Help Document on Invoice Mismatch Reports:

The VAT dealers have been filing returns online and also uploading the invoices of purchases made from VAT dealers and sales made to VAT dealers related to goods taxable at 1%, 5% and 14.50%. The intention of the system is to match the purchase and sale invoices online without manual intervention and to allow input tax credit to the dealers without delay. At the same time,tax, penalty etc has to be realized where there are irregular and illegal claims of ITC,and suppressedsale turnovers. Further, if selling VAT dealers fail to upload the sale invoices, it results in the purchasers not getting ITC for which they are eligible. Hence penalties may have to be levied, if sale invoices to VAT dealers (tax rates 1%, 5%, 14.50%) are not uploaded by the sellers.

It is system based and dynamic mismatched report, giving alerts to the dealers regarding the discrepancies in the ITC claimed by them and enables them to claim the correct amount of ITC by rectifying the mistakes before an assessment is initiated.

  1. General Principles:
  1. The Mismatch reports will be displayed to the individual dealers and department officers in their respective logins.
  1. The mismatches will not be made on invoice to invoice basis but on account to account basis, tax rate wise. This means invoice number mismatch is not taken into consideration.
  1. For the purpose of comparing ITC claimed by the dealer in the return and VAT in the purchase invoices uploaded by him, the total ITC claimed in VAT200 is compared with the total VAT in the invoices, rate of tax wise.
  1. For the purpose of comparing the invoices of the seller and the purchaser the entire amount in the account of the purchaser for a rate of tax in a tax period is compared with the entire amount in the account of the corresponding seller for that rate of tax in that tax period.
  1. Similarly for the purpose of identifying suppression of sales, the entire amount in the account of the seller for a rate of tax in a tax period is compared with the entire amount in the account of all the corresponding purchasers for that rate of tax in that tax period.
  1. Mismatch of purchase invoices and corresponding sellers invoices with VAT 200:

This report is called Purchaser’s Mismatch Report and is compiled as follows.

  • Column 2 is the tax period in which ITC is claimed.
  • Column 3 is the total VAT available in the invoices uploaded.
  • Column 4pertains to the difference of ITC proposed to be disallowedwhen the ITC claimed in the VAT 200 return is more than the total VAT in the purchase invoice uploaded.
  • Column 5 pertains to the ITC proposed to be disallowed for three reasons viz., nonpayment of tax by the seller, delayed claim of ITC by the purchaser by more than 3 months, more ITC invoices uploaded by the purchaser than his sellers.
  • Column 6 is the total of Column 4 and Column 5.
  • Column 7 is ITC proposed to be allowed.

  1. Mismatch between the ITC claimed by the dealer in the return and VAT in the purchase invoices uploaded by him.
  • The mismatch between the ITC claimed by the dealer in the return and VAT in the purchase invoices uploaded by him is displayed in the ITC account of the dealer.
  • Only when the amount of ITC claimed in VAT200 is greater than the amount in the invoices uploaded, this mismatch is displayed. This is treated as “case 6” in the list of the mismatches
  • Example: The dealer has claimed Rs 1,00,000/- as ITC in 5% creditable purchases column, however the VAT in all purchase invoices pertaining to 5% goods is only 90,000/-. Therefore Rs. 10,000/- is treated as excess claim of ITC.
  • The detailsof the ITC proposed to be disallowed on this ground can be seen in the Drilldown report as follows:
  • Column 7 is the difference between the purchase turnover declared in the return and the purchase turnover as per the invoices uploaded, when such difference is greater than zero, Rate of tax wise. This is the difference between Column 3 and column 5.
  • Column 8 is the difference between the ITC claimed in the return and the VAT in invoices uploaded, when such difference is greater than zero, Rate of tax wise. This is the difference between Column 4 and column 6.
  1. Mismatch between the Invoices uploaded by the purchaser and the invoices uploaded by his sellers in order to identify excess claim of ITC.

The mismatch between the VAT in the invoices uploaded by the purchaser in the return and VAT in the invoices uploaded by the corresponding selling dealer is displayed in the drilldown report.

