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Vendor invoice management for Indian businesses: process, checks and GSTR-2B matching

Vendor invoice management means receiving, checking, approving, recording and paying supplier bills. In India each bill also decides your GST credit, any TDS due, and when a micro or small supplier must be paid.

By , co-founder of Autobot 8 min read

What are the steps in the accounts payable process?

The accounts payable process has seven steps: receive the bill, record it, match it with the purchase order and goods receipt, approve it, run the tax and MSME checks, pay by the due date, and match it with GSTR-2B before filing.

  1. Receive: suppliers email bills to one address, such as bills@yourfirm.in.
  2. Record: enter each bill in your purchase register within a day; save the PDF to Google Drive.
  3. Match: check the bill against the purchase order and goods receipt note (the three-way match, or 3 way match).
  4. Approve: whoever ordered confirms; the owner signs off above a set limit.
  5. Check: run the five checks below.
  6. Pay: on your weekly payment day, by the pay-by date. Note the UTR (bank reference).
  7. File: match the month with GSTR-2B, claim credit in GSTR-3B [5] and deposit TDS on time.

How do you set up a vendor invoice register in Google Sheets?

Keep one Google Sheet with a row per bill and columns for supplier and GST details, deadline dates, checks and payment proof. Paste the header row below into cell A1, use Data, Split text to columns, then add the formulas.

Sheet rowHeader row for cell A1

Supplier,Supplier GSTIN,GSTIN status,MSME type,Udyam no.,Invoice no.,Invoice date,PO no.,Accepted on,Taxable value,GST,TDS,Credit days,MSME limit,Pay by,180-day date,PO and GRN match,Approved by,IMS action,2B month,Paid on,UTR,Duplicate check,Status,File link

Accepted on is the delivery date or, if you objected in writing within 15 days, the day the supplier resolved it [9]. Leave Credit days blank if no terms are written.

Column Formula for row 2, copied down
N MSME limit =IF(AND(OR(D2="Micro",D2="Small"),I2<>""),I2+IF(M2="",15,45),"")
O Pay by =IF(G2="","",IF(M2="",IF(N2="",G2,N2),IF(N2="",G2+M2,MIN(N2,G2+M2))))
P 180-day date =IF(G2="","",G2+180)
W Duplicate check =IF(F2="","",IF(COUNTIFS(B:B,B2,F:F,F2)>1,"Check duplicate",""))

Format N to P as dates. Conditional formatting with =AND($X2<>"Paid",$O2<>"",$O2-TODAY()<=7) colours bills due within a week.

Example: a micro supplier delivers on 5 Oct 2026, invoice dated 3 Oct, written terms 30 days. The MSME limit is 19 Nov, 45 days from delivery, and pay-by is 2 Nov, the agreed date. With no written terms, both are 20 Oct.

What should you check before paying a vendor invoice?

Run five checks before paying: the bill is not a duplicate, the supplier's GSTIN is active and the bill complete, the bill is in your IMS or GSTR-2B, TDS is worked out, and you know if the supplier is micro or small.

1. Is it a duplicate?

A supplier's GST invoice number is unique within a financial year [3], so the same GSTIN and invoice number twice in a year is a duplicate. Column W flags repeats.

2. Is the GSTIN active and the bill complete?

Search the GSTIN on the GST portal's Search Taxpayer page for the legal name, any cancellation date and returns filed [8]. On the bill, check your GSTIN, invoice number and date, HSN code, taxable value, tax and place of supply [3]. Suppliers whose turnover crossed ₹5 crore in any year since 2017-18 must send you e-invoices with an IRN and QR code, unless exempt [3].

3. Is it in IMS or GSTR-2B?

A bill shows in your IMS once the supplier saves it in GSTR-1, GSTR-1A or IFF [7]. If a large bill is missing, ask the supplier to file it by the 11th [6].

4. Does TDS apply?

Under section 393 of the Income-tax Act, 2025, deduct TDS at booking or payment, whichever is first [12]. The first four rows apply to companies, firms and other entities, and to proprietors whose turnover last year topped ₹1 crore (₹50 lakh for professions).

