GSTR 2 Guide: Details of Inward Supplies & Filing Process

GSTR 2 is a foundational concept in the Goods and Services Tax (GST) system, designed to capture all details of inward supplies, which most people simply call purchases. In a perfect digital tax environment, this return allows a business to declare every invoice received from suppliers to claim Input Tax Credit (ITC). By documenting what you have bought and the tax you have paid to your vendors, GSTR 2 ensures that you only pay tax on the value you add to your product or service. While the compliance landscape has shifted toward automated matching, understanding the mechanics of GSTR 2 remains essential for any business looking to manage its tax outflows effectively and stay on the right side of the law.

What is GSTR 2?

GSTR 2 is the monthly tax return where a registered taxpayer provides details of the goods or services they have purchased from various suppliers. It is the counterpart to GSTR 1 (which handles sales).

The magic of GSTR 2 lies in its ability to facilitate Input Tax Credit (ITC). If you buy raw materials for ₹1,000 and pay ₹180 in GST, that ₹180 is recorded in GSTR 2. Later, when you sell your finished product, you can subtract that ₹180 from the tax you owe the government.

Current Status of GSTR 2 (2025-26 Context)

It is important to note that the GST Council has simplified the filing process over the years. In the current 2025-26 period:

• Suspended Status: The manual filing of GSTR 2 is currently suspended to reduce the compliance burden.
• Auto-Population: Most details that were supposed to be in GSTR 2 are now automatically captured in GSTR 2B and GSTR 2A.
• Rule 36(4): You can only claim ITC if the supplier has uploaded the invoice in their GSTR 1, which then reflects in your auto-generated statements.

Key Components of GSTR 2

If you were to look at the structure of GSTR 2, it contains several tables that categorize your purchases.

Table Number

Content Type

Why it Matters

Table 3

Inward supplies from Registered Persons

This is where your regular business purchases show up.

Table 4

Inward supplies attracting Reverse Charge

Tax you must pay directly to the government (e.g., for legal services).

Table 5

Inputs or Capital Goods received from overseas

Records your imports and Customs Duty paid.

Table 6

Amendments to earlier months

To fix mistakes made in previous purchase entries.

Table 10

Credit or Debit Notes

Adjustments for returned goods or price changes.

Table 13

HSN Summary

A code-wise summary of all goods purchased.

How to File GSTR 2 (The Logical Workflow)

Even though the process is largely automated via GSTR 2B today, the workflow for reconciling your inward supplies follows these steps:

Step 1: View GSTR 2A/2B

Log in to the GST Portal and navigate to the Returns Dashboard. Your GSTR 2A is a live view of what your suppliers are filing, while GSTR 2B is a static actionable statement generated every month.

Step 2: Reconciliation

Compare your internal purchase register (your accounting books) with the data shown on the portal.

• Matched: Invoice is in your books and on the portal. You are safe to claim ITC.
• Missing in Portal: You have the invoice, but the supplier hasn't filed it. You must follow up with them.
• Missing in Books: There is an invoice on the portal you don't recognize. You must investigate for potential fraud or errors.

Step 3: Taking Action

In the original GSTR 2 framework, you could:

1. Accept: Confirm the invoice is correct.
2. Reject: If you never made that purchase.
3. Modify: If the amount or GST rate is wrong.
4. Keep Pending: If the goods haven't reached you yet.

Step 4: Final Submission

Once the reconciliation is done, the data flows into GSTR 3B, which is the final return where you actually pay your tax.

The Importance of Matching

Matching is the heartbeat of GST. If your GSTR 2 data (purchases) does not match your supplier's GSTR 1 (sales), the system triggers a red flag.

Why matching is critical in 2025:

• ITC Blockage: Under current rules, you cannot claim a single rupee of tax credit unless it appears in your GSTR 2B.
• Cash Flow: If you pay your supplier but they don't file their returns, you lose the ITC and have to pay that tax again out of your pocket.
• Compliance Rating: Frequent mismatches can lower your business's GST compliance rating, making other businesses hesitant to deal with you.

Common Errors and How to Avoid Them

1. Wrong GSTIN: Ensuring your supplier has your correct GST number is vital. Even a one-digit error means the ITC goes to someone else.
2. Date Mismatch: An invoice dated March 31st might be recorded by the supplier in April. This affects which month you can claim the credit.
3. Place of Supply (POS) Errors: If the POS is wrong, you might be claiming CGST/SGST instead of IGST, which leads to legal notices.

Penalties and Late Fees

While GSTR 2 filing is currently handled via the auto-population in GSTR 3B, the penalties for general late filing of returns remain:

• Late Fee: Generally ₹50 per day (₹25 for CGST and ₹25 for SGST). For Nil returns, it is usually ₹20 per day.
• Interest: If tax is unpaid due to delayed filing or wrong ITC claims, interest at 18% per annum is charged on the net tax liability.
• Maximum Limit: The late fee is capped at a maximum of ₹5,000 per return in most cases.

Conclusion

GSTR 2 is much more than just a list of bills; it is the document that proves your right to claim tax credits. In the 2025-26 era, while you might not file a separate form called GSTR 2 manually every month, the activity of reconciling your inward supplies remains the most important task for a tax-efficient business. By keeping your purchase register clean and performing monthly reconciliations with GSTR 2B, you ensure that your cash flow remains healthy and your business remains compliant with the law.