In December 2022, the Indian government introduced a new rule known as Rule 88C to the Central Goods and Services Tax (CGST) Rules, 2017. This rule enables automated notifications to be sent to taxpayers when there are discrepancies between the GSTR-1/IFF and GSTR-3B tax declarations. If your tax liability in your GSTR-1 or IFF exceeds the amount you paid in your GSTR-3B by a certain limit, you will receive an intimation in Part A of Form GST DRC-01B. It's crucial to understand and respond to this notification to avoid disruptions in your GST filings. In this blog, we'll explain Form DRC-01B and provide a step-by-step guide to help you respond effectively.
Form DRC-01B is a tool introduced by the government to notify taxpayers of discrepancies in their tax liability declarations between GSTR-1/IFF and GSTR-3B. When the tax liability you declared in your GSTR-1 or IFF exceeds the amount you paid in your GSTR-3B by a specific amount or percentage, you will receive an intimation in Part A of Form GST DRC-01B. You'll have two options: either pay the additional tax liability along with interest under Section 50 using Form GST DRC-03 or explain the differences in your tax payment within seven days. Regardless of the action you take, you must respond to the intimation using Part B of Form GST DRC-01B.
Failure to respond to Form DRC-01B intimation may lead to the blocking of your GSTR-1/IFF filing for subsequent tax periods. This block will remain until you either pay the specified amounts or provide a valid explanation for non-payment.
To reply to the intimation in Form DRC-01B, follow the steps detailed below-
Step 1: Log in to the GST portal with your user credentials.
Step 2: Navigate to ‘Services’ > ‘Returns’ > ‘Return Compliance’. Alternatively, you may click on the ‘Return Compliance’ link available on the dashboard.
Step 3: Once the ‘Return Compliance’ page is displayed, click on the ‘View’ button under the ‘Liability Mismatch (DRC-01B)’ tile.
The records for which action is pending will be displayed.
Step 4: Click on the hyperlinked reference number on the ‘Liability Mismatch (DRC-01B)’ page
Note: If you have multiple reference numbers displayed, you can click on any one option between ‘Reference number’, ‘Return period’ or ‘Status’ to search for the intimation under DRC-01B that has been issued to you.
Reference number: If you click on the ‘Reference number’ option, enter the ARN and click on the ‘Search’ button to retrieve the records (both completed and pending). Click on the relevant record you wish to respond to.
Return period: If you click on the ‘Return period’ option, select the financial year for which you need to file DRC-01B and the return period from the drop-down list. The return period options will be enabled only once the financial year is selected. Click on the ‘Search’ button to get all the completed and pending records. If the status for a record is pending, you can file Form DRC-01B.
Status: If you click on the ‘Status’ option, select the status ‘Pending’ or ‘Completed’ from the drop-down list and click on the ‘Search’ button. You can file Form DRC-01B only for pending records.
The ‘Liability Mismatch (DRC-01B)’ page will contain two parts, Part A and Part B of the form.
Part A: ‘Intimation of Difference in Liability Reported in Statement of Outward Supplies and that Reported in Return’.
Part B: ‘Reply by Taxpayer in Respect of the Intimation of Difference in Liability’.
Note: You can download Part A of Form DRC-01B by clicking on the ‘Download DRC-01B Part A’ button.
The system-generated PDF will be downloaded.
Step 5: There are two sub-parts under Part B. In sub-part 1, provide the ARN of the payment made via Form DRC-03 for the period for which Form DRC-01B was issued to you. Once entered, click on ‘Validate’.
The summary of the payment details that have been paid towards the difference amount through the DRC-03 will be displayed.
Note 1: If you have entered the incorrect ARN, an error message will be displayed.
Double-check the following points:
1. Ensure that the ARN is valid and corresponds to the same DRC-03 and GSTIN.
2. Confirm whether the cause of payment specified in the DRC-03 is ‘Liability mismatch - GSTR-1 to GSTR-3B’.
3. The DRC-03 should have been filed on or after the date that Part A of the DRC-01B was issued.
4. The overall tax period should align with the period for which Part A of the DRC-01B was issued.
5. For monthly filers, the period, including both the ‘From’ and ‘To’ dates, should be the same.
6. For quarterly filers, it should cover at least one month within the quarter.
Note 2: You will be able to file Part B of the DRC-01B by making payment providing the ARN in sub-part 1 or providing a response in sub-part 2 or in both or doing a combination of both. However, it is not mandatory to enter the ARN of the DRC-03 to file the form.
