Form DRC-01B in GST: Intimation of Differences in Liability Between the GSTR-1/IFF and GSTR-3B

If the liability declared in the GSTR-1 return or the IFF exceeds the amount paid through the GSTR-3B return by a predefined limit, a taxpayer will receive an intimation in Part A of Form GST DRC-01B. It is mandatory for a taxpayer to reply to the intimation in Part B Form GST DRC-01B, failing which, their GSTR-1/IFF filing for the succeeding tax period will be blocked.

In this article, we explain Form DRC-01B and the step-by-step process to reply to the intimation in Form DRC-01B. 

What is Form DRC-01B?

In December 2022, the government inserted the new Rule 88C to the Central Goods and Services Tax (CGST) Rules, 2017. It allows automated intimations to be sent to taxpayers for mismatches between the GSTR-1/IFF and GSTR-3B. These intimations will be sent in Part A of Form GST DRC-01B when the tax liability furnished in the GSTR-1/IFF exceeds the tax paid in the GSTR-3B by such a defined amount and percentage. 

The taxpayer will have the option to pay the differential tax liability, along with interest under Section 50, by using Form GST DRC-03 or can explain the differences in the tax payable within a period of seven days. Irrespective of the action taken, taxpayers will need to reply to the intimation using Part B of Form GST DRC-01B. 

If the taxpayer fails to respond in Form GST DRC-01B, then their GSTR-1/IFF will be blocked for the subsequent tax periods. This will continue until the taxpayer either deposits the amounts specified in the intimation or replies explaining the reasons for non-payment. 

How to reply to the intimation in Form DRC-01B?

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: 

• Ensure that the ARN is valid and corresponds to the same DRC-03 and GSTIN.
• Confirm whether the cause of payment specified in the DRC-03 is ‘Liability mismatch - GSTR-1 to GSTR-3B’. 
• The DRC-03 should have been filed on or after the date that Part A of the DRC-01B was issued. 
• The overall tax period should align with the period for which Part A of the DRC-01B was issued. 
  • For monthly filers, the period, including both the ‘From’ and ‘To’ dates, should be the same. 
  • 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.

Frequently Asked Questions (FAQs)

1. When can Form DRC-01B be filed?

Once a taxpayer receives an intimation in Form DRC-01B for differences between the liability declared in the GSTR-1/IFF and that paid through the GSTR-3B beyond the configurable threshold limit, they will need to submit a reply in Part B of Form DRC-01B.

2. To whom does Form DRC-01B apply?

Form DRC-01B applies to various types of taxpayers, such as regular taxpayers, including SEZ units and developers, casual taxpayers, and composition taxpayers. 

3. Is DRC-01B to be filed monthly or quarterly? 

Form DRC-01B will be generated either on a monthly or quarterly basis, depending on the frequency of filing GSTR-3B. Hence, the response in Part B of Form DRC-01B can be either monthly or quarterly, depending on when DRC-01B has been generated.

4. If I have not filed Form DRC-01B for the previous tax period, can I still file GSTR1/IFF for the current tax period?

Suppose you have received an intimation in Part A of Form DRC-01B Part B for any period and have not responded in Part B of the same form, you will not be allowed to file your GSTR-1/IFF for the subsequent tax period. Hence, it is extremely important to submit your response in Part B of Form DRC-01B on time in order to avoid any interruptions in the filing of GSTR-1/IFF. 

5. Will I get intimated that I need to submit a reply in Form DRC-01B?

Once a taxpayer has been intimated in Form DRC-01B - Part A, a reference number will be assigned. They also get an intimation via email and SMS for future reference and correspondence. One can also check this intimation on the GST portal by navigating to Services > Returns > Return Compliance > Liability Mismatch DRC-01B.

6. How long will it take to unblock Form GSTR-1/IFF after filing the reply in Part B of DRC-01B?

After filing the reply under Part B of Form DRC-01B, a taxpayer can instantly file their GSTR-1/IFF. If there is any issue while trying to file the same, log out of the GST portal and log in again after a few minutes. This should resolve the issue.

7. Why am I getting an error message, ‘Please provide valid ARN of DRC-03’ while filing a reply under Part B of DRC-01B?

If you get an error message while entering the ARN to submit a reply in Part B of Form DRC-01B, then you can undertake the following steps- 

• Ensure that the ARN is valid and corresponds to the same DRC-03 and GSTIN.
• Confirm whether the cause of payment specified in the DRC-03 is ‘Liability mismatch - GSTR1 to GSTR-3B’. 
• You should have filed the DRC-03 on or after the date that Part A of the DRC-01B was issued. 
• The overall tax period should align with the period for which Part A of the DRC-01B was issued. 
• For monthly filers, the period, including both the ‘From’ and ‘To’ dates, should be the same. 
• For quarterly filers, it should cover at least one month within the quarter. 

8. Can I deselect any reason for the difference in payment in Form DRC-01B after providing the details for a reason selected earlier? 

If you deselect any reasons for difference after providing the details, the system will display an error message requesting for the deletion of details already provided. Hence, only after deleting the details entered for a reason selected earlier will you be able to deselect that reason.