. For invoices that don’t match, they have to manually reconcile the details with the suppliers.
  2. Suppliers may forget to upload or report some invoices. The buyer will need to alert his client who in turn will need time to understand the reason for such lapses and check whether the supplier can report such invoices? What if the supplier does not agree to these changes?
  3. Some suppliers may have under or over-reported the invoices. Again, it will take time for both the buying dealer and the supplier to arrive at a consensus.
  4. Some invoices uploaded by the supplier may not reflect in GSTR-2A since they might be in transit. Which buyer has considered as input while filing GSTR 1.
  5. The buyer has to accept right invoices only before submitting the GSTR-2. Accepting the wrong invoice can lead to possibilities of litigation due to no provision of revision.

 Solutions for GSTR-2 Filing

To mitigate the risk absolutely, following solution should be used:

  1. Overview of the work by an independent Chartered Accountant once the business accountant has complete.
  2. Accounting software solutions like Tally version 6.2 are seamless.


Business owners need these services that can complete 100% vouching before uploading the data on GST portal. Using their services ensures:

  1. Simplifies the process of invoice matching
  2. Enables quick reconciliation of discrepancy in invoices
  3. Empowers business owners to make the right decisions
  4. Ensures GST compliance
  5. Saves time and reduces business team effort.


How to file GSTR-2 returns

Expenses excluded for Input Tax Credit in GST

Though input tax credit can be claimed by a person registered under GST for most inputs, some services are not eligible for input tax credit claim. After almost four months post GST businesses are still trying to understand the changes required in their current systems to accommodate with new compliance model.

We all are doing the analysis to understand its overall impact. On this note, we bring to you our impact analysis on those expenses which are not allowed for GST Input credit and what outcome one should draw from it.

In this article, we look at such services, which are not eligible for input tax credit under GST.

Here is the list of items excluded from input tax credit claim under GST:

Motor Vehicle and Conveyances

Input tax credit can be claimed for motor vehicles or conveyance only when they are used for

  • Making a further supply of such vehicles, Conveyances (For exampleMaruti ,Honda car manufacturers).
  • Transportation of passengers (For example Companies giving vehicles on lease to Ola, Uber, Travel agencies owning the vehicles).
  • Imparting training (Motor driving schools).
  • Transportation of goods (GTA like GATI, INTERIM, BLUE DART).

Therefore companies other than above, cannot claim GST credit of expenses incurred in the purchase of Motor Vehicle. Also, this brings us to consult with our tax advisors on treatment of input credit under following categories

    • Maintenance expenses for office vehicles
    • Conveyance expenses for employees
    • Logistic expenses incurred in transportation of goods.

Food, Beverages and Outdoor Catering

GST Input credit can be claimed for food, beverages only by such registered person who is engaged in the business of

  • Restaurant services
  • Food and catering services
  • Hotels

Therefore regular taxpayers i.e. companies other than above, cannot claim GST credit of expenses relating to food, beverages, and catering incurred during Staff welfare, festivals, Canteen service, Business meetings.

This tells us to consult with our tax advisors on the treatment of input credit for food platforms like Food panda, Zomato, and other online food chains.

However from 1st Nov the GST levy on AC & Non AC Restaurants coming down to 5%, the restaurants will not be able to take the benefits of ITC.

Membership of a club, health and fitness center

In most of the Multinational companies, large size Indian companies generally following expenses are offered to employees:

  • Beauty treatment
  • Health services
  • Cosmetics
  • Medicines.

These expenses are also out of the purview of claiming GST Input credit even if it is given as gifts up to 50,000 for the regular taxpayer.

Life and Health Insurance

The policy holders who have taken general insurance (includes fire, marine, car, theft, etc.) can enjoy GST Input credit paid on the policy premium.However, the premium paid for health and life insurance will not be allowed for GST input credit.

Travel Benefit for Employees

The travel benefits extended to employees on vocation such as leave or home travel concession cannot be claimed for GST input credit.


We believe it is imperative for the companies to make the necessary operational and financial changes for accommodating the above cases of ineligibility of ITC. In our next edition of the blog, we will discuss some more such expenses in detail.

This leaves us all with a question, what do I need to discuss with my accountants and tax consultants on the requirement to re-structure my business process?


Ineligible input credit under CGST Act.



TRAN vs VAT Refund Claim : Which is better under GST?

What shall be the treatment of Input Credit of old stock in Tran 1 After GST? In order to claim input of old stock in GST, you have to submit the records of the tax credits in TRAN 1 / TRAN 2.

Scenarios for treatment of Input Credit of old stock in TRAN 1:

Treatment of Input Credit of old stock for Industry under GST

Treatment of Input Credit of old stock for Industry under GST

Here are possible scenarios for any industry:

Do you Have C Form?

  • Yes, We have C Forms
    • We have a complete set of C Forms.
      • Payable Tax = This will be net liability person has to pay after claiming input credit of VAT, CGST, SGST & IGST i.e. (Output tax liability) – (Transitional credit + credit under GST).
    • We don’t have complete set of C Forms
      • Option 1: Pay the Differential tax b/w VAT & CST, claim a refund after VAT Assessment.
      • Option 2: Wait for C forms completion and pay late fee+ interest.
      • Option 3: Claim in TRAN NIL against pending Form C, file refund application to claim C form credit.
  • No, We have C Forms
    • Pay the Differential tax b/w VAT & CST.

Therefore in case of pending C forms, amongst the above 3 option-the 3rd option makes a better choice:

Credit to claim from TRAN


We think that under GST the mechanism of claiming credit from old regime is very simple for Service tax and Excise duty but at the same time it has created hardships for people who has to claim credit of VAT regime belonging to C forms.

We have come up with this article to guide people to avoid the hardship arising from filing TRAN 1 in case there are missing C/ F Forms, by opting for the mechanism of filing Refund application and claim the credit from VAT department.


Rules for claiming Input Credit through TRAN

How to Fill TRAN 1- Take help from this video