First identify what arrived. A DRC-01B is an automated GST Portal intimation about a liability mismatch between GSTR-1 and GSTR-3B. A DRC-01C is an automated intimation about an input-tax-credit (ITC) mismatch between GSTR-3B/3BQ and GSTR-2B/2BQ. A DRC-01 can instead be the summary served with a separate notice issued by a tax officer. The response, deadline and legal defence are different for each.
Save the complete communication, reconcile the exact tax period to the underlying returns and invoices, and then use the relevant Part B response to explain the difference, report a correctly linked DRC-03 payment, or do both. Do not pay merely because a portal comparison shows a variance, and do not assume that a DRC-01B or DRC-01C is the same as a formal show-cause or demand notice.
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Start by identifying the GST communication
The form number and wording determine the first steps. Check the downloaded PDF, portal message, reference number and attachments before preparing any reply.
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GSTN describes DRC-01B as an intimation for a mismatch between outward-supply liability reported in GSTR-1 and liability reported or paid in GSTR-3B. The portal assigns a reference number. Open it at Services > Returns > Return Compliance > Liability Mismatch DRC-01B. The response is filed in Part B of that intimation.
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DRC-01C: ITC mismatch
DRC-01C concerns claimed ITC rather than outward tax. GSTN’s functionality description compares ITC claimed in GSTR-3B or GSTR-3BQ with ITC available in GSTR-2B or GSTR-2BQ. The portal route is Services > Returns > Return Compliance > ITC Mismatch DRC-01C, and the response is also in Part B.
DRC-01 accompanying a formal notice
GSTN says DRC-01 may be a summary served with a notice issued by a tax officer under specified provisions or rules. It is not interchangeable with the automated DRC-01B or DRC-01C intimations. Read the notice itself: it should identify the cited provision, tax period, factual allegation, calculation and response date. The portal comparison alone cannot determine the merits of a formal demand.
| Communication | What is compared or alleged | Where to respond | What it does not establish by itself |
|---|---|---|---|
| DRC-01B | GSTR-1 outward liability versus GSTR-3B liability | Services > Returns > Return Compliance > Liability Mismatch DRC-01B, Part B | That the displayed difference is legally payable |
| DRC-01C | GSTR-3B/3BQ ITC claimed versus GSTR-2B/2BQ ITC available | Services > Returns > Return Compliance > ITC Mismatch DRC-01C, Part B | That every variance is an ineligible claim or an error by the department |
| DRC-01 with a notice | The officer’s stated allegation, calculation and legal provision | Follow the notice and the applicable statutory procedure | That the automated mismatch FAQ supplies the deadline or defence |
Preserve the notice and build a case file
Before changing a return or making a payment, download the communication and every attachment. Keep an unedited copy and record:
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- form number (DRC-01B, DRC-01C or DRC-01), portal reference or ARN;
- tax period and whether the business files monthly or quarterly;
- date the communication was served or became visible;
- the difference shown, tax heads involved and any interest or penalty stated;
- the cited provision, if the document is a formal notice;
- the response route and the deadline printed in the document.
Do not infer a deadline from the form name. The reviewed GSTN portal FAQs explain how the Part B mechanics work but do not establish one universal deadline for every formal notice, tax period or legal provision. The actual document, service date and governing law control.
Reconcile the exact period before choosing a response
A portal comparison is a starting point, not a conclusion. Export the relevant return data and create a period-specific reconciliation. Keep separate columns for invoice number, invoice date, customer or supplier GSTIN, taxable value, tax head, amendment or credit-note status, return in which it was reported, and the source document supporting the entry.
For a DRC-01B liability mismatch
- Download the GSTR-1 details and the filed GSTR-3B for the same period. Include amendments, credit notes, debit notes, advances and any corrections that affect the period.
- Match outward invoices and notes by document number and tax head. Check for an invoice reported in GSTR-1 but omitted from GSTR-3B, or a GSTR-3B amount that was paid under the wrong head.
- Investigate period assignment. An invoice or amendment may have appeared in a later return, while the comparison is tied to the original period.
- Check totals after removing cancelled documents and confirming that amendments have not been counted twice.
