GST DRC-01B Notice: How to Reply to a GSTR-1 and GSTR-3B Liability Mismatch Within 7 Days

What is a GST DRC-01B notice?

FORM GST DRC-01B is an electronic intimation about a difference between the tax liability reported in FORM GSTR-1, IFF or GSTR-1A and the liability reported in FORM GSTR-3B for the same tax period. It is issued under Rule 88C of the Central Goods and Services Tax (CGST) Rules, 2017.

Part A shows the difference detected by the GST system. The intimation is available electronically on the GST portal, and a copy is sent to the email address registered for the GSTIN.

The intimation asks you to pay the differential tax, with applicable interest, through FORM GST DRC-03 or explain the difference online in Part B of DRC-01B. If you have paid only part of the amount, you must also explain the unpaid portion.

DRC-01B is not, by itself, a final demand order. It requires you to act or explain. Compare the figures with your returns and records before deciding whether additional tax is payable.

Why can the GST system issue DRC-01B?

The system compares the outward tax liability reported for a period with the liability reported in GSTR-3B for the same period. An intimation may be issued if the difference exceeds the applicable amount and percentage thresholds.

Rule 88C describes the trigger by reference to an amount and percentage recommended by the GST Council. The system applies the relevant thresholds, so do not assume that a particular percentage or rupee amount mentioned in a general article will always determine whether you receive an intimation.

A mismatch does not necessarily mean you owe the amount shown. It does mean you need to reconcile the period and respond on time.

Who can receive a DRC-01B intimation?

A registered taxpayer may receive an intimation if the system identifies a qualifying difference between the outward liability reported in GSTR-1, IFF or GSTR-1A and the liability reported in GSTR-3B.

GST portal guidance covers different types of return filers, including regular taxpayers, SEZ units and developers, casual taxpayers, and taxpayers who have opted into or out of the composition scheme. If you use IFF under the QRMP scheme, check the period and GSTIN shown in the intimation.

The seven-day response period

Rule 88C gives you seven days from the date of the intimation to act. You must pay the differential amount with applicable interest and report the payment in Part B, explain why the difference is not payable, or do both if only part of the amount is payable.

Act promptly after seeing the intimation. Do not rely on an email reminder or assume that an open helpdesk ticket extends the response period. Save Part A and note the date shown on the portal.

What to check before replying

1. Confirm the GSTIN and tax period

Check that Part A relates to the correct GSTIN and return period. A reconciliation prepared for one GSTIN should not be used to respond to an intimation for another.

Note the difference shown under each tax head. Check whether Part A covers figures reported in GSTR-1, GSTR-1A, IFF or GSTR-3B.

2. Reconcile the figures with your books

Compare the filed returns for the same period with your sales register and payment records. Check:

• Taxable invoices, debit notes and credit notes;
• Changes to supply details in GSTR-1 or GSTR-1A;
• Taxable, exempt and nil-rated supply classifications;
• Place of supply and whether the transaction was reported under IGST or CGST and SGST/UTGST;
• GSTR-3B liability and any tax payment or adjustment for the period; and
• The electronic liability register and relevant tax-payment records.

Your reconciliation should show how the figures in Part A relate to the returns and books. Avoid replying with only a month-end ledger balance or a comparison of gross sales.

3. Identify the cause of the difference

The difference may be due to an invoice or debit note reported in GSTR-1 but omitted from GSTR-3B, a credit note or amendment reported differently, a duplicate entry, an incorrect tax head, or an error in the books or return.

A timing or accounting explanation is useful only if the transaction records support it and it explains the difference for the period in question. For example, saying an invoice was “accounted for later” does not establish that no tax was due for the period. Identify the invoice, the period in which it was reported and how it was treated in each return.

GSTR-1A can be used to add or amend details after filing GSTR-1 and before filing GSTR-3B for the same period. If an amendment relates to your mismatch, check that it appears in the filed GSTR-1A and is reflected consistently in GSTR-3B. TaxClear’s GSTR-1A guide explains the filing sequence.

If the reconciliation shows tax is payable

If the figures show that you reported less tax in GSTR-3B than was payable, calculate the differential tax and applicable interest. Use the portal utility to select the cause and tax period, then pay through FORM GST DRC-03.

Check the tax heads before paying. Allocate the amount correctly between IGST, CGST, SGST/UTGST and cess, as applicable. Save the DRC-03 ARN and payment confirmation.

Enter the payment information in Part B of DRC-01B. If you paid only part of the difference, explain the unpaid balance in Part B as well. Payment through DRC-03 does not replace the requirement to submit the response details in DRC-01B.

If you believe no additional tax is payable

You can explain the difference in Part B without making a payment if your records support that position. Make the explanation specific enough for someone reviewing the intimation to follow the figures.

