DRC-01C Notice: ITC Mismatch GSTR-2B vs GSTR-3B (2026 Guide)
DRC-01C Notice: What It Means When Your ITC Doesn't Match GSTR-2B
Seven days. That is how long you have to respond once a DRC-01C intimation lands in your GST portal inbox, and that short window is exactly why this notice causes more panic than most.
A DRC-01C is a system-generated intimation under Rule 88D of the CGST Rules. It is issued when the Input Tax Credit you claimed in GSTR-3B is higher than what shows up as available in your GSTR-2B, by more than a threshold the GST system checks automatically. It is not an officer's opinion and not a scrutiny notice yet. It is the portal flagging a number that does not add up, and asking you to fix it or explain it before things escalate.
This article covers exactly what triggers a DRC-01C, the two things you are allowed to do about it, how to file your reply on the portal, and what happens if the seven days run out before you respond.
What Triggers a DRC-01C Intimation
GSTR-2B is your system-generated, static statement of ITC available for a tax period, built from what your suppliers have uploaded. GSTR-3B is your summary return, where you actually claim that credit. When the ITC claimed in your GSTR-3B exceeds what GSTR-2B shows as available, by an amount and percentage set by the GST Council, the system automatically generates an intimation in Part A of Form DRC-01C.
Here is the part most people miss. The exact threshold figures are not published. The department has deliberately kept them undisclosed so taxpayers cannot engineer their claims to stay just under the line. Do not treat "small gaps don't trigger this" as a safe assumption.
Common Reasons for the Mismatch
The gap between GSTR-2B and GSTR-3B rarely means you have done something wrong on purpose. The usual causes are:
- Your supplier reported the invoice late, so it appears in a later GSTR-2B than the month you claimed it
- Errors by the supplier in categorising the supply, for example B2B invoices marked as B2C
- ITC on inward supplies from an SEZ unit not reflecting in your GSTR-2B
- ITC claimed on invoices where payment to the supplier was not made within 180 days, triggering a reversal requirement you may have missed
- Genuine duplication or data entry errors on either side
Your Two Options: Pay or Explain
Once you receive Part A of the intimation, Rule 88D gives you exactly two paths, and you must choose one within seven days.
Option 1: Pay the excess. If you accept the mismatch is a genuine over-claim, pay the excess ITC along with interest under Section 50, using Form GST DRC-03. Make sure you select the correct cause of payment when filing DRC-03, and obtain your DRC-04 acknowledgment once the payment is processed. That acknowledgement is your proof the matter was closed through payment.
Option 2: Explain the difference. If the mismatch is due to timing, supplier error, or a reason that does not reflect an actual excess claim, file a reconciliation explaining the gap directly on the portal in Part B of the form.
Either way, you must reply in Part B. Simply paying without filing Part B, or staying silent, does not close the matter.
How to Reply on the Portal
- Log in to the GST portal at gst.gov.in with your credentials.
- Go to Services, then Returns, then Return Compliance.
- Locate the ITC Mismatch (DRC-01C) tile and click View.
- Your pending DRC-01C intimation will be displayed with its reference number and status.
- Click the reference number to open the details of the mismatch.
- Choose your response: confirm payment made through DRC-03, or enter your explanation for the difference in Part B.
- Submit before the seven-day window closes.
What Happens If You Miss the Deadline
This is where DRC-01C stops being a routine reconciliation exercise and becomes a real compliance problem. If you do not reply within seven days:
- You will be blocked from filing your next GSTR-1 or using the Invoice Furnishing Facility (IFF) for subsequent tax periods, under Rule 59(6).
- The department can initiate demand and recovery proceedings for the excess ITC under Section 73 (no fraud alleged) or Section 74 (fraud or suppression alleged).
- There is no personal hearing at the DRC-01C stage itself. A hearing only comes into play if the matter escalates to a formal notice under Section 73 or 74.