Payment TDS rate Applies above Section 393(1) row
Contract work, including transport, job work and manpower supply [13] 1% to an individual or HUF, 2% to others ₹30,000 on one bill, or ₹1 lakh in the year Sl. 6(i), was 194C
Professional fees (technical services 2%) 10% ₹50,000 in the year Sl. 6(iii), was 194J
Rent of land or building (machinery 2%) 10% ₹50,000 a month Sl. 2(ii), was 194-I
Commission or brokerage 2% ₹20,000 in the year Sl. 1(ii), was 194H
Goods, if your turnover last year was above ₹10 crore 0.1% of the excess ₹50 lakh in the year from one seller Sl. 8(ii), was 194Q

Example of TDS on purchase of goods: ₹70 lakh of steel from one mill this year means 0.1% of ₹20 lakh, or ₹2,000. Transporters with ten or fewer goods carriages who give a declaration and PAN are exempt, if you report the payments. Without a valid PAN, deduct 20%, or 5% for goods [12].

5. Is the supplier micro or small?

Ask each supplier for its Udyam number and verify it on the Udyam portal [11]. Pay micro and small suppliers by the written due date, never beyond 45 days from acceptance, or within 15 days without written terms [9]. No contract can stretch these MSME vendor payment terms. Medium enterprises are not covered.

Late payment costs monthly compound interest at three times the RBI Bank Rate, now 17.25% a year [9][10]. It also moves your tax deduction to the year you pay (section 37(2)(g)) [12]. See our MSME 45 days payment rule guide and MSME interest calculator.

How do you do GSTR-2B reconciliation every month?

Match your purchase register with the GSTR-2B generated on the 14th of the next month. Act on each bill in IMS first, download GSTR-2B, match on supplier GSTIN and invoice number, and settle every difference. Claim credit in GSTR-3B only for bills in GSTR-2B that pass your checks.

How IMS works

IMS has run since October 2024. Accepted bills give credit in GSTR-2B, rejected ones do not, and pending ones wait, up to the section 16(4) deadline. Bills left without action are deemed accepted on the 14th [7].

Month-end steps

  1. By the 8th: ask suppliers missing from IMS to file GSTR-1 by the 11th, the cut-off for this month's GSTR-2B [6].
  2. By the 13th: in IMS, accept matching bills, reject wrong ones, and keep pending any bill for goods not yet received [7].
  3. From the 14th: download GSTR-2B in Excel from the Returns Dashboard [6]. It is not generated until last month's GSTR-3B is filed [7].
  4. Match on supplier GSTIN plus invoice number, then compare value and tax. Strip spaces from invoice numbers first.
  5. Settle differences with the table below. Recompute GSTR-2B if you changed IMS actions [7].
  6. Claim in GSTR-3B by the 20th, or the 22nd or 24th if you file quarterly [5]. Leave out blocked credit, such as food or most passenger cars [4].
What you find What to do
In the register, not in GSTR-2B Supplier filed late or not at all. Chase it; claim when it appears, by 30 November after the year [1]
In GSTR-2B, not in the register Find the bill, or reject it in IMS if it is not yours
Value or tax differs Ask for a GSTR-1A correction or a credit or debit note. Claim only what GSTR-2B shows [2]
Under "ITC not available" Usually the supplier gave its own state as place of supply. Ask for a fix [6]
Under Rule 37A reversal Supplier has not filed GSTR-3B. Reverse by 30 November and reclaim when it files [2]

Each quarter, tick your biggest suppliers' statements against your ledger. This vendor reconciliation catches missing bills.

On 8 Oct 2026 the GST Council recommended that GSTR-3B credit match GSTR-2B from the April 2027 return. It is not yet law [14].

Worked example

A Pune distributor's register has 46 September bills with ₹6,12,400 of GST. GSTR-2B has 45 rows.

