ITR filing 2025: Assessees need to be more attentive to reconciliation of GST data, earnings

With all the Income Tax Returns (ITR) forms for the Assessment Year 2025-26 (AY26) notified and filing to start soon, the assessees need to be mindful of reconciliation in information under GST and Income Tax, experts say. They cautioned that any discrepancy would result in queries and higher compliance cost.

An ordinary GST assessee need to file monthly returns (GSTR 1, 2B and 3B) and then annual return (GSTR 9 and 9C). While these forms record business transaction, income tax return forms record earnings. Based on a revised MoU (Memorandum of Understanding) signed between Central Board of Direct Taxes (CBDT) and Central Board of Indirect Taxes & Customs (CBIC) on July 21, 2020, data and information are being shared on an automatic and regular basis. Also, the two boards, on request and spontaneous basis, share any information available in their respective databases which may have utility for the other organisation. Such an arrangement emphasises the need for more attention by an assessee.

According to Neha Shrivastava, Associate Partner with Forvis Mazars in India, GST’s design assumes that every outward and inward supply entered in a business’ books will exactly replicate across a chain of returns (GSTR-1 → 2B → 3B → 9/9C) and databases (e-invoice IRP, E-way-bill, 26AS). Any break in that digital era triggers automated red flags. “A mid-size distributor can process 100-150 B2B invoices a month; each one must be matched at least twice before credit can be taken,” she said. Further, While GST returns sit on the GSTN, 26AS is generated from income-tax records of TDS/TCS.