Filing Mistakes, Notices and Sources
Matching GST turnover with your books and income-tax return: a reconciliation guide for 2026
Why turnover in GST returns, books and the income-tax return differ, how to reconcile them line by line, what changes with the Income-tax Act, 2025 from April 2026, and how to avoid mismatch notices.
Turnover reported in GST returns, in your books of account and in your income-tax return rarely matches exactly, and it does not have to, but every difference must be explainable. Common reasons are exempt and non-GST income, GST-inclusive versus exclusive figures, credit notes, advances, stock transfers to other GSTINs and timing at year end. Tax authorities now share data between GST and income tax, so an unexplained gap can lead to questions from either side. Prepare a simple reconciliation each year before filing GSTR-9 and the income-tax return.
This guide is part of the guide to common GST filing mistakes. It is general information; your CA should finalise the reconciliation. The portals referred to are listed in official GST sources.
Why the numbers differ
| Reason | Effect | Example |
|---|---|---|
| GST included in "sales" in books | Books higher than GST taxable value | Sales account credited with invoice total |
| Exempt or non-GST income | Books higher | Interest income, rent of residential dwelling for residence, sale of fixed assets treated differently |
| Supplies between your own GSTINs | GST turnover higher than books for the PAN | Stock transfer from Gujarat to Maharashtra branch |
| Credit notes reported in different periods | Timing | Discount note issued in April for a March sale |
| Advances for services | GST liability earlier than income | Advance received in March, service in April |
| Supplies without consideration | GST turnover higher | Permanent transfer of business assets on which ITC was taken |
| Year-end cut-off | Timing | Goods dispatched 31 March, invoice dated 1 April |
| Errors | Unexplained | Missed invoices, wrong GSTIN, duplicate entries |
A worked reconciliation (illustrative)
A Vadodara engineering firm (one PAN, two GSTINs: Gujarat and Maharashtra), FY 2025-26:
| Line | Amount |
|---|---|
| Turnover in books (profit and loss account, net of GST) | ₹4,62,00,000 |
| Add: stock transfers to Maharashtra GSTIN (taxable in GST, not sales in books) | ₹38,00,000 |
| Less: interest and other non-GST income included in "turnover" in books | ₹(2,50,000) |
| Add: credit notes for FY 2025-26 sales issued and reported in GST in April 2026, booked in March in the books | ₹1,20,000 |
| Expected total turnover in GSTR-1/GSTR-9 (both GSTINs) | ₹4,98,70,000 |
| Actual total in GSTR-9 (both GSTINs) | ₹4,97,10,000 |
| Unexplained difference | ₹1,60,000 |
The firm traces the ₹1,60,000 to an invoice booked but not reported in GSTR-1. It reports it in GSTR-9 and pays the tax with interest by DRC-03, as described in the GSTR-9 guide. The corrected GST total of about ₹4.99 crore is close to the ₹5 crore GSTR-9C and e-invoicing thresholds. Aggregate turnover under section 2(6) of the CGST Act is computed on an all-India basis for the PAN and its treatment of inter-state supplies between your own GSTINs matters here, so the firm asks its CA to confirm the figure before deciding on GSTR-9C and next year's e-invoicing.
The income-tax side in 2026
The Income-tax Act, 2025 replaced the Income-tax Act, 1961 from 1 April 2026. It introduces the concept of a tax year in place of "previous year" and "assessment year", and renumbers sections. For returns for FY 2025-26 (filed in 2026), the 1961 Act still governs the year's income; for income earned from 1 April 2026, the 2025 Act applies. Your CA and software will need to follow the new form references.
For small businesses, the concepts most relevant to reconciliation continue in the new Act, though section numbers differ. Confirm thresholds on the Income Tax Department's portal:
- Presumptive taxation for small businesses (formerly section 44AD): profit deemed at a percentage of turnover for eligible businesses within the turnover limit (₹2 crore, or ₹3 crore where cash receipts do not exceed 5%, under the rules in force for recent years).
- Presumptive taxation for professionals (formerly section 44ADA), with its own limits.
- Tax audit requirements by turnover.
- TDS and TCS on business payments, which appear in your annual tax statement.
Why it matters for GST. If you use a presumptive scheme, the income-tax return shows gross turnover, which officials can compare with GST returns. A presumptive filer showing ₹1.8 crore while GST returns show ₹2.3 crore will be asked to explain.
Data the authorities can compare
- GSTR-1 / GSTR-3B / GSTR-9 turnover and the turnover in your income-tax return.
- E-way bill values against GSTR-1.
- E-invoice data against GSTR-1.
- Your customers' GSTR-2B against your GSTR-1.
- TDS/TCS credits in the income-tax annual information against declared receipts.
Mismatches are a common source of the intimations described in GST notices and how to reply.
A year-end routine
- By October: review ITC for the year just ended and claim missed credit before 30 November (section 16(4)).
- Before GSTR-9: reconcile books turnover with GSTR-1 and GSTR-3B for each GSTIN, as in the example.
- Before the income-tax return: reconcile books turnover with the sum of GST turnover across GSTINs and with TDS/TCS statements.
- Keep the reconciliation with your records for at least as long as GST and income-tax records must be kept.
- Explain differences in writing when asked; most are legitimate.
Accounting software can produce much of this if ledgers are set up correctly; see the software selection checklist.
When to bring in a professional
If you have multiple GSTINs, stock transfers, exports, works contracts, a presumptive scheme near its limit, or a large unexplained difference, have a CA prepare the reconciliation. Errors here can affect both your GST and your income tax.
Frequently asked questions
Should GST turnover equal turnover in my ITR?
Not necessarily. They are measured under different laws, but the difference should be explained by identifiable items such as non-GST income, stock transfers and timing.
Are stock transfers between my branches counted as turnover?
For GST, supplies between distinct persons (GSTINs of the same PAN in different states) are taxable and reported in each GSTIN's returns. In the books of a single entity they are not sales.
Does the Income-tax Act, 2025 change GST?
No. It is a separate law. It changes how income tax is computed and reported from 1 April 2026, which affects how your income-tax figures are compared with GST data.
Which year's rules apply to the return I file in 2026?
For income of FY 2025-26, the Income-tax Act, 1961 applies; the 2025 Act applies to income from 1 April 2026 onwards. Confirm the transitional provisions with your CA.
Sources
- Income Tax Department e-filing portal — Income-tax Act, 2025, presumptive taxation, tax audit and annual information
- CBIC GST — definitions of aggregate turnover and distinct persons, section 44 annual return
- GST portal — GSTR-9, GSTR-1 and e-way bill data
