GSTR-2B Reconciliation Guide: Automate ITC Matching with AI

GSTR-2B Reconciliation Guide: Automate ITC Matching with AI

GSTR-2B reconciliation is one of the most time-consuming compliance tasks for Indian businesses. Every month, accounts teams manually compare supplier invoices against the auto-populated GSTR-2B statement from the GST portal — checking whether every purchase invoice issued by a supplier appears in GSTR-2B (meaning the supplier has filed their GSTR-1 correctly), and whether the tax amounts match.

For a business with 200+ purchase invoices per month, this process can take days. AI-powered extraction and matching compresses it to hours.

What Is GSTR-2B and Why It Matters

GSTR-2B is an auto-populated statement generated by the GST system on the 14th of every month. It shows all Input Tax Credit (ITC) available to a buyer based on what their suppliers have reported in GSTR-1.

Why reconciliation matters:

• ITC can only be claimed if the invoice appears in GSTR-2B
• Rule 36(4) limits provisional ITC claims on unmatched invoices
• Mismatches indicate either late filing by the supplier or data errors that need correction
• Unreconciled mismatches affect cash flow (blocked ITC) and create GST audit risk

The Traditional Manual Process

The AI-Powered Process

Step-by-Step: AI-Powered GSTR-2B Reconciliation

Step 1: Extract Invoice Data from PDFs

Use AllPDFMagic Invoice Extractor to extract structured data from all your purchase invoice PDFs:

• Upload invoices individually via the web interface, or
• Use the API to process batches automatically

For each invoice, the AI extracts: supplier GSTIN, invoice number, date, taxable value, CGST, SGST, IGST amounts, HSN codes.

Export the extracted data as CSV or JSON.

Step 2: Download Your GSTR-2B

1. Log in to the GST portal (gst.gov.in)
2. Go to Returns → Auto-Drafted ITC Statement → GSTR-2B
3. Select the month and download as JSON or Excel

The GSTR-2B contains B2B invoices section (Table 3) — this is what you'll match against your purchase invoices.

Step 3: Match Invoice Data to GSTR-2B

The matching logic compares:

• Supplier GSTIN — exact match
• Invoice Number — match after normalising format (removing spaces, hyphens)
• Invoice Date — within the filing period
• Tax Amounts — within a tolerance for rounding differences (typically ±₹1)

A simple Python matching script:

import pandas as pd

# Load your extracted invoice data
my_invoices = pd.read_csv("extracted_invoices.csv")

# Load GSTR-2B data (B2B section)
gstr2b = pd.read_excel("GSTR2B_July2026.xlsx", sheet_name="B2B")

# Normalise invoice numbers for matching
my_invoices["inv_num_clean"] = my_invoices["invoice_number"].str.replace(r"[-\s]", "", regex=True).str.upper()
gstr2b["inv_num_clean"] = gstr2b["Invoice Number"].str.replace(r"[-\s]", "", regex=True).str.upper()

# Merge on GSTIN + invoice number
merged = my_invoices.merge(
    gstr2b,
    left_on=["supplier_gstin", "inv_num_clean"],
    right_on=["GSTIN of Supplier", "inv_num_clean"],
    how="left",
    indicator=True
)

# Separate matched and unmatched
matched = merged[merged["_merge"] == "both"]
unmatched = merged[merged["_merge"] == "left_only"]

print(f"Matched: {len(matched)} invoices")
print(f"Unmatched (not in GSTR-2B): {len(unmatched)} invoices")
unmatched.to_csv("unmatched_invoices.csv", index=False)

Step 4: Investigate Mismatches

Unmatched invoices fall into three categories:

1. Supplier hasn't filed GSTR-1 yet — follow up with the supplier to file before the deadline
2. Supplier filed with a different invoice number — check for typos or format differences
3. Supplier reported incorrect GSTIN — request a credit note and corrected invoice

For each unmatched invoice, verify the supplier's filing status on the GST portal using Search Taxpayer → View Filed Returns.

Step 5: Provisional ITC Treatment

Under Rule 36(4), ITC on invoices not appearing in GSTR-2B can only be claimed provisionally up to a specified percentage (currently 5%). Track provisional ITC separately and reverse it if the invoice doesn't appear in GSTR-2B within a defined period.

Common Reconciliation Issues and Fixes

Frequently Asked Questions

How often should GSTR-2B reconciliation be done? Monthly, ideally before the ITC claim deadline. GSTR-2B is available on the 14th of each month; reconciliation should be completed before filing GSTR-3B (due on the 20th).

What happens if I claim ITC on an invoice not in GSTR-2B? Under Rule 36(4), you may claim provisional ITC up to the specified percentage (currently 5% of eligible ITC from GSTR-2B invoices). Excess provisional ITC must be reversed in GSTR-3B.

Can AI extraction handle invoices in multiple languages? AllPDFMagic's invoice extractor handles invoices in English, Hindi, and several regional languages. For regional language invoices, accuracy may vary — verify extracted data manually for a sample.

What if my supplier is in a composition scheme? Composition dealers don't appear in GSTR-2B as they don't charge GST. These purchases are not eligible for ITC and should be tracked separately.

Extract invoice data for reconciliation →

Related guides:

• How to Extract GST Invoice Data from PDFs — extract structured data from invoices
• Automate Invoice Processing with AI — full automation workflow
• PDF API for Developers — API integration guide