The data in the above drilldown report is compiled as follows:

  • Column 3 is the Tax period during which the seller has raised the invoices on the purchaser for a rate of tax.
  • Column 5 indicates whether the seller has paid tax for the tax period in which he has raised invoices on the purchaser for a rate of tax.
  • Column A is the total tax in the invoices in column 3.
  • The columns displaying months, show the amount of VAT reported as ITC from out of the total amount of VAT in the invoices raised by the selling dealer for a tax rate in the month indicated in column 3by the purchasing dealer in each month preceding the current return month(These columns are not numbered as they are dynamic and keep changing every month).
  • The column B displays the total ITC reported upto the previous return month.
  • Column (A-B) displays the probable maximum balance which can be reported in the current month as ITC. This balance is not arrived after applying the prorate prescribed in the rule 20 (4) to rule 20(12) of the AP VAT rules-2005. This balance is arrived from the invoices uploaded by the seller and purchaser. Therefore this is only a provisional amount and the upper limit beyond which even provisional ITC cannot be given.
  • Column C is the ITC claimed in the current month from out of the balance in the column (A-B).
  • Column D is the ITC allowed in the current month with respect to the invoices pertaining to the return month during which the seller has raised the invoice on the purchaser, for a tax rate.
  • Column E is the ITC disallowedin the current month with respect to the invoices pertaining to the return month during which the seller has raised the invoice on the purchaser, for a tax rate.
  • Column F refers to the reasons due to which the ITC claim of the purchaser was rejected /accepted. These reasons are termed as cases; these cases are explained as follows.
  1. Case 1.a(Seller not Filed Return)ITC is disallowed for the purchases made by the seller who has not filed the return for the invoice period.

This shall be treated as “case 1.a” of the ITC disallowed/allowed categories.

  1. Case 1.b (Seller Not Paid Tax ) ITC is disallowed on such invoices uploaded by the purchaser ,where the seller has NOT paid the declared TAX for the Tax period in which he has issued the tax invoice to the purchaser

This shall be treated as “case 1.b” of the ITC disallowed/allowed categories.

  1. Case 1.c (Short Paid)ITC is allowed on such invoices uploaded by the purchaser to the extent, the seller has paid the TAX, and ITC disallowed to the extent the seller has not paid TAX (Short Paid)for the Tax period in which he has issued the tax invoice to the purchaser

This shall be treated as “case 1.c” of the ITC disallowed/allowed categories.

Example: Seller has declared net tax payable as Rs/- xxx but not paid the tax in full, then ITC of the purchaser will be proposed to be disallowed to the extent the seller has Short Paid Tax.

  1. Case 1.d (ITC Claimed on NILL Return)ITC is disallowed on such invoices uploaded by the purchaser, when the seller has filed NIL Returns for the Tax period in which he has issued the tax invoice to the purchaser.

This shall be treated as “case 1.d” of the ITC disallowed/allowed categories.

  1. Case 2 (Belated Claim).
    ITC is allowed on such invoices uploaded by the purchaser, when the purchaser claims ITC within three months from the tax period in which the seller has uploaded invoices.

If the purchaser has uploaded the tax invoice after 3 months from the tax period in which the seller has uploaded invoices, the purchaser will not be eligible to claim ITC against such invoices.This shall be treated as “case 2” of the ITC disallowed/allowed categories.

Example: Seller has uploaded the invoice in the month of August,2016, the purchaser can claim ITC on such invoice for the month of either August, or September or October but not beyond October, 2016

  1. Case 3 (VAT is equal in both sale invoices and purchase invoices uploaded).
    When sum total of the VAT in all the invoices uploaded by a seller in respect of a purchaser are equal to the sum total of the VAT in all the invoices uploaded by such purchaser, the ITC shall be allowed on the VAT in such invoices uploaded by the purchaser. This shall be treated as “case 3” of the ITC allowed/disallowed categories
  1. Case 4(VAT claimed is Less in purchase invoices compared to the invoices uploaded by the seller).
    When sum total of the VAT in all the invoices uploaded by a seller in respect of a purchaser are more than the sum total of the VAT in all the invoices uploaded by such purchaser, the ITC shall be allowed on the VAT in such invoices uploaded by the purchaser only. This shall be treated as “case 4” of the ITC allowed/disallowed categories.

