International Journal For Multidisciplinary Research

E-ISSN: 2582-2160   •   Impact Factor: 9.24

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“Challenges in ITC (Input Tax Credit) Reconciliation and Their Impact on Financial Reporting Accuracy in India”

Author(s) Dr. Amit Gupta, Dr. Ravi Kumar
Country India
Abstract The Goods and Services Tax (GST) represents a major reform, consolidating various indirect taxes into a single system to improve transparency and compliance. A central feature of GST is the Input Tax Credit (ITC), which allows businesses to claim credits on taxes paid for inputs, ensuring that only the added value is taxed, preventing double taxation. However, reconciling ITC can be challenging due to discrepancies, delays, and errors, which may affect the accuracy of financial reports. The reconciliation process is crucial for ensuring consistency between tax credits claimed by businesses, suppliers, and tax authorities. Problems such as record mismatches, manual mistakes, and delayed updates can result in financial inaccuracies, increased administrative workload, and penalties for non-compliance. Technological advancements provide promising solutions to these issues. Companies like Reliance Industries and Tata Steel have adopted automated reconciliation software, AI, and blockchain technologies to improve accuracy, speed, and transparency in financial reporting. Automation helps reduce human errors, AI tools detect discrepancies in real time, and blockchain ensures secure, transparent records. Together, these technologies enhance financial reporting, ensure tax compliance, and minimize operational inefficiencies. This study underscores the importance of embracing technological solutions to overcome ITC reconciliation challenges, improve financial accuracy, and comply with GST regulations. Looking ahead, AI and blockchain are expected to play an even greater role in transforming ITC reconciliation.
Keywords GST, Input Tax Credit, ITC Reconciliation, Financial Reporting, Technological Solutions.
Field Business Administration
Published In Volume 7, Issue 5, September-October 2025
Published On 2025-09-05
DOI https://doi.org/10.36948/ijfmr.2025.v07i05.55234
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