The blocked GSTR-1 filing is not a minor inconvenience. Your buyers will not see your invoices in their own GSTR-2B, which disrupts their input credit and can strain the business relationship, on top of your own compliance grinding to a halt.
DRC-01C vs DRC-01B: Do Not Confuse the Two
These two forms are commonly mixed up because they work almost identically, just on opposite sides of your return.
| DRC-01C | DRC-01B | |
|---|---|---|
| Governing rule | Rule 88D | Rule 88C |
| What it checks | ITC claimed in GSTR-3B vs available ITC in GSTR-2B | Tax liability in GSTR-1/IFF vs tax paid in GSTR-3B |
| What it flags | Over-claimed input credit | Under-paid output tax |
| 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, escalation to Section 73/74 | GSTR-1/IFF blocked, escalation to Section 73/74 |
If your notice is about ITC being too high, you are dealing with DRC-01C. If it is about your reported sales liability not matching what you paid, that is DRC-01B, a separate notice covered elsewhere in this series.
FAQs: People Also Ask
What is a DRC-01C notice? A DRC-01C is a system-generated intimation under Rule 88D, issued when the Input Tax Credit claimed in your GSTR-3B exceeds the ITC available in your GSTR-2B by more than a prescribed threshold.
What is the time limit to reply to DRC-01C? You must respond within seven days from the date you receive the intimation, either by paying the excess ITC with interest through DRC-03, or by explaining the reason for the difference in Part B on the portal.
Is DRC-01C the same as DRC-01B? No. DRC-01C addresses ITC mismatches between GSTR-2B and GSTR-3B under Rule 88D. DRC-01B addresses output tax liability mismatches between GSTR-1 and GSTR-3B under Rule 88C. They are separate notices with separate triggers.
What happens if I don't respond to DRC-01C within 7 days? Your GSTR-1 and IFF filing for subsequent tax periods will be blocked, and the department may initiate demand and recovery proceedings for the excess ITC under Section 73 or Section 74.
Can I use my electronic credit ledger to pay the excess ITC flagged in DRC-01C? No. The provisions require actual tax payment through DRC-03, not adjustment against the balance in your electronic credit ledger.
FAQs: Real Questions People Ask
My supplier uploaded the invoice a month late, which is why my GSTR-2B was lower when I filed GSTR-3B. Is this my fault? Not necessarily. Timing mismatches caused by a supplier filing late are one of the most common reasons for a DRC-01C intimation, and they are exactly the kind of situation Part B is meant for. Instead of paying, file an explanation showing the invoice details, the date your supplier actually reported it, and confirmation that the ITC has since been reflected correctly. Keep your purchase register handy as supporting evidence, since the officer reviewing your reply will look for a clear paper trail rather than just your assurance.
I already reversed the excess ITC in a later month's GSTR-3B before I got the DRC-01C. Do I still need to reply? Yes, you still need to file Part B within the seven-day window. Explain that the excess was identified and reversed in a subsequent return, and mention the specific tax period where the reversal appears. Do not assume the system will connect the dots on its own. Filing Part B is what formally closes the intimation, even if you believe the issue is already resolved on your end.
I missed the 7-day deadline, and now my GSTR-1 filing is blocked. What do I do next? Your immediate priority is unblocking your filing, which requires you to either deposit the amount specified in the intimation through DRC-03 or file your explanation late through the portal, since the block generally lifts once one of these actions is completed. Do this as quickly as possible, since every additional day of a blocked GSTR-1 delays your own compliance and affects your buyers' ITC. If the department has already moved toward a Section 73 or 74 notice by the time you act, you will need to respond to that formal notice directly rather than through DRC-01C.
Not Sure Whether to Pay or Explain?
Upload your DRC-01C notice to Notice Sahayak. It compares your GSTR-2B and GSTR-3B figures for the flagged period, identifies whether the gap is a timing issue, a supplier error, or a genuine over-claim, and tells you whether to file a reconciliation or pay through DRC-03, before your seven-day window closes.