How to Correct Mistakes in GST by DRC-03? Its Impact on GST Audit?

GST is the biggest indirect tax reform in India. It has brought uniformity in the taxation system across the country. GST is a self-assessment tax system which means that taxpayers have to self-assess their tax liability and file their returns accordingly. However, sometimes taxpayers make errors while filing their GST returns. In such cases, they can rectify their mistake by filing DRC-03. In this article, we will discuss how to correct mistakes in GST by DRC-03 and its impact on GST audit.

What is DRC-03?

DRC-03 is a form that is used to rectify mistakes made in the GST returns. Mistakes can be made while filing GST returns either due to ignorance or by mistake. DRC-03 can be filed to correct such errors. It is a voluntary disclosure form and can be filed at any time, even if the Department has not initiated any action or investigation against the taxpayer.

How to File DRC-03?

To file DRC-03, follow the below-mentioned steps:

1. Login to the GST portal using your credentials

2. Click on Services > Returns > New Return

3. Select the Financial Year and Return Filing Period for which the mistake needs to be rectified

4. Select the type of return that needs to be filed

5. In the next screen, select the section “DRC-03-Details of Tax and Interest Payable”. Fill in the details of the tax and interest payable.

6. Click on “Compute Tax” to calculate the amount of tax and interest payable

7. Select the checkbox agreeing to the declaration and submit the form.

Impact of DRC-03 on GST Audit

GST audit is the process of verifying the correctness of the GST returns filed by the taxpayer. The taxpayer must file accurate GST returns to avoid any discrepancies in the GST audit. If there are any errors in the GST returns filed by the taxpayer, they can file DRC-03 to rectify the errors.

When DRC-03 is filed, the taxpayer is required to pay the tax and interest payable on the corrected returns. This payment has to be made before filing the DRC-03 form. If the taxpayer fails to pay the tax and interest payable, the Department can initiate an action against the taxpayer.

When the GST audit is conducted, the auditor verifies the correctness of the GST returns filed by the taxpayer. If the auditor finds any discrepancies in the returns, they can initiate an investigation against the taxpayer. However, if the taxpayer has already filed DRC-03, rectifying the errors, the auditor cannot initiate any action against the taxpayer.

Conclusion

GST is a self-assessment tax system, and taxpayers have to file their returns accurately to avoid any discrepancies in the GST audit. However, sometimes errors can be made while filing GST returns. In such cases, taxpayers can rectify their mistakes by filing DRC-03. DRC-03 is a voluntary disclosure form and can be filed at any time, even if the Department has not initiated any action or investigation against the taxpayer. However, it is important to note that the taxpayer must pay the tax and interest payable before filing the DRC-03 form to avoid any action against them.