  • 42 rows match: ₹5,64,700.
  • 3 bills are missing (₹38,700). Two suppliers filed after 11 Oct; one has not filed.
  • 1 bill is under "ITC not available" (₹9,000). The Ahmedabad supplier gave Gujarat as place of supply.
  • 2 rows are extra: a courier bill never sent to accounts (₹2,160, added) and a repeated August bill (₹14,400, rejected, GSTR-2B recomputed).

It claims ₹5,66,860 for September and carries ₹47,700 to October.

How do you plan vendor payments so none are late?

Fix one payment day a week, such as Friday. Each Thursday, filter the register for approved bills due within seven days, micro and small suppliers first, and pay them on Friday. Add the dates below and your TDS dates.

When What to do
Every Friday Pay bills due within 7 days, MSME first. Log the UTR
8th, 13th, 14th Chase missing bills, finish IMS, download GSTR-2B [6][7]
20th GSTR-3B, or the 22nd or 24th if quarterly [5]
Day 150 of each bill Pay before the 180-day credit reversal [1]
31 March Clear overdue MSME bills to keep this year's deduction [12]
30 November Last date for last year's credit and Rule 37A reversals [1][2]

Which mistakes cost you input tax credit?

Lost credit usually comes from timing or paperwork: claiming before a bill reaches GSTR-2B, paying after 180 days, missing 30 November, buying from suppliers who do not file, or accepting a wrong GSTIN or place of supply. Also avoid:

  1. Claiming blocked credit, such as food, club fees or building construction [4].
  2. Claiming on a proforma invoice (see the proforma invoice format guide) or before the goods arrive [1][2].

When should you move from a sheet to software?

Stay on the sheet while one person keeps up with every bill. Move to vendor invoice management software when bills run into hundreds a month, several people approve, matching must link to stock, or GSTR-2B matching takes days. TallyPrime can already import and reconcile GSTR-2B [15].

FAQ

Is a purchase invoice the same as a vendor invoice?

Yes. It is the supplier's tax invoice, recorded in your books as a purchase invoice or purchase bill. A proforma invoice or quotation cannot support GST credit [2].

What is a three-way match?

It compares the purchase order, goods receipt note and invoice before you pay, to catch wrong rates, short supply and bills for goods that never came. For services, compare the order, invoice and work done.

Can I claim GST credit if the invoice is not in GSTR-2B?

No. Rule 36(4) allows credit only for invoices in your GSTR-2B [2]. Ask the supplier to file, and claim in the month it appears, by 30 November after that year or the annual return date, if earlier [1].

What happens if I do not pay a supplier within 180 days?

You reverse the credit on the unpaid part, with interest, in the GSTR-3B after day 180, and claim it again when you pay. The 30 November cut-off does not apply to that claim [2].

When do I deduct TDS on purchase of goods?

Only if your turnover last year exceeded ₹10 crore. Deduct 0.1% on purchases above ₹50 lakh from one seller in the tax year, at booking or payment, whichever is first, or 5% without the seller's PAN [12].

About the author

Rahul Vijay is a co-founder of Autobot (Convogenie Technologies, Bengaluru), an AI assistant with its own computer that works like an employee while you are away.

Sources

General information, not tax advice.

All pages opened on 18 Oct 2026.