Step 6: If you haven’t yet made the payment and wish to do the same, you can click on the ‘Click Here for DRC-03’ button.
Step 7: In sub-part 2, you can select the reason for the difference in liability reported by clicking on the relevant checkbox and providing further explanations in the text box. If your reason is not specified, select the ‘Any other reasons’ checkbox and explain the reason in the space provided. You can use up to 500 characters to explain your reason.
Note: If you have selected the reason for the difference in liability but have not explained the reason in the space provided, an error message will pop up.
Step 8: Once the relevant details have been entered, click on the ‘Save’ button.
A success message will be displayed at the top of the screen upon successfully saving the details.
Note: To go back to the previous page at any time, click on the ‘Back’ button.
Step 9: Preview the DRC-01B before filing.
It is important that you download and verify the details of your response before submitting the same. To download the draft order, click on the ‘Download DRC-01B’ button.
A system-generated draft order will be downloaded into your system. Check the same carefully to rule out any discrepancies.
Step 10: Select the declaration checkbox at the bottom of the page. Select the name of the authorized signatory from the drop-down list and enter the place.
Note: The checkbox for selecting the declaration will be enabled only after saving the details in either sub-parts one and/or two of Part B of DRC-01B.
Step 11: Proceed to click on the ‘File GST DRC-01B’ button.
The ‘File GST DRC-01B’ button will be enabled only once the name of the authorized signatory is selected and the place has been entered. The designation/status and date will be auto-populated.
Step 12: A warning message will pop up. Click on the ‘Proceed’ button.
Step 13: You can now proceed to file with EVC or DSC by clicking on either the ‘File DRC-01B with EVC’ or ‘File DRC-01B with DSC’ buttons.
Enter the OTP sent on the email ID and mobile number of the primary authorized signatory registered on the GST portal, and click on the ‘Verify’ button.
A Success message will pop up. Click on the ‘OK’ button to complete the process.
Step 14: You can check the status of Form DRC-01B from the ‘Status’ option mentioned in Step 4.
Click on the reference number hyperlink.
The completed form will be displayed.
You can download the final PDF by clicking on the ‘Download DRC-01B’ button.
You need to file Form DRC-01B when you receive an intimation for differences between your GSTR-1/IFF and GSTR-3B liability declarations beyond a specified threshold.
Form DRC-01B applies to various taxpayers, including regular taxpayers, SEZ units and developers, casual taxpayers, and composition taxpayers.
The generation of Form DRC-01B can be either monthly or quarterly, depending on your GSTR-3B filing frequency. Your response in Part B of Form DRC-01B should align with when DRC-01B was generated.
No, if you have received an intimation in Part A of Form DRC-01B and failed to respond in Part B, you won't be able to file your GSTR-1/IFF for the subsequent period. Timely response is essential to avoid disruptions in filing.
Once you receive an intimation in Form DRC-01B - Part A, a reference number will be assigned, and you will also receive email and SMS notifications. You can check this information on the GST portal as well.
After responding in Part B of Form DRC-01B, you can immediately file your GSTR-1/IFF. If you encounter issues, try logging out and logging in after a few minutes to resolve them.
Ensure that the ARN is valid and matches the DRC-03 and GSTIN. Check that the cause of payment in DRC-03 is 'Liability mismatch - GSTR1 to GSTR-3B.' The filing date of DRC-03 should align with the date of Part A of DRC-01B, and the tax period should match.
If you want to deselect a reason after providing details, you must first delete the details entered for that reason before deselecting it.
Understanding Form DRC-01B is vital for all GST taxpayers to ensure seamless compliance with tax regulations. Responding to intimations and discrepancies promptly will prevent any disruptions in your GSTR-1/IFF filing. If you receive an intimation, be sure to take the necessary steps outlined in this blog to maintain a smooth and hassle-free tax filing process.