- Trace any remaining difference to a ledger, challan and return computation. Write down whether it is a timing difference, a reporting error, a payment-head issue or an amount that is genuinely unpaid.
Common explanations include an omitted outward invoice, an amendment filed in a later period, a credit note treated differently in the two returns, a tax-head classification error, or a mismatch between reported liability and payment. The records must show which explanation applies.
For a DRC-01C ITC mismatch
- Download the GSTR-2B statement for the relevant period and the filed GSTR-3B or GSTR-3BQ in which the credit was claimed.
- Match each claimed invoice to the supplier’s document in GSTR-2B. Check invoice number, date, supplier GSTIN, taxable value and each tax component.
- Separate credits that appeared in a different period from credits that never appeared in GSTR-2B. Review supplier amendments, credit notes and reversals.
- Check your purchase register, tax invoice, receipt of goods or services, accounting entry and reversal records. A difference may be caused by timing, a supplier reporting omission, a duplicate claim or a credit that does not meet the applicable conditions.
- Recalculate the amount actually claimed in the relevant return. Do not treat the entire portal difference as an automatic payment figure until the invoice-level review is complete.
GSTR-2B is an important reconciliation statement, but an unexplained difference still requires an invoice and return review. Conversely, an invoice present in your books is not by itself proof that the amount belongs in the period or is otherwise eligible.
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Check whether GSTR-1A can correct an outward-supply error
GSTN describes GSTR-1A as an optional facility to amend an incorrect record or add an omitted record for the same tax period. It becomes available after GSTR-1 is filed or its due date has passed, whichever is later, and before GSTR-3B for that period is filed. Changes flow into that period’s GSTR-3B.
For a recipient, ITC arising from an addition or amendment through GSTR-1A appears in the next tax period’s GSTR-2B. This timing matters when explaining why a supplier correction is not yet visible in the statement being reconciled.
GSTR-1A is not a general way to cancel an issued intimation, reopen a closed period or replace a response to a formal notice. If the portal window is unavailable, use the records and response route applicable to the communication you received.
Choose the supported Part B response
The official DRC-01B and DRC-01C materials provide response choices that generally allow an explanation, details of a DRC-03 payment, or a combination. Select the option that matches your reconciliation rather than choosing payment as a default.
Use an explanation when the difference is not an unpaid liability
An explanation should identify the period, the affected return fields, the document-level cause and the evidence attached or retained. For example, describe an amendment reported in a later period, a credit note that reduced liability, or an invoice that was included in GSTR-3B but placed under a different tax head. State the amount attributable to each cause and explain how the returns and ledger prove it.
Use a DRC-03 payment when additional tax is established
If the reconciliation shows that tax remains payable, make the payment through the prescribed DRC-03 process and enter its details in Part B. Keep the challan, electronic cash-ledger entry, filed DRC-03 and response acknowledgement together. A payment reference does not, by itself, prove that the underlying amount was legally due; it records the transaction. The notice and records still determine the substantive position.
Use both when part is payable and part needs explanation
Break the difference into a paid portion and a disputed or timing portion. Link the paid portion to the DRC-03 and explain the balance with invoice, return and ledger support. Avoid a single unexplained narrative covering several causes.
Validate a DRC-03 ARN before submitting
Portal FAQs identify specific checks when a DRC-03 ARN is rejected. Confirm all of the following before entering it:
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- The ARN is valid and belongs to the same GSTIN as the intimation.
- The DRC-03 date and stated cause correspond to the mismatch communication.
- The tax period on the DRC-03 aligns with the period expected by the intimation.
- For a monthly filer, the period dates match the relevant month.
- For a quarterly filer, the period satisfies the quarter-alignment rule described in the applicable FAQ.
If the ARN is valid but rejected, compare the exact dates, GSTIN, cause and period character by character with the intimation. A payment made under another GSTIN, another cause or another period may not link even when the amount is correct.
File the response and retain proof
- Open the relevant DRC-01B or DRC-01C item through the Return Compliance menu.
- Review the displayed difference and select the Part B response option supported by your reconciliation.
- Enter the explanation in clear, period-specific language. Add the DRC-03 ARN only after validating it.
- Complete the portal submission and any authentication or verification requested by the portal.
- Download the filed Part B response, acknowledgement, reference number and payment records. Save them with the source returns and reconciliation workbook.