For example, if an invoice was duplicated in GSTR-1, identify the invoice number and value, explain how the duplicate occurred, and provide the relevant return or amendment details. If the difference relates to a credit note, state when it was issued and reported and how it affected the liability. Do not assume that the words “credit note” or “timing difference” are enough to resolve the mismatch.

Your response should clearly state:

1. The GSTIN and tax period in the intimation;
2. The difference shown in Part A, including the tax-head details;
3. The transactions or reporting entries that caused the difference;
4. How those items were treated in GSTR-1, GSTR-1A, IFF and GSTR-3B, as applicable;
5. The amount paid through DRC-03, if any; and
6. The reason any difference remains unpaid.

Attach or retain the reconciliation and supporting records permitted by the portal. Avoid unsupported statements that the portal has made an error.

How to submit the Part B response

Portal menu labels can change, but the response is generally available through the return-compliance facility.

1. Log in to the GST portal using the GSTIN that received the intimation.
2. Open the return-compliance or liability-mismatch facility and select the DRC-01B intimation.
3. Review or download Part A and confirm the period and tax heads.
4. If you paid tax, enter the DRC-03 ARN and payment information in Part B.
5. Explain any amount that remains unpaid. If no amount is payable, explain the full difference.
6. Review the information, submit using the verification method available to you and save the acknowledgement.
7. Check the response status on the portal and retain the explanation, reconciliation and payment evidence with your GST records.

If a portal error occurs, save screenshots and transaction details, raise a helpdesk ticket promptly and keep trying to submit the response within the deadline. Do not assume that reporting a technical problem completes Part B.

What happens if you do not respond?

Under Rule 88C, the amount may be recoverable under section 79 if you do not take the required action or your explanation is not acceptable. This does not make Part A a final adjudication order, but failing to respond can have serious consequences.

There may also be a return-filing restriction. Rule 59(6)(d) restricts filing GSTR-1 or IFF for a subsequent period unless you have deposited the specified amount or furnished the required reply explaining any amount that remains unpaid. GST portal guidance advises taxpayers to submit Part B and check that the response has been recorded. This can affect the next return filing and customers waiting for invoice information.

If you cannot resolve the issue from your records within seven days, seek assistance promptly. Filing Part B does not necessarily resolve a later recovery proceeding or demand.

DRC-01B is different from DRC-01C

DRC-01B concerns a difference in outward liability reported in GSTR-1/IFF and GSTR-3B. DRC-01C concerns a different comparison between input tax credit reported in GSTR-3B and credit reflected in GSTR-2B.

An ITC reconciliation should not be your only response to a DRC-01B intimation. If you received an ITC mismatch communication, TaxClear’s GSTR-3B and GSTR-2B mismatch guide covers that separately. For a wider review of sales and return figures, see the GST reconciliation guide.

Common mistakes to avoid

• Ignoring the intimation because the difference seems small;
• Paying the amount in Part A without checking the returns and underlying transactions;
• Paying through DRC-03 but failing to provide the payment information in Part B;
• Responding without an invoice-level or tax-head reconciliation;
• Explaining the full amount when some of it remains unpaid;
• Assuming a credit note, amendment or timing difference automatically resolves the mismatch;
• Confusing an outward-liability mismatch with an ITC mismatch; and
• Failing to save the Part B acknowledgement or check whether the portal accepted the response.

Practical response checklist

Before submitting Part B, make sure you have:

• Checked the GSTIN, tax period and response deadline;
• Reconciled GSTR-1/IFF, GSTR-1A where applicable, and GSTR-3B;
• Checked invoices, amendments, credit notes, debit notes and tax-head allocations;
• Determined the amount, if any, that is payable;
• Paid applicable tax and interest through DRC-03, if required;
• Entered the DRC-03 ARN and payment information in Part B;
• Explained all unpaid differences with supporting information; and
• Saved the acknowledgement and checked the response status.

Frequently asked questions

Is DRC-01B a demand order?

No. It is an intimation under Rule 88C asking you to pay a differential liability with applicable interest or explain the difference. It is not a final demand order.

Does DRC-01B apply to every difference between GSTR-1 and GSTR-3B?

No. The system issues the intimation when the difference exceeds the applicable amount and percentage thresholds. Do not rely on an assumed universal threshold.

Can I respond without paying the amount shown?

Yes, if your records support the position that no additional amount is payable. Submit a clear explanation in Part B within seven days and keep the reconciliation and supporting evidence.

Do I need to file Part B after paying through DRC-03?

Yes. Report the DRC-03 payment information in Part B and save the response acknowledgement.

What if the mismatch is due to a credit note or amendment?

Explain how the item was issued, reported and reflected in the returns, including the relevant transaction and return details. A credit note or amendment does not, by itself, resolve the difference.