Example: The total turnover in the invoices uploaded by the seller is Rs 1,00,000/- whereas the total turnover in the invoices uploaded by the purchaser is only Rs 50,000/- then ITC will be allowed on Rs 50,000/- only.

  1. Case 5(VAT claimed is More in purchase invoices compared to the invoices uploaded by the seller).

When sum total of the VAT in all the invoices uploaded by a seller in respect of a purchaser are less than the sum total of the VAT in all the invoices uploaded by such purchaser, the ITC shall be allowed on the VAT in such invoices uploaded by the seller only. This shall be treated as “case 5” of the ITC allowed/disallowed categories.

Example: The total turnover in the invoices uploaded by the seller is Rs 1,00,000/- whereas the total turnover in the invoices uploaded by the purchaser is only Rs 2,00,000/- then ITC will be allowed on Rs 1,00,000/- only

The above report will throw another drilldown report, wherein all the invoices uploaded by the seller and the invoices uploaded by the purchaser can be seen and rectification by way of uploading or modifying invoices can be made.

  1. Case7.Where any dealer has claimed Input Tax Credit on purchases made from AP BEVERAGES CORPORATION LIMITED, COMMISSIONER OF PROHIBITION AND EXCISE APsuch ITC shall be disallowed.
  1. Case 8 (Cancelled TIN) and Case 8 Test TIN.Where any dealer has claimed Input Tax Credit on the purchases made from a seller who has cancelled his registration prior to the date of invoice and for Test TINs and TINs which does not exist.

  1. Mismatch between the Invoices uploaded by the seller and the invoices uploaded by all his corresponding purchasers in order to identify suppression of sales turnover.

This report is called Seller’s Mismatch Report and is compiled as follows.

  • Column 2 is the tax period for which the seller is filing return.
  • Column 3 indicates the return and payment status of the seller i.e., whether the dealer has filed return or not and whether he has paid tax or not.
  • Column 4 displays a probable suppression of sales by the seller when the turnover in the invoices uploaded by the seller is less than a turnover as per invoices uploaded by all his purchasers.
  • Column 5 displays a probable suppression by the seller when the sales turnover in the VAT 200 return is lesser than the sale invoices uploaded by such dealer.
  • Column 6 displays the difference between the return turnover and the turnover in the invoices uploaded, where the invoice turnover is less than the return turnover and thereby the invoices not uploaded.
  • Column 7 is the penalty at the rate of 5% for failure to upload invoices under section 56A of the AP VAT Act.

  1. Where the turnover in the total invoices uploaded by a seller are more than the sales turnover in the VAT 200, such difference in turnover shall be treated as suppression of sales and Taxed accordingly.

Example:

  1. turnover in the total invoices uploaded by the seller Rs 1,00,000/-
  2. the sale turnover in VAT 200 Rs. 50,000/-
  3. difference i.e. suppressed sales Rs. 50,000/-

This is displayed in Drilldown report as follows

  1. Where the turnover in the total invoices uploaded by a seller are less than the total invoices uploaded by all his purchasers, such difference in turnover shall be treated as suppression of sales and Taxed accordingly.

Example:

  1. Turnover in the total invoices uploaded by the seller Rs 50,000/-
  2. Turnover in the total purchases invoices uploaded by the corresponding purchasers Rs. 1,00,000/-
  3. difference i.e. suppressed sales Rs. 50,000/-

This is displayed in Drilldown report as follows.

A Drilldown of the above report will throw another drilldown report, which gives invoice wise details.

  1. Probable Penalties
  1. Penalty @5% will be proposed on the turnovers of invoices which are not uploaded by the sellers or purchaser. The difference between the return turnover and uploaded invoice turnover is treated as the turnover pertaining to the un uploaded invoices.