Why your input tax credit does not match, and how distributors lose it

Input tax credit is not a discount. It is your money, sitting with the government, waiting for one condition to be met: your supplier has to have declared the sale.

If they have not, you cannot claim it. Not "cannot claim it yet" — cannot claim it, and if you did, you will pay it back with interest.

Distributors lose real money here every month, usually without noticing, because the loss looks like nothing at all. There is no bounced payment and no angry phone call. There is simply a number in your books that is larger than the number the portal will honour.

The one rule that matters

Since the law was tightened, credit is limited to what appears in your GSTR-2B — the static, auto-drafted statement generated for you on the 14th of the following month.

Not what is on your purchase bill. Not what you paid. What your supplier filed.

GSTR-2A and GSTR-2B are different things and people mix them up constantly:

• 2A is dynamic. It keeps changing as suppliers file late. Useful for chasing, useless for filing.
• 2B is a snapshot, frozen on the 14th. This is the one your 3B should agree with.

Claim off your purchase register and you will over-claim. Claim off 2B and you will be right, and out of pocket until the supplier fixes it.

What actually causes a mismatch

In rough order of how often we see it:

The supplier filed late, or not at all. Small suppliers miss deadlines. Their sale lands in a later month's 2B, so your credit is not lost, only delayed — provided you notice and carry it forward rather than writing it off.

They typed your GSTIN wrong. One character. The invoice exists in their GSTR-1 against somebody else's number, or nobody's. It will never reach your 2B on its own.

They filed it as B2C. The difference between the tables is in GSTR-1: B2B, B2CL and B2CS. If they did not enter your GSTIN at all, the sale went into the consumer bucket. Same effect: no credit for you, and they have to amend.

The invoice number does not match. You recorded INV-4471, they filed 4471/26-27. Both are real, and automated matching will not pair them.

The HSN or rate disagrees. Your code and theirs differ, so the tax does — see HSN codes for distributors.

Place of supply is wrong. You were charged IGST where CGST and SGST applied, or the reverse. The tax exists, in the wrong pot, and cannot simply be moved.

You recorded it in the wrong month. Goods received on 2 April against a bill dated 30 March. Their filing is March, yours is April.

The reconciliation, in twenty minutes

Once a month, after the 14th:

1. Pull 2B from the portal. It is one download.
2. Match it against your purchase register on GSTIN plus invoice number plus taxable value. Anything that matches on two of the three but not the third is worth a look — that is usually the typo cases.
3. Split the differences into three lists. In 2B but not in your books, meaning you missed a bill. In your books but not in 2B, meaning your supplier has not filed. In both but with different figures.
4. Claim only what is in 2B. Whatever your books say.
5. Carry the rest. Keep a running list of unclaimed credit by supplier, with the invoice and the month. This is the list you chase from.

The whole exercise is only painful if your purchase register is incomplete, which brings us to the real problem.

Why most distributors cannot do this

To reconcile against 2B you need a purchase register that is complete, current, and has the supplier's GSTIN and the invoice number on every row.

For a distributor taking thirty or forty bills a week, that means someone typing supplier name, GSTIN, invoice number, date, taxable value and tax for every one of them. It does not happen. It happens for the big bills and the ones that came with a follow-up call, and the rest go in a drawer.

So the reconciliation is done from the drawer, in March, by the CA, for the whole year at once — by which point the supplier who typed your GSTIN wrong in June has no memory of it and no incentive to amend.

The conversation that gets your money back

When a supplier's invoice is missing from your 2B, do not ask "why have you not filed?". Send them:

Invoice INV-4471 dated 14/08/2026, taxable ₹94,570.64, tax ₹17,022.72, our GSTIN 03AABCJ1234K1Z9. It is not appearing in our GSTR-2B for August. Could you check whether it went in as B2B against that GSTIN?

Specific, checkable, and it names the likely cause without accusing anyone. Most of the time the answer comes back within a day and the amendment lands in the next month's 2B.

Do it in the month it happens. A missing credit chased in September gets fixed. The same credit chased the following March usually does not.

What it is worth

A distributor doing ₹2 crore of purchases a year at an average 18 per cent is handling roughly ₹36 lakh of input tax credit. Losing one per cent of it to unreconciled mismatches is ₹36,000 — more than most software costs, and it recurs every year.

Where Dhela fits

Dhela reads supplier bills from a photo, so the purchase register exists without anyone typing it: supplier, GSTIN, invoice number, date, HSN, taxable value and tax on every line, captured when the bill arrives rather than in March.

It prepares GSTR-1 and GSTR-3B working papers from that register, and it does not file for you — a return should be looked at by a human before it goes in.

Free plan, no card. dhela.in

General information, not tax advice. GST rules and deadlines change — confirm the current position before relying on anything here.