Why Yearly Reconciliation Leaves Money Behind

Ask how a company handles its airline GST credit and the most common answer is: “We do a reconciliation at year end.” It sounds sensible. The data is complete, the team has time after the audit, and the deadline is still ahead.

In our experience it is the most expensive way to do it.

Airline Credit Decays

Airline credit is made of thousands of small tickets. Each can fail for small reasons: the booking had no GSTIN, or the wrong state’s GSTIN; the airline invoice exists on its portal but never reached GSTR-2B; a cancellation produced a credit note nobody matched. None of these is hard to fix in the month. The traveller remembers the trip, the travel desk still has the booking, and the airline can amend the invoice.

Eleven months later, each fix is harder. People have moved on. Airlines are slower to respond to old requests. And the section 16(4) time limit leaves only a few weeks to act on anything found late.

A year-end reconciliation finds the problems. A monthly one fixes them.Ashish Kumar, Managing Partner

Two Ways of Doing the Same Work

A Worked Example

Consider an illustrative company spending ₹20 crore a year on domestic air travel, with about ₹1.8 crore of eligible GST credit. Suppose 8% of tickets each month carry a fixable problem. That is about ₹1.2 L of credit a month at risk.

Under a yearly clean-up, all twelve months of problems are found in September or October. The error rate stayed at 8% all year. If 40% of the ₹14.4 L at risk is recovered, ₹8.6 L is lost.

Under monthly monitoring, April’s problems are found in May, the booking process is fixed, and the error rate falls to around 2% from June. Recent requests get a better response, say 85%. The difference in this illustration is ₹7–8 L a year, before counting the cost of cash claimed late.

What to Check, and Who Acts

• Each month: airline invoices against bookings, GSTR-2B against invoices, and credit claimed in GSTR-3B against GSTR-2B.
• The travel desk fixes GSTIN capture at booking. This is where most errors start.
• Airlines correct invoices, but only on a clear, recent request.
• The tax team claims credit in the month it appears and decides on disputed items.

Common Objections

“We don’t have the people.” Monthly work is smaller than it sounds: most tickets match automatically, and the exceptions list is short. The yearly clean-up is the one that needs a team for weeks.

“The auditors are happy.” They should be. An audit checks that credit claimed was valid. It does not check what was never claimed.

Cash has a cost too. Tax paid on an April ticket and claimed the following autumn is cash the company has lent the government for over a year, at no interest.

What Monthly Looks Like

1. First weekDownload last month’s airline invoices from each portal and match them to bookings.
2. Mid-monthWhen GSTR-2B is generated, match invoices to it and act on the IMS queue.
3. Before GSTR-3BClaim what is eligible and list what is not.
4. Month endSend exceptions to the people who can fix them: the travel desk for booking errors, the airline for invoice corrections.

Start with the current year’s open months, where credit can still be claimed and airlines can still correct invoices. Run one catch-up match for April onwards, fix the booking process from what it shows, and then keep the monthly rhythm. That is how our Airline GST Reconciliation practice works, with results reported in a signed monthly statement.