Start by identifying the form number. A DRC-01C is a portal-generated intimation about a difference between input tax credit (ITC) shown in GSTR-2B and ITC claimed in GSTR-3B or GSTR-3BQ; its response is filed in Part B. A DRC-01 is the summary of a formal show-cause notice (SCN), for which the taxpayer generally files a reply in DRC-06. These are different proceedings and should not be answered with the same template.
Then reconcile the mismatch invoice by invoice and period by period, explain whether it is a timing or reporting issue or an eligibility problem, submit through the route specified in the communication before its stated deadline, and preserve the filed copy and acknowledgement. GST Portal procedures can change, so verify the current notice, statutory provision and portal instructions before relying on any general explanation.
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First identify what you have received
Do not rely on an email subject or an informal description such as “ITC mismatch notice.” Download the communication and any annexures from the GST Portal, then check the heading, form number, date of issue, date and mode of service, GSTIN, tax period, issuing authority, statutory section, proposed amount and deadline.
| Document | What it means | Where the response is made | What your response must address |
|---|---|---|---|
| DRC-01C Part A | An electronic intimation of a difference between ITC available in GSTR-2B and ITC claimed in GSTR-3B or GSTR-3BQ. The DRC-01C manual says it can be generated when the difference exceeds a predefined limit. | Part B of the same DRC-01C through the Return Compliance area. | The quantified difference, its reason, and any payment made against the mismatch. |
| DRC-01 | The GST Portal form list describes this as the summary of a show-cause notice. The accompanying notice contains the allegations and proposed consequences. | The route and form stated in the actual notice; the portal identifies DRC-06 as the reply form for an SCN. | Every allegation, the statutory basis, the calculation, supporting facts and the relief requested. |
| DRC-06 | The taxpayer’s reply to a formal show-cause notice. | The GST Portal filing flow directed by the notice. | A numbered, evidence-backed answer to the SCN rather than a short explanation of a spreadsheet variance. |
A DRC-01C intimation is not automatically the same as an SCN. Conversely, an SCN should not be treated as an informal reconciliation request. The form, statutory section and text of the communication control the response.
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What to do on the day you receive the communication
- Preserve the original record. Download the notice, DRC-01C Part A or DRC-01 summary, annexures, portal-generated statements and the service details. Save the files in a read-only case folder and note the time zone and date shown by the portal.
- Record the scope. Write down the GSTIN, financial year, tax periods, tax heads, invoice ranges, proposed tax, interest and penalty, if any, and the officer or authority named in the communication.
- Record the actual deadline. Use the date printed in the notice or generated by the applicable legal process. There is no single reply period that safely applies to every DRC-01C, DRC-01 or SCN.
- Secure the underlying data. Export the relevant GSTR-2B files, filed GSTR-3B returns, purchase register, input-tax ledger, invoice images, debit and credit notes, supplier correspondence and payment or receipt records. Preserve the versions used for the reconciliation.
- Check identity before making a payment. A DRC-03 acknowledgement must relate to the same GSTIN, tax period and mismatch proceeding if you intend to rely on it in a DRC-01C response.
- Assign one owner. A finance preparer can build the reconciliation, but a responsible authorised signatory should review the legal position, attachments and final submission.
How to reply to a DRC-01C intimation
The GST Portal’s DRC-01C manual says Part B is mandatory when the intimation is generated. It also states that failure to file the response can prevent filing GSTR-1 or an Invoice Furnishing Facility (IFF) statement for the subsequent tax period. Treat the filing as a compliance action even when you believe the difference is only timing-related.
Open the correct portal work item
- Sign in to the GST Portal for the affected GSTIN.
- Go to Services > Returns > Return Compliance > ITC Mismatch (DRC-01C).
- Open the pending reference number and read Part A, including the periods, tax heads and amounts used to calculate the difference.
- Download or record the Part A details before entering Part B. Your detailed working papers should reproduce the portal’s figures or explain any difference between the portal data and your own extracts.
Prepare the Part B explanation
Part B allows a reason and explanation for the difference. The official instructions describe four predefined reason choices and an “any other reasons” option with an explanation field of up to 500 characters. Choose the reason that matches the records; do not select a convenient category merely to unlock submission. Keep the portal text concise and make it consistent with the fuller reconciliation retained with your records.
If the mismatch is wholly or partly accepted, the portal permits payment information to be supplied, including the relevant DRC-03 acknowledgement reference. State how the amount was calculated and make sure the payment reference is for the same GSTIN, period and proceeding. If the difference is disputed, explain the transaction-level reconciliation and why the credit is legally available instead of entering a payment reference that does not relate to the case.
