What are DRC-01B and DRC-01C notices? Both are system-generated GST intimations. DRC-01B (Rule 88C) is issued when tax liability in GSTR-1 is higher than tax paid in GSTR-3B. DRC-01C (Rule 88D) is issued when input tax credit claimed in GSTR-3B is higher than ITC available in GSTR-2B. You must reply in Part B within 7 days by paying the difference through DRC-03, explaining it, or both. Until you reply, GSTR-1/IFF for the next period cannot be filed.
You log in to the GST portal and find an intimation against your GSTIN: a DRC-01B for a liability mismatch, a DRC-01C for an ITC mismatch, or both. No officer has written to you. The portal compared your returns after you filed GSTR-3B and found a gap larger than its threshold.
These notices are easy to close if you act inside the 7-day window, and awkward if you do not, because the next GSTR-1 gets blocked and your customers stop seeing your invoices in their GSTR-2B. This guide covers what triggers each notice, how to reply on the portal, what happens if you miss the deadline, and how to stop them recurring.
DRC-01B vs DRC-01C: The Core Difference
| Aspect | DRC-01B | DRC-01C |
|---|---|---|
| Rule | Rule 88C, CGST Rules | Rule 88D, CGST Rules |
| Inserted by | Notification 26/2022-Central Tax (December 26, 2022) | Notification 38/2023-Central Tax (August 4, 2023) |
| What it compares | Tax liability in GSTR-1/IFF vs tax paid in GSTR-3B | ITC claimed in GSTR-3B vs ITC available in GSTR-2B |
| Direction of gap | GSTR-1 liability higher than GSTR-3B | GSTR-3B ITC higher than GSTR-2B |
| Reply | Part B of DRC-01B | Part B of DRC-01C |
| Time to reply | 7 days | 7 days |
| If you do not reply | Next GSTR-1/IFF blocked (Rule 59(6)) | Next GSTR-1/IFF blocked (Rule 59(6)) |
In plain terms: DRC-01B is about what you sold. DRC-01C is about what you bought.
What Triggers DRC-01B?
DRC-01B is issued when the tax liability you declared in GSTR-1/IFF for a period is higher than the liability you paid in GSTR-3B for the same period, and the difference crosses the limit set on the portal. GSTN's advisories have set this as a difference above Rs 25 lakh and above 20% of the GSTR-1 liability. The limits are configurable, so check the latest GSTN advisory if your gap is close.
Common Reasons for DRC-01B
| Reason | What happened |
|---|---|
| Sale reported in GSTR-1 but tax not paid in GSTR-3B | Liability understated in GSTR-3B |
| Timing difference | Invoice in GSTR-1 of one month, tax paid in GSTR-3B of the next |
| GSTR-1 amended upwards later | Amendment increased liability after GSTR-3B was filed |
| Advance or credit note treated differently in the two returns | GSTR-1 and GSTR-3B figures do not match for the period |
Worth knowing: from the July 2025 tax period, the tax liability auto-populated into GSTR-3B from GSTR-1 cannot be edited downwards in GSTR-3B. Corrections have to be made through GSTR-1A before filing GSTR-3B. This removes many old DRC-01B cases, but timing differences and amendments can still trigger it. See our GSTR-1 vs GSTR-3B mismatch reconciliation guide.
What Triggers DRC-01C?
DRC-01C is issued when ITC claimed in GSTR-3B is higher than ITC available in GSTR-2B for the period, beyond the portal limit. GSTN's advisory set the same kind of test: a difference above Rs 25 lakh and above 20%. Again, confirm the current limit on the portal advisory.
A DRC-01C does not mean your claim is wrong. It means the portal could not match it to GSTR-2B. Your reply explains the gap or corrects it.
Common Reasons for DRC-01C
| Reason | Usually valid? | What to do |
|---|---|---|
| Supplier filed GSTR-1 late, so the invoice shows in a later GSTR-2B | Valid if the invoice is genuine and you have received the goods or services | Explain with invoice details and the period it appears in GSTR-2B |
| ITC on reverse charge supplies from unregistered persons or import of services | Valid | Explain with self-invoices and RCM tax payment details |
| IGST on imports where Bill of Entry data has not yet reached GSTR-2B | Valid | Explain with Bill of Entry numbers and dates |
| ITC of an earlier period claimed now | Valid if within the Section 16(4) time limit | Explain with the original invoices and periods |
| Invoice rejected or kept pending in IMS but still claimed | Not valid | Reverse or pay the excess through DRC-03 with interest |
| ITC claimed without a supplier invoice in GSTR-2B at all | Not valid | Reverse or pay the excess through DRC-03 with interest |
The 7-Day Deadline and What Happens If You Miss It
Rules 88C and 88D give you 7 days from the intimation to respond in Part B. The intimation is also sent to your registered email and mobile.
