Question 1

How does invoice matching work in GST-compliant procurement?

Accepted Answer

GST-compliant invoice matching adds a fourth check on top of the standard quantity and price match: the GST split on the vendor invoice (CGST + SGST or IGST) must equal the GST computed on the PO at the same rate, and the vendor's GSTIN on the invoice must match the GSTIN frozen on the PO when the order was placed. If the rate has changed between PO date and invoice date, or the vendor has switched GSTIN (e.g. moved from one state's registration to another), the system flags the invoice for review before any input tax credit is claimed. This prevents both ITC reversals at the GSTR-2B reconciliation stage and incorrect ledger postings to Tally.

Question 2

What is the tolerance for auto-acceptance in invoice matching?

Accepted Answer

Tolerance is configured per organisation, typically as a percentage band (e.g. ±1% on price) plus an absolute floor (e.g. ±₹100). An invoice that falls within both the percentage and the absolute band is auto-accepted and moved to the payment queue. An invoice that breaches either threshold is flagged as a mismatch and routed through the approval chain — small breaches usually get a single approver, large breaches get the full chain. Tolerance is intentionally not zero: rounding differences, freight allocations, and minor GST recalculations would otherwise generate noise on every invoice.

Question 3

What happens when an invoice fails 3-way matching?

Accepted Answer

A failed match doesn't block the invoice — it routes it. The invoice goes to a mismatch queue with the variance type pre-classified: quantity short, quantity excess, price up, price down, GST mismatch, or GSTIN mismatch. The approver sees the PO, GRN, and invoice side by side and decides one of three outcomes: accept the variance and pay the full invoice (with audit reason), partially accept and raise a vendor debit note for the difference, or reject and return the invoice. Each decision is logged with timestamp, approver, and reason — so an auditor can later see why each variance was paid.

Question 4

Can invoice matching detect GSTIN mismatches between PO and invoice?

Accepted Answer

Yes. When the PO is placed, the vendor's active GSTIN for the billing address is frozen onto the PO header. When the invoice is later received, the GSTIN on the invoice is compared against the frozen GSTIN — not the vendor's current GSTIN, which may have changed in the meantime. A mismatch flags the invoice immediately, before any ITC is claimed. This catches three real scenarios: the vendor sent the invoice from a different state's GSTIN than the PO was placed against, the vendor's GSTIN was suspended between PO and invoice (which would block ITC entirely), and clerical errors where the AP team has the wrong GSTIN on file.

VDN Type	Trigger	Notes
REJECTION	Goods rejected at receipt or gate entry	—
UNDER_RECEIVED	Quantity shortfall against invoice	—
DAMAGE	Goods received in damaged condition	—
PRICE_EXCESS	Invoice rate exceeds agreed PO rate	—
SHORT_LANDED	Import shipment short-landed at port	Captures `debit_foreign_amount`, `fx_rate_at_grn`, `debit_duty_amount` so the recovery is denominated in the vendor's billing currency

Invoice Matching & Mismatch Resolution

The Challenge

How We Address This

Three-Way Matching

Configurable Tolerance

Two-Tier Resolution

Posting Block

PO Flag Propagation

HSN/SAC Validation

Per-line GST ITC posture survives mismatch resolution

Optional — Enable When You Need It

Vendor Debit Notes

Compliance Mapping

Companies Act 2013

CARO 2020

GST Act

Internal Controls

Further Reading

Assess How This Applies to Your Organisation