Submit and preserve proof
- Review the selected reason, explanation, figures and DRC-03 reference, if any.
- Submit Part B using the authorised signatory method required by the portal.
- Download the filed response, acknowledgement and ARN immediately. Record the submission timestamp and keep a screenshot or portal-generated PDF showing the status.
- Monitor the GST Portal for further notices, queries or restrictions. A successful submission does not decide the underlying eligibility of every invoice.
How to answer a formal SCN using DRC-06
For an SCN, answer the notice actually served. The DRC-01 summary may omit reasoning that appears in the detailed notice or annexure. Read the statutory section, allegation, period, calculation and proposed action together before drafting.
Use the notice’s numbering
- Heading and authority. Identify the notice number, GSTIN, tax period, date received, issuing officer and statutory provision.
- Preliminary position. State whether the proposal is accepted, partly accepted or disputed. If only particular invoices or tax heads are accepted, identify them precisely.
- Reply to each allegation. Use the same sequence and paragraph numbers as the SCN. A general denial is not a substitute for answering an invoice-level allegation.
- Reconciliation. Attach a period-wise and tax-head-wise bridge from GSTR-2B to GSTR-3B and the books. List every disputed invoice or document separately.
- Reason for each variance. Explain supplier reporting or amendment timing, an omitted or duplicated document, taxable-value or tax mismatch, a credit note, wrong-period reporting, or another cause only after checking the records.
- Legal position. For each disputed credit, explain the applicable legal basis and connect it to the transaction evidence. The fact that an invoice appears in GSTR-2B does not by itself establish entitlement.
- Relief requested. State which proposed amount should be dropped, which amount is admitted and paid, and any consequential request supported by the notice and governing law.
- Hearing. Request a personal hearing where appropriate and comply with any hearing direction in the notice. The reviewed portal material does not establish one universal hearing rule for every proceeding.
File the DRC-06 reply through the route specified by the notice and portal. Save the submitted document, attachments, ARN and acknowledgement. If the portal rejects an attachment or shows an error, capture the error, check file-size and format requirements shown on screen, and do not wait until the deadline to resolve access problems.
Build a reconciliation that an officer can verify
A total-level spreadsheet is rarely persuasive on its own. Build one worksheet for each tax period and tax head, then tie every line to an invoice or other underlying document. The following columns provide a workable minimum.
| Field | What to compare |
|---|---|
| Supplier and GSTIN | The supplier identity on the invoice, in the books and in the portal data. |
| Invoice or debit note | Number, date, taxable value and tax amount, including amendments and linked credit notes. |
| Return period | The period in which the supplier reported the document, the period in which an amendment appeared and the period in which the recipient claimed or reversed ITC. |
| GSTR-2B | Whether the document appears, the relevant period and its available or not-available status. |
| GSTR-3B | The table, tax head and amount in which ITC was claimed, reversed or otherwise reported. |
| Books and evidence | Purchase register, input-tax ledger, invoice and transaction evidence relevant to the actual supply. |
| Difference and explanation | The quantified variance and a specific cause cross-referenced to an annexure. |
| Eligibility conclusion | Why the credit is eligible under the applicable law, or why it is being reversed or paid. |
Separate timing differences from eligibility issues
A supplier may report or amend a document after the recipient’s return has been filed. GST Portal guidance states that supplies declared or amended through GSTR-1A become available to the recipient in the next tax period’s GSTR-2B. That can explain a period mismatch, but you must identify the actual supplier amendment and the periods involved; do not label every variance as timing without evidence.
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Eligibility is a separate test. GSTR-2B is a reconciliation statement, not a blanket approval of ITC. Self-assess the conditions and restrictions applicable to the transaction, examine whether the supply was actually received and recorded, and explain the legal basis in the reply. If the records show that a credit is not eligible, calculate the reversal or payment rather than trying to explain it away as a data mismatch.
Classify each line into one of three outcomes
| Outcome | How to present it |
|---|---|
| Timing or reporting explanation | Show the supplier filing or amendment, the period shown in GSTR-2B, the recipient’s return entry and why the periods do not align. |
| Disputed but claimed eligible credit | List the invoice, transaction evidence, legal basis and the exact amount still claimed. Explain any difference that remains after correcting data. |
| Credit accepted as ineligible | Identify the invoice and tax head, state the reason for ineligibility, quantify the amount and provide the payment or reversal details required by the proceeding. |
Documents to attach and how to index them
Attach only material that proves a pleaded fact, and label it so the officer can find it quickly. A practical index can include:
- Annexure 1: period-wise and tax-head-wise reconciliation from GSTR-2B to GSTR-3B and the books.
