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GST DRC-01B Notice: GSTR-1 vs GSTR-3B Liability Mismatch

Last reviewed: April 2026 · Sourced from official government portals

01

What Is Drc-01b And Why Does It Exist

From 2022-23 onwards, the GST system automatically compares your GSTR-1 (invoice-level outward supply details) with your GSTR-3B (self-assessed tax payment summary) for every month. If the taxable value or tax liability in GSTR-3B is less than what you declared in GSTR-1, the system automatically generates a DRC-01B intimation.

This is a system-generated notice. No human officer has specifically reviewed your case. But it still demands a response and carries real consequences if ignored.

Source: Rule 88C, CGST Rules 2017, inserted by Notification 26/2022-CT dated 26.12.2022.

02

The Most Common Reasons For A Drc-01b

The mismatch is almost always one of these:

  • •Tax paid through DRC-03: You realised you had underpaid tax in a prior period and made a voluntary payment through DRC-03 (voluntary tax payment challan) but the GSTR-3B still reflects the original lower figure. This is legitimate but needs to be declared in DRC-01B Part B.
  • •Timing difference: You raised invoices in GSTR-1 for advance received but the actual tax was paid in the next month's GSTR-3B. Common in construction and real estate.
  • •Credit notes issued: You issued credit notes in a later period that reduced your actual liability from what GSTR-1 showed for the current period. This is not always reflected correctly in the system comparison.
  • •Amendment in GSTR-1: You amended invoices in a subsequent month but the original period's comparison is being flagged.
  • •Genuine underpayment: You made a mistake in GSTR-3B and actually did pay less tax than you were supposed to. In this case, you should pay the shortfall.
  • •Nil-rated, exempted, or non-GST supplies declared in GSTR-1 but not in GSTR-3B: These categories can create apparent mismatches that are not actual tax dues.
03

The Two-part Response Structure

DRC-01B has two parts and your response determines which path you go down.

  • •DRC-01B Part A: This is the intimation the system sends you. It shows the specific period, the GSTR-1 declared liability, the GSTR-3B declared liability, and the difference.
  • •DRC-01B Part B: This is where you reply. You must file Part B within 7 days of the Part A intimation.
  • •In Part B, you select one of two responses: (a) "The difference is due to the following reasons" - you explain and provide details, or (b) "I am making payment of the difference" - you pay the shortfall.
  • •If you select the explanation route, you must provide specific reasons. Vague reasons like "due to accounting treatment" are not sufficient - you need the specific transaction details.
04

How To Prevent Drc-01b Notices In Future

DRC-01B is a system check that runs automatically every month. Preventing it is straightforward if you reconcile before filing GSTR-3B.

Before filing GSTR-3B each month: verify that the taxable value and tax in your GSTR-3B matches what you declared in GSTR-1 for the same period. If there is a difference due to DRC-03 payment, credit notes, or timing, note it now rather than waiting for the system to flag it.

If you made a voluntary payment through DRC-03 for a prior period, always declare it in the next GSTR-3B filing so the portal can match it correctly.

05

What Happens After Your Part B Response

The outcome depends on whether the officer accepts your explanation.

  • •If your explanation is accepted: The matter closes here. No further action.
  • •If your explanation is not accepted or you do not respond: The system/officer can initiate proceedings under Section 73 or 74 and issue a DRC-01. At that stage, the mismatch becomes a formal demand with penalties.
  • •If you pay the shortfall: Part B closed with payment challan number. The matter closes for that period.
  • •If the same mismatch recurs across multiple months: The officer may decide to initiate a comprehensive scrutiny or audit rather than handling them individually.

A DRC-01B is significantly easier and cheaper to resolve than a DRC-01. The incentive to resolve it here is strong.

06

How To Prepare Your Part B Response

A proper Part B response should include:

  • •A clear statement of the reason for the mismatch with the specific transaction or period it relates to
  • •DRC-03 challan details if the difference was paid voluntarily in a different period
  • •A reconciliation table showing: GSTR-1 declared value, credit notes issued, amendments, advances adjusted, and the net taxable value matching GSTR-3B
  • •Copies of relevant invoices, credit notes, or amendment records as supporting documents
  • •If there was a genuine error, the payment of shortfall with interest under Section 50 (18% per annum from the original due date)
FAQ

Frequently Asked Questions

This is exactly the right path. In your Part B response, select the explanation option, state that the difference was paid voluntarily through DRC-03, and provide the DRC-03 challan number and date. The system will verify this and close the matter.

Yes. The amount does not determine whether the notice escalates. A non-response to DRC-01B can initiate formal DRC-01 proceedings regardless of the amount. Respond to every DRC-01B - even for small amounts.

Yes, each DRC-01B is for a specific month and must be responded to individually in its own Part B. The reasons may be the same across months - in that case, your responses will be similar - but each Part B must be filed.

How we reviewed this page

The penalty amounts, deadlines, and regulatory requirements on this page are sourced directly from official government portals. We do not use secondary sources. When regulations change, we update the page.

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