GSTN states that filing DRC-01C Part B is required and warns that failure to file it prevents filing subsequent GSTR-1 or IFF. That stated consequence applies to the DRC-01C workflow described by GSTN; do not extend it automatically to every formal notice or every mismatch type.
Understand payment and the electronic cash ledger
GST Portal payment guidance states that a successful internet-banking payment is credited to the electronic cash ledger and associated with the GSTIN. Retain the payment challan and ledger entry with the DRC-03 and the filed response.
Check that the payment was successful rather than merely initiated, that the amount reached the correct GSTIN, and that the tax, interest or other head selected matches the liability you are addressing. A cash-ledger credit is evidence of payment processing; it is not a legal determination that the mismatch calculation was correct.
Handling a formal show-cause or demand notice
If the document is a tax-officer notice accompanied by a DRC-01 summary, switch from the automated mismatch workflow to the procedure stated in the notice. Read the cited section or rule, allegation, calculation, tax period, proposed interest or penalty and response method. Build a written reply that answers each allegation separately and attaches the relevant returns, invoices, ledgers, reconciliations and payment evidence.
Do not rely on a DRC-01B or DRC-01C FAQ to determine whether the officer’s legal interpretation is correct. A formal notice may involve questions that the automated comparison does not test, including classification, place of supply, exemption, valuation, limitation or the statutory conditions for ITC. The notice’s response date and applicable law govern.
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Deadlines and when professional help is warranted
No universal response deadline can safely be published for every GST mismatch or short-payment communication. The applicable period depends on the document, date of service, cited provision, tax period and governing law. Check the printed date immediately. If it is missing, unclear, close, or already disputed, obtain case-specific advice promptly rather than waiting for a portal reminder.
A qualified GST practitioner or tax professional is particularly appropriate when:
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- the communication is a formal show-cause or demand notice;
- the amount is material to the business;
- the difference involves a contested legal interpretation rather than a clerical error;
- the invoice-level reconciliation cannot explain the variance;
- the portal rejects a payment reference after the identity and period checks; or
- a response deadline may have expired or is ambiguous.
Professional assistance should be based on the actual notice and records. No adviser can guarantee that a portal explanation, payment or correction will close the matter.
Common failure modes and practical fixes
Paying the displayed difference without reconciling
Why it fails: a timing, amendment or tax-head issue can make the displayed variance different from the legally payable amount.
Fix: complete the invoice- and return-level reconciliation first. Pay only the amount established by the records, then link the correct DRC-03 if payment is required.
Using the wrong form route
Why it fails: DRC-01B, DRC-01C and a DRC-01 summary accompanying a formal notice are different processes.
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Entering an unrelated DRC-03 ARN
Why it fails: the ARN may belong to another GSTIN, cause, date or period.
Fix: verify the ARN against every identity and period check listed in the applicable FAQ.
Assuming GSTR-1A can repair any old period
Why it fails: GSTR-1A has a same-period window that ends before filing that period’s GSTR-3B.
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Fix: check whether the window is actually open. For a closed period, address the mismatch through the applicable response and correction mechanism instead.
Ignoring a DRC-01C Part B filing
Why it fails: GSTN warns that subsequent GSTR-1 or IFF filing can be blocked when the required Part B is not filed.
Fix: submit the supported explanation, payment details or combination and preserve the acknowledgement.
Quick Recap
A decision checklist before you submit
- Have you identified DRC-01B, DRC-01C or a formal DRC-01 notice?
- Does your reconciliation use the exact tax period and the correct monthly or quarterly basis?
- For liability, have you matched GSTR-1, GSTR-3B, amendments, notes and tax heads?
- For ITC, have you matched GSTR-3B/3BQ, GSTR-2B/2BQ and the underlying invoices and reversals?
- Is GSTR-1A genuinely available for the same period and before that period’s GSTR-3B?
- Does the response clearly separate amounts paid, explained and still disputed?
- If you cite DRC-03, does the ARN match the GSTIN, cause, date and period?
- Have you checked the actual response date in the communication?
- Have you downloaded the submitted response, acknowledgement, challan and ledger record?
- Would a qualified professional need to review a formal, high-value or legally disputed matter?
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