DRC-01B Notice: GSTR-1 vs GSTR-3B Liability Mismatch
DRC-01B Notice: What It Means When GSTR-1 Doesn't Match GSTR-3B
You filed GSTR-1 reporting your sales. You filed GSTR-3B reporting and paying your tax. Now the portal is telling you the two numbers don't line up, and you have seven days to sort it out.
A DRC-01B is a system-generated intimation under Rule 88C of the CGST Rules. It fires when the tax liability you declared in GSTR-1 or IFF is higher than what you actually paid through GSTR-3B, by more than the portal's configured threshold. It is automated, not an officer's judgment call, and it is asking for one of two things: pay the gap, or explain it.
This article walks through what triggers a DRC-01B, the threshold that sets it off, how to file your Part B reply, and what happens to your future filings if you let the seven days pass.
What Triggers a DRC-01B Intimation
The GST system compares the liability you declared in GSTR-1 or IFF against the liability you actually paid in GSTR-3B or 3BQ, for each return period. An intimation fires when either condition is met:
- The liability declared in GSTR-1 exceeds the liability paid in GSTR-3B by a pre-defined amount, or
- The percentage difference between the two exceeds a configurable threshold
The commonly cited trigger point is a difference of more than ₹1 lakh or 20% of the GSTR-3B liability, whichever is lower, though the department has not published this figure as an absolute rule you can rely on in every case. Here is the part most people miss. This is not designed to catch rounding differences. It is built to flag gaps large enough to suggest sales were reported but the corresponding tax was not paid.
DRC-01B applies broadly, to regular taxpayers, SEZ units and developers, casual taxpayers, and composition taxpayers. It is generated monthly or quarterly depending on how often you file GSTR-3B.
Common Reasons for the Mismatch
A liability gap between GSTR-1 and GSTR-3B usually comes down to one of these:
- Invoices reported in GSTR-1 for a period where the corresponding GSTR-3B payment was missed or understated
- Amendments made to GSTR-1 in a later period that were never reflected in the GSTR-3B payment for that period
- Credit notes issued but not adjusted correctly against the original liability
- Genuine data entry errors, duplicate invoice reporting, or a mismatch between B2B and B2C classification
Your Two Options: Pay or Explain
Once Part A of the intimation is generated, you have seven days to act. Part A itself is system-generated and cannot be edited. Your response goes entirely into Part B.
Option 1: Pay the differential. If the gap reflects genuine short payment, pay the difference along with interest under Section 50, using Form GST DRC-03. Select the correct reason for payment when filing DRC-03 so it is linked clearly to this intimation.
Option 2: Explain the difference. If the gap is due to an amendment, a credit note, or a reporting error rather than an actual shortfall in tax paid, use the automated dropdown in Part B to select the applicable reason, and add details if your specific situation is not covered by the dropdown options.
Regardless of which path you take, filing Part B itself is mandatory. Paying through DRC-03 without also submitting Part B does not close the intimation.
How to Reply on the Portal
- Log in to the GST portal with your credentials.
- Go to Services, then Returns, then Return Compliance.
- Open the Liability Mismatch (DRC-01B) tile.
- Select the specific tax period the intimation relates to.
- Review Part A, the system-generated breakdown of the liability difference by tax head.
- In Part B, either confirm the DRC-03 payment reference, or select a reason from the dropdown and add explanatory details.
- Submit your reply before the seven-day window closes.
What Happens If You Miss the Deadline
If you do not respond within seven days, the consequences are immediate and compounding:
- Your GSTR-1 or IFF filing for the subsequent tax period is automatically blocked, and stays blocked until you either pay the amount or submit an explanation.
- A blocked GSTR-1 means your buyers cannot see your invoices in their GSTR-2B, which disrupts their input credit and puts pressure on the business relationship, not just your own compliance record.
- In more serious cases, an unresolved DRC-01B can be treated as acknowledging a self-assessed liability that remains unpaid, which opens the door to direct recovery proceedings under Section 79, a route that can bypass the usual show cause notice and adjudication process under Section 73 or 74.