  1. Central Goods and Services Tax Act, 2017, section 16 as amended, CBIC tax portal (clauses (aa) and (b), the 180-day proviso, and 16(4) "thirtieth day of November", in force from 1 Oct 2022). https://taxinformation.cbic.gov.in/content/html/tax_repository/gst/acts/2017_CGST_act/active/chapter5/section16_v1.00.html
  2. CGST Rules, 2017, Rule 36 (Rule 36(4) from 1 Jan 2022, Notification 40/2021-CT), Rule 37 (180 days, proportionate reversal, re-claim) and Rule 37A (Notification 12/2024-CT), CBIC tax portal. https://taxinformation.cbic.gov.in/content/html/tax_repository/gst/rules/cgst_rules/active/chapter5/rule36_v1.00.html , https://taxinformation.cbic.gov.in/content/html/tax_repository/gst/rules/cgst_rules/active/chapter5/rule37_v1.00.html and https://taxinformation.cbic.gov.in/content/html/tax_repository/gst/rules/cgst_rules/active/chapter5/rule37a_v1.00.html
  3. CGST Rules, Rule 46 (invoice particulars; serial number unique for a financial year) and Rule 48(4) and (5) (e-invoice), with Notification 10/2023-Central Tax of 10 May 2023 (threshold ₹5 crore from 1 Aug 2023), CBIC tax portal. https://taxinformation.cbic.gov.in/content/html/tax_repository/gst/rules/cgst_rules/active/chapter6/rule46_v1.00.html , https://taxinformation.cbic.gov.in/content/html/tax_repository/gst/rules/cgst_rules/active/chapter6/rule48_v1.00.html and https://taxinformation.cbic.gov.in/view-pdf/1009732/ENG/Notifications
  4. CGST Act, section 17(5) (blocked credits), CBIC tax portal. https://taxinformation.cbic.gov.in/content/html/tax_repository/gst/acts/2017_CGST_act/active/chapter5/section17_v1.00.html
  5. CGST Rules, Rule 61 (GSTR-3B by the 20th; 22nd or 24th for quarterly filers by state), CBIC tax portal. https://taxinformation.cbic.gov.in/content/html/tax_repository/gst/rules/cgst_rules/active/chapter8/rule61_v1.00.html
  6. GST portal tutorial, FAQs on Form GSTR-2B (generated on the 14th, cut-off 12th to 11th for monthly GSTR-1, download from the Returns Dashboard, "ITC not available" cases). https://tutorial.gst.gov.in/userguide/returns/FAQ_gstr2b.htm
  7. GST portal tutorial, FAQs and user manual on the Invoice Management System (launched 1 Oct 2024; accept, reject, pending; deemed acceptance; recompute after changes; draft GSTR-2B not generated if the previous GSTR-3B is unfiled). https://tutorial.gst.gov.in/userguide/returns/FAQ_IMS_Dashboard.htm and https://tutorial.gst.gov.in/userguide/returns/Manual_IMS_Dashboard.htm
  8. GST portal tutorial, Search Taxpayers using GSTIN/UIN (details shown before login, return filing table). https://tutorial.gst.gov.in/userguide/taxpayersdashboard/Search_Taxpayer_manual.htm
  9. Micro, Small and Medium Enterprises Development Act, 2006, Gazette text as enacted, sections 2(b), 2(n), 15 and 16. https://samadhaan.msme.gov.in/WriteReadData/DocumentFile/MSMED2006act.pdf
  10. Reserve Bank of India, notification RBI/2026-27/283 of 7 Oct 2026, Bank Rate raised from 5.50% to 5.75%. https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=13728&Mode=0
  11. Udyam Registration portal (Print/Verify menu, Verify Udyam Registration). https://udyamregistration.gov.in/
  12. Income-tax Act, 2025 (No. 30 of 2025), Gazette of India, 21 Aug 2025, in force from 1 Apr 2026: section 37(1), (2)(g) and (3); section 393(1) Table rows 1(ii), 2(ii), 6(i), 6(iii) and 8(ii) with Note 1; section 393(4) Table row 8; section 397(2)(b); section 402 definitions of "buyer", "designated person", "specified person" and "work". https://egazette.gov.in/WriteReadData/2025/265620.pdf
  13. Finance Act, 2026 (No. 4 of 2026), Gazette of India, 30 Mar 2026, sections 84 and 90 (no change to the rows above; manpower supply added to "work" from 1 Apr 2026). https://egazette.gov.in/WriteReadData/2026/271439.pdf
  14. PIB, "Recommendations of the 57th Meeting of the GST Council", 8 Oct 2026, PRID 2320934, copy on the GST Council site (items 5.1 to 5.3, and the note that only circulars, notifications and law amendments have the force of law). https://gstcouncil.gov.in/sites/default/files/2026-10/press_release_0.pdf
  15. TallyHelp, "How to Reconcile GSTR-2B Data in TallyPrime" (vendor documentation). https://help.tallysolutions.com/gstr-2b-reconciliation/