- Annexure 2: invoice and debit-note register with supplier GSTIN, document number, date, taxable value and tax.
- Annexure 3: copies of disputed invoices and linked credit notes or amendments.
- Annexure 4: relevant GSTR-2B extracts and filed GSTR-3B return pages for each period.
- Annexure 5: purchase register and input-tax ledger extracts that tie the documents to the books.
- Annexure 6: payment, receipt, transport, service-completion or other transaction evidence where relevant to the allegation.
- Annexure 7: supplier correspondence or portal evidence showing a reporting or amendment date.
- Annexure 8: DRC-03 payment details and acknowledgement, if an amount was admitted and paid.
Cross-reference each annexure in the paragraph where it is used. Do not submit an unindexed archive containing unrelated invoices; it obscures the relevant evidence and makes review harder.
Deadlines, payment and legal limits
Do not publish or rely on a generic DRC-06 reply deadline. The applicable date can depend on the form, statutory section, tax period, service date and type of proceeding. Follow the deadline printed in the notice and verify it against the current governing provision. The portal instructions reviewed here do not establish one universal SCN response period, and they do not establish the current DRC-01C threshold, limitation period, interest calculation or penalty exposure.
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Similarly, a DRC-01C is not an instruction to pay the entire displayed difference automatically. First determine whether the amount is a timing or reporting variance, a correctable arithmetic or classification error, an amendment or credit-note issue, or genuinely ineligible ITC. If payment is appropriate, document the calculation and use the payment route required by the proceeding.
What happens after you file
- Check that the portal status shows a completed submission rather than a saved draft.
- Download the final reply, annexures, ARN and acknowledgement and store them with the notice.
- Record any hearing date, further-information request or order uploaded later.
- Keep the reconciliation and source records for the applicable statutory record-retention period, even if the portal matter appears closed.
- Do not alter the working file after submission without preserving the submitted version and a dated explanation of any correction.
If an adverse order is issued
The GST Portal appeal FAQ states that an aggrieved taxpayer may generally appeal within three months from communication of the decision or order. It also describes a minimum 10% pre-deposit of disputed tax before appeal, subject to the applicable law and order type. The FAQ says that, where an order is not uploaded, a self-certified copy should be submitted within seven days of filing APL-01; otherwise the submission date may be treated as the filing date. A final APL-02 acknowledgement with an appeal number is described as the filing confirmation.
These are portal FAQ statements, not a substitute for checking the current statute, notification, order type and calculation. Confirm the appeal deadline, disputed amount, pre-deposit, interest and documents immediately after the order is communicated; do not wait for recovery action to begin.
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Common mistakes and practical fixes
| Mistake | Fix |
|---|---|
| Using a DRC-06-style narrative in a DRC-01C Part B field. | Use the DRC-01C Return Compliance work item, keep the explanation within the field limit and retain the detailed reconciliation separately. |
| Answering only the total amount. | Provide invoice-level lines, period and tax-head totals, and a traceable annexure index. |
| Ignoring amendments and credit notes. | Compare original and amended supplier data and show the net effect in the relevant period. |
| Admitting an amount without matching the GSTIN, period and proceeding. | Verify every DRC-03 reference and payment calculation before submission. |
| Missing the printed deadline while waiting for a portal correction. | Escalate access problems immediately, preserve error evidence and submit through the authorised alternative stated by the notice, if one is provided. |
| Failing to retain proof of filing. | Download the response, ARN, acknowledgement and portal status on the submission date. |
| Making unsupported allegations about fraud, supplier default, limitation, interest or penalty. | State only what the records and the applicable current provision support, and obtain professional advice for a contested or high-value issue. |
When professional review is warranted
Have a GST practitioner or tax lawyer review the reply when the demand is large, spans several financial years, alleges fraud or suppression, involves related parties or blocked-credit provisions, raises limitation questions, or could affect other registrations. Professional review is also sensible when the books, GSTR-2B and filed returns cannot be reconciled without changing prior-period reporting or when a payment would amount to admitting a disputed legal issue.
For routine cases, the essential standard is the same: identify the correct form, reconcile the underlying documents, explain each difference and its legal treatment, use the portal route stated in the communication, meet the actual deadline and preserve proof of everything filed.
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