That last point is worth sitting with. Section 79 recovery does not require the department to first issue you a formal notice and hearing the way Section 73 or 74 does. Treating a DRC-01B as low-priority because "it's just a portal notice" is the mistake that leads here.
DRC-01B vs DRC-01C: Know Which One You Have
These two notices are frequently confused because the mechanism is nearly identical, just applied to opposite sides of your return.
| DRC-01B | DRC-01C | |
|---|---|---|
| Governing rule | Rule 88C | Rule 88D |
| What it checks | Tax liability in GSTR-1/IFF vs tax paid in GSTR-3B | ITC claimed in GSTR-3B vs ITC available in GSTR-2B |
| What it flags | Under-paid output tax | Over-claimed input credit |
| Response window | 7 days | 7 days |
| Payment form | DRC-03 with interest under Section 50 | DRC-03 with interest under Section 50 |
| Consequence of non-reply | GSTR-1/IFF blocked, possible Section 79 recovery | GSTR-1/IFF blocked, escalation to Section 73/74 |
If your notice concerns sales reported but not fully paid, you are looking at DRC-01B. If it concerns ITC claimed beyond what your GSTR-2B supports, that is DRC-01C, covered separately in this series.
FAQs: People Also Ask
What is a DRC-01B notice? A DRC-01B is a system-generated intimation under Rule 88C, issued when the tax liability declared in GSTR-1 or IFF exceeds the tax actually paid in GSTR-3B by more than the portal's configured threshold.
What is the time limit to reply to DRC-01B? You must respond within seven days of receiving the intimation, either by paying the differential liability with interest through DRC-03, or by explaining the difference in Part B.
What is the threshold that triggers a DRC-01B notice? The commonly cited trigger is a difference exceeding ₹1 lakh or 20% of the GSTR-3B liability, whichever is lower, though the department has not published this as a guaranteed fixed rule in every case.
Is DRC-01B the same as DRC-01C? No. DRC-01B addresses liability mismatches between GSTR-1 and GSTR-3B under Rule 88C. DRC-01C addresses ITC mismatches between GSTR-2B and GSTR-3B under Rule 88D.
What happens if I don't respond to DRC-01B within 7 days? Your GSTR-1 or IFF filing for subsequent periods gets blocked, and in serious cases the unpaid amount can be treated as an acknowledged self-assessed liability, allowing the department to pursue direct recovery under Section 79.
FAQs: Real Questions People Ask
I amended my GSTR-1 for a past period after I had already filed GSTR-3B for it. Now I have a DRC-01B. What do I select in Part B? This is one of the more common triggers, since amendments in GSTR-1 do not automatically reconcile against a GSTR-3B already filed and paid. In Part B, select the dropdown reason closest to "amendment in a subsequent period" or similar, and note the specific tax period and amendment reference in the details field. Keep your amendment records ready, since a clear before-and-after trail is what closes this kind of explanation quickly.
I issued a credit note that reduced my actual liability, but the DRC-01B still shows a gap. Did I do something wrong? Not necessarily. Credit notes sometimes are not adjusted correctly against the original invoice's tax period in the system's comparison logic. In Part B, explain that the difference relates to a credit note, and provide the credit note number and the period it was issued in. If the credit note genuinely reduces your liability for that period, this is a reconciliation issue, not an actual shortfall, and should not require a DRC-03 payment.
My GSTR-1 is already blocked because I missed the 7-day window. What is my fastest way out of this? File your Part B reply immediately, along with a DRC-03 payment if the gap is genuine, since the block generally lifts once one of these actions is completed. Do not wait for a further notice before acting, since the block affects your buyers' ability to claim ITC on your invoices as much as it affects your own filing. If the matter has already progressed to a formal Section 73 or 74 notice by the time you respond, you will need to address that notice directly instead of through DRC-01B.
Not Sure Whether the Gap Needs a Payment or Just an Explanation?
Upload your DRC-01B notice to Notice Sahayak. It compares your GSTR-1 and GSTR-3B figures for the flagged period, identifies whether the gap is an amendment, a credit note, or a genuine short payment, and tells you exactly which Part B option to select before your seven-day window closes.