Steps that an enterprise takes to ensure vendor invoices are compliant

By Annapoorna


Updated on: Feb 16th, 2022


3 min read

social iconssocial iconssocial iconssocial icons

Availability of tax credits to the buyer is dependent on the vendor’s compliance with the payment of taxes and filing of returns. Thus, it is important to ensure that vendor invoices are tax compliant.

Here are some of the ways by which a business can ensure that their vendors are 100% compliant and report their invoices to the government on time:

  • Authenticity: The first thing to do is to check the authenticity of vendor invoices. You can check this by verifying the GSTIN of the taxpayer and also verifying the registration certificate of the vendor.
  • Use automated accounts payable processing: Manual processes account for greater inaccuracies. Start using automated techniques to process vendor invoices. This will help you identify errors in the invoices and ensure that all tax-related information is correctly mentioned in the invoice.
  • Download GSTR-2B report: The taxpayer should download the GSTR-2B report from the GST portal. It allows you to check whether the sale invoices reported by vendors align with the input tax credit intended to be claimed by you in GSTR-3B. In case of any inconsistencies, you can reach out to the vendor and resolve them.
  • Check whether GST returns are filed: One can check the GST return status of any person on the GST portal. Click on the search taxpayer tab and enter the GSTIN. Then, enter the captcha and click on search. Here, you can see the GST validity status and the GST returns filing table. It gives you the filing status of various GST returns, such as GSTR-1 and GSTR-3B, applicable to the vendor.
  • Ensure if e-invoicing applies to your vendor: One can confirm this by visiting the e-invoice portal. Go to the search tab and click on ‘GSTINs generating Invoice Registration Number’. The respective page will open, and you can download the file, which will give you a list of GSTINs generating Invoice Registration Number (IRN). You should check if e-invoicing applies to a particular vendor, then his invoices should be e-invoicing compliant. 
  • Regular follow-ups with vendors: One should follow the practice of managing regular follow-ups with your vendors regarding filing returns on time. 
  • Charge penalty: You can start charging a penalty to the vendors if they fail to upload invoices on time. If there is a delay in uploading invoices and filing in GSTR-1, you may not be able to claim ITC.  
    Also, you can add indemnity clauses in vendor contracts to protect your interest.
  • Hold vendor payments: One can also hold vendor payments to the extent of GST if they default in reporting invoices in GSTR-1.

Failure to ensure compliance may lead to fines, penalties, a halt to your production, and may also impact your working capital. Thus, ensuring regulatory compliance is essential to operate effectively and efficiently.

About the Author

I preach the words, “Learning never exhausts the mind.” An aspiring CA and a passionate content writer having 4+ years of hands-on experience in deciphering jargon in Indian GST, Income Tax, off late also into the much larger Indian finance ecosystem, I love curating content in various forms to the interest of tax professionals, and enterprises, both big and small. While not writing, you can catch me singing Shāstriya Sangeetha and tuning my violin ;). Read more


Clear offers taxation & financial solutions to individuals, businesses, organizations & chartered accountants in India. Clear serves 1.5+ Million happy customers, 20000+ CAs & tax experts & 10000+ businesses across India.

Efiling Income Tax Returns(ITR) is made easy with Clear platform. Just upload your form 16, claim your deductions and get your acknowledgment number online. You can efile income tax return on your income from salary, house property, capital gains, business & profession and income from other sources. Further you can also file TDS returns, generate Form-16, use our Tax Calculator software, claim HRA, check refund status and generate rent receipts for Income Tax Filing.

CAs, experts and businesses can get GST ready with Clear GST software & certification course. Our GST Software helps CAs, tax experts & business to manage returns & invoices in an easy manner. Our Goods & Services Tax course includes tutorial videos, guides and expert assistance to help you in mastering Goods and Services Tax. Clear can also help you in getting your business registered for Goods & Services Tax Law.

Save taxes with Clear by investing in tax saving mutual funds (ELSS) online. Our experts suggest the best funds and you can get high returns by investing directly or through SIP. Download Black by ClearTax App to file returns from your mobile phone.

Cleartax is a product by Defmacro Software Pvt. Ltd.

Company PolicyTerms of use


ISO 27001

Data Center


SSL Certified Site

128-bit encryption