If you do not respond:
- GSTR-1/IFF is blocked. Under Rule 59(6), you cannot file GSTR-1 or IFF for the following period until you file Part B. Your customers will not see your invoices in their GSTR-2B, which delays their ITC and can hold up your payments.
- DRC-01B: recovery risk. Under Rule 88C, an amount that is neither paid nor explained can be recovered under Section 79, because tax declared in GSTR-1 but not paid is treated as self-assessed tax under Section 75(12). No show cause notice is needed for this recovery.
- DRC-01C: demand proceedings. Under Rule 88D, an unexplained excess ITC can lead to proceedings under Section 73 or 74, starting with a show cause notice, plus interest and penalty.
Filing Part B, even with a partial payment and explanation, lifts the GSTR-1 block. The officer can still examine your explanation later.
How to Reply to DRC-01B or DRC-01C on the GST Portal
The steps are the same for both notices.
Step 1: Log in and Open the Intimation
Log in at gst.gov.in. The intimations are under Services > Returns > Return Compliance:
| Notice | Portal option |
|---|---|
| DRC-01B | Liability mismatch: GSTR-1/IFF vs GSTR-3B |
| DRC-01C | ITC mismatch: GSTR-2B vs GSTR-3B |
Select the tax period shown in the intimation and open Part B.
Step 2: Work Out the Gap Before You Reply
Do not reply straight away. First, rebuild the difference from your books:
- For DRC-01B: invoice-wise GSTR-1 liability vs the GSTR-3B liability for the period, tax head by tax head.
- For DRC-01C: invoice-wise GSTR-2B vs your purchase register, plus RCM and import ITC that sit outside GSTR-2B.
Split the gap into amounts you can explain and amounts you actually owe.
Step 3: Choose the Reply Option in Part B
| Option in Part B | When to use it |
|---|---|
| Paid the full difference through DRC-03 | The whole gap is a genuine short payment (DRC-01B) or excess ITC (DRC-01C). Enter the DRC-03 ARN. |
| Explanation for the difference | The whole gap has a valid reason, such as timing, RCM or import ITC. Enter the explanation. |
| Partly paid and partly explained | Some of the gap is owed and the rest has a valid reason. Enter the DRC-03 ARN and explain the balance. |
Paying through DRC-03: for DRC-01B, pay the short-paid tax with interest under Section 50. For DRC-01C, pay back the excess ITC with interest under Section 50 (18% where wrongly availed ITC was utilised). Pay first, then quote the ARN in Part B. Our DRC-03 voluntary payment guide walks through the form.
Step 4: Submit With DSC or EVC
Review the figures, then submit Part B using DSC or EVC. Download the acknowledgement.
Step 5: File the Pending GSTR-1
Once Part B is filed, the GSTR-1/IFF block is lifted and you can file the pending return.
Sample Explanation for DRC-01C Part B
Keep the explanation short, specific and number-led. For example:
Reply to DRC-01C for tax period [MM/YYYY]
ITC available in GSTR-2B: Rs [amount]
ITC claimed in GSTR-3B Table 4: Rs [amount]
Difference: Rs [amount]
The difference is explained as follows:
1. Rs [amount]: invoices from [supplier GSTIN] filed late by the supplier;
they appear in GSTR-2B for [MM/YYYY]. Invoice nos: [list].
2. Rs [amount]: ITC on reverse charge supplies (import of services);
self-invoice nos: [list]; RCM tax paid in GSTR-3B for [MM/YYYY].
3. Rs [amount]: IGST on imports; Bill of Entry nos: [list], dated [dates].
Total explained: Rs [amount]. Invoices and supporting documents are
available and can be produced on request.
For a DRC-01B explanation, use the same structure: GSTR-1 liability, GSTR-3B liability, difference, then each reason with invoice numbers and the period in which the tax was actually paid.
How to Prevent DRC-01B and DRC-01C Notices
The notices are triggered by reconciliation gaps, so the fix is to reconcile before you file GSTR-3B every month.
| Check | When | What to confirm |
|---|---|---|
| GSTR-1 vs GSTR-3B liability | Before filing GSTR-3B | Liability matches, tax head by tax head; use GSTR-1A for corrections |
| GSTR-2B vs GSTR-3B ITC | Before filing GSTR-3B | ITC claimed is backed by GSTR-2B, or by RCM/import records |
| Purchase register vs GSTR-2B | Monthly | Missing supplier invoices are followed up |
| IMS actions | Before GSTR-2B is generated | Invoices are accepted, rejected or kept pending deliberately |
| RCM register | Monthly | Self-invoices raised and RCM tax paid |
| Import register | Monthly | Bill of Entry data reflected in GSTR-2B |
Use IMS deliberately. In the Invoice Management System, invoices you reject or keep pending do not go into your GSTR-2B for that month. If you then claim that ITC anyway, you create exactly the gap that DRC-01C looks for. See our IMS guide.
