Most accounting software sold in India is a general ledger with a GST module bolted on. That works until the first quarter-end, when you discover the system can produce a GSTR-1 but cannot reconcile it against GSTR-2B, and someone ends up doing it in Excel anyway.
Here is what to actually check.
Returns are not one feature, they are four
A vendor saying "GST compliant" usually means the software can export a GSTR-1. That is the easy part. Ask about all four:
| Return | What it is | Where software falls short |
|---|---|---|
| GSTR-1 | Outward supplies | Amendments to prior periods. Ask to see a B2B invoice amended two quarters back. |
| GSTR-3B | Summary and payment | Auto-population from your own books rather than manual re-entry. |
| GSTR-2B | Auto-drafted ITC statement | Reconciliation. The one that matters, and the one most systems skip. |
| Annual | Yearly reconciliation | Whether it can reproduce a year you have already closed. |
GSTR-2B reconciliation is where the money is. Input tax credit you cannot match against a supplier's filing is credit you cannot claim. If the software cannot show you "invoices in my books not in 2B" and "invoices in 2B not in my books" as two lists, your team will do that comparison by hand every month, permanently.
E-invoicing: check the threshold, then check the clock
E-invoicing means generating an invoice reference number from the government portal before issuing the invoice, not after. The turnover threshold has been lowered several times since 2020, so check the current limit against your aggregate annual turnover rather than trusting a brochure — what was out of scope two years ago may not be now.
Two questions worth asking:
- What happens when the portal is unreachable? A system that blocks invoicing entirely will stop your billing counter. Ask what the offline path looks like.
- How long between invoice date and IRN generation? Reporting windows apply to larger taxpayers, and software that lets staff generate an IRN a week late is setting up a rejection.
The details that cause disputes
Place of supply. CGST and SGST for intra-state, IGST for inter-state. It sounds trivial and is not — for services delivered remotely, for goods shipped to a state other than the billing address, and for anything involving a branch. Demo it with your own messiest scenario, not the vendor's clean one.
HSN and SAC digits. The number of digits you must report scales with turnover. Software storing a four-digit code cannot later produce six without someone re-coding the item master.
Reverse charge. Purchases from unregistered suppliers, certain notified services, imports. The liability sits with you and has to post correctly without a manual journal entry.
E-way bills. Required above the consignment value threshold, with validity tied to distance. If accounting and dispatch do not talk to each other, the bill gets raised late — and the penalty attaches to the consignment, not the paperwork.
ITC reversal. Credit claimed on invoices you have not paid within the stipulated period must be reversed. A system that cannot age unpaid purchase invoices against claimed ITC leaves you to find that manually.
Localisation is more than tax
- Financial year. April to March. A hardcoded January start causes pain at every reporting boundary.
- Number formatting. Lakhs and crores. It reads wrong to every Indian reviewer otherwise.
- TDS and TCS. Separate from GST, interacting with purchase and sales flows respectively. Ask which sections are supported out of the box.
- Multi-state registration. One entity, several GSTINs, separate returns each. Software modelling one GSTIN per company means a second state becomes a second instance and a consolidation problem.
Five questions for any vendor
- Show me a GSTR-2B reconciliation on real data, with mismatches.
- Amend a B2B invoice from two quarters ago and show me the GSTR-1 effect.
- Show me a reverse-charge purchase posting without a manual journal entry.
- What happens to invoicing when the IRP is unreachable?
- We have GSTINs in two states — show me both returns from one set of books.
If a vendor cannot demonstrate all five on your data, budget for the Excel work you will still be doing.
GST rates, turnover thresholds and reporting windows change. Verify the current position on the GST portal or with your tax advisor before making a decision based on this.
About the author. Kislay Chandan has worked with schools since 2014. Rather than gathering requirements from the outside, he worked inside a school to see what actually goes wrong day to day, and built what he found into the software. He still works with Shemrock Glitters in Patna — most changes to the product start with something that came up there.
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