Follow up suppliers before the 11th. Monthly GSTR-1 is due on the 11th. Invoices your suppliers file after that land in a later GSTR-2B and create timing gaps.
Key Takeaways
- DRC-01B: GSTR-1 liability higher than GSTR-3B tax paid (Rule 88C).
- DRC-01C: GSTR-3B ITC higher than GSTR-2B ITC (Rule 88D).
- Deadline: reply in Part B within 7 days.
- Reply options: pay through DRC-03, explain, or pay part and explain the rest.
- If ignored: next GSTR-1/IFF blocked; DRC-01B amounts recoverable under Section 79; DRC-01C can lead to a Section 73/74 notice.
- Prevention: reconcile GSTR-1, GSTR-3B and GSTR-2B before every GSTR-3B filing.
How Tax Garden Helps
A mismatch notice is usually a symptom of returns filed without reconciliation. Tax Garden's GST return filing service reconciles GSTR-1, GSTR-2B and your purchase register before each GSTR-3B, which is what keeps these notices from being generated. If you already have a DRC-01B or DRC-01C open, we work out the gap, pay what is owed through DRC-03 and file the Part B explanation within the 7 days.
GST return filing starts at Rs 1,500/month, and the Retail Shops GST Package is Rs 2,100/month including TDS filings. See pricing. For notices issued by an officer rather than the system, see our DRC-01A pre-SCN reply guide.
Looking for expert help with GST mismatch notice replies? The team at Tax Garden, based in Kondapur, Hyderabad, helps Indian SMEs stay compliant. End-to-end filings, notices, and deadline tracking, all in one place.
DRC-01B and DRC-01C: Frequently Asked Questions
What is the difference between DRC-01B and DRC-01C?
DRC-01B (Rule 88C) is issued when tax liability in GSTR-1/IFF is higher than tax paid in GSTR-3B. DRC-01C (Rule 88D) is issued when ITC claimed in GSTR-3B is higher than ITC available in GSTR-2B. Both are system-generated and must be answered in Part B within 7 days.
How many days do I have to reply to DRC-01B or DRC-01C?
7 days from the date of the intimation. Reply in Part B of the same form on the GST portal.
What happens if I do not reply to DRC-01C?
You cannot file GSTR-1 or IFF for the next period until you file Part B. An unexplained excess ITC can also lead to a show cause notice under Section 73 or 74 with interest and penalty.
What happens if I do not reply to DRC-01B?
GSTR-1 or IFF for the next period is blocked until you file Part B. The unpaid amount can also be recovered under Section 79, because tax declared in GSTR-1 but not paid is treated as self-assessed tax.
What are the reply options in Part B?
Three: you have paid the full difference through DRC-03 (quote the ARN), you explain the full difference, or you have paid part of it through DRC-03 and explain the rest.
What is the threshold for DRC-01B and DRC-01C?
The limits are set on the GST portal and announced through GSTN advisories. They have been a difference above Rs 25 lakh and above 20%. Check the latest advisory, as the limits can be changed without amending the rules.
Does filing Part B unblock GSTR-1 immediately?
Yes. Once Part B is filed with payment details, an explanation, or both, you can file the pending GSTR-1 or IFF. The officer can still review your explanation later.
Can I get DRC-01B and DRC-01C for the same month?
Yes. They check different things, so one month can trigger both. Reply to each separately in its own Part B.
How do I prevent DRC-01B and DRC-01C notices?
Reconcile before every GSTR-3B filing: GSTR-1 liability against GSTR-3B, and GSTR-3B ITC against GSTR-2B. Use GSTR-1A to correct liability, act on invoices in IMS deliberately, and follow up suppliers who file late.
Based on Rules 59(6), 88C and 88D of the CGST Rules, 2017; Sections 50, 73, 74, 75(12) and 79 of the CGST Act, 2017; Notification 26/2022-Central Tax and Notification 38/2023-Central Tax; and GSTN advisories on DRC-01B, DRC-01C and GSTR-3B liability locking. Thresholds and portal menus can change; verify on gst.gov.in before acting. This article is general information, not advice for your specific notice.
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