GST DRC-01B notice: how to reconcile and reply to a GSTR-1 vs GSTR-3B difference
A DRC-01B tells you that the tax liability declared in GSTR-1 or IFF is higher than the tax paid in GSTR-3B for a tax period. You have seven days to pay the difference or explain it. Here is what the intimation means, how to find the invoices behind the gap, and how to prepare the Part B reply.
What a DRC-01B intimation is
FORM GST DRC-01B is an intimation issued under Rule 88C of the CGST Rules, 2017. The GST portal compares the tax liability declared in GSTR-1 or IFF with the tax paid in GSTR-3B for the same return period. When GSTR-1 is higher by more than the limit set on the recommendation of the GST Council, Part A of DRC-01B shows the difference, and Part B is where you respond.
Rule 88C was inserted by Notification No. 26/2022–Central Tax dated 26 December 2022, and GSTN announced the portal functionality in its advisory of 29 June 2023.
The intimation is not a demand, but it has consequences. Until you respond, the portal does not let you file GSTR-1 or IFF for later periods. An amount that remains unpaid, and is not explained to the satisfaction of the proper officer, is recoverable under section 79 of the CGST Act.
- Rule
- Rule 88C, CGST Rules, 2017
- What is compared
- Tax liability in GSTR-1 / IFF vs tax paid in GSTR-3B, for the same tax period
- Time to respond
- Within seven days of the intimation
- Ways to respond (Part B)
- Pay the difference, fully or partially, with interest under section 50 through DRC-03, and/or give reasons for the rest
- If you do not respond
- GSTR-1 / IFF for later periods cannot be filed until you pay or reply
- If unpaid and unexplained
- The amount is recoverable under section 79
How to reconcile a DRC-01B, step by step
- 1
Read Part A carefully
Note the tax period and the difference for each tax head (IGST, CGST, SGST, cess). Your reconciliation has to add up to exactly these figures.
- 2
Collect the right files
Download GSTR-1 (or IFF) for the period from the portal, and for the neighbouring months as well, because documents are sometimes reported a month late. Keep the GSTR-3B as filed, and export the sales register for the same period from Tally or Busy.
- 3
Match GSTR-1 with the books
Pair each invoice, credit note and debit note in GSTR-1 with the sales register on invoice number and customer GSTIN, then compare the taxable value and each tax head. Compare the B2C summary and advances separately.
- 4
Compare the books with GSTR-3B
Check the tax the books show for the period against the tax actually paid in GSTR-3B. This separates reporting differences from genuine short payment.
- 5
Explain every unmatched amount
Typical causes: transactions reported in this period’s GSTR-1 whose tax was paid in an earlier GSTR-3B; excess tax paid in earlier periods; tax on advances paid earlier and adjusted against invoices now; GSTR-1 filed with incorrect details (for example a missed credit note), to be amended; and genuine short payment in GSTR-3B.
- 6
Check that the lines add up
Total each cause per tax head. Together they must equal the difference in Part A. If they do not, something is still unmatched.
- 7
Pay what is due and explain the rest within seven days
Pay any short payment through DRC-03 with interest under section 50 and keep the ARN. In Part B, enter the payment and choose the reasons for the rest from the list (excess tax paid in earlier periods, earlier-period transactions reported now, GSTR-1 filed with incorrect details, advances, or other reasons). Keep an annexure of the invoices behind each line.
Illustrative example · not a real taxpayer
Example: a ₹90,000 DRC-01B, line by line
Tax period September 2025. Tax liability in GSTR-1 ₹6,30,000; tax paid in GSTR-3B ₹5,40,000; difference in Part A ₹90,000. After matching GSTR-1 with the sales register and GSTR-3B:
Why the difference arises
Invoices reported in September’s GSTR-1 whose tax was paid in August’s GSTR-3B
- Amount
- ₹45,000
- Treatment
- Explain
Why the difference arises
Tax on an advance paid in an earlier GSTR-3B; the invoice is reported now
- Amount
- ₹18,000
- Treatment
- Explain
Why the difference arises
Credit note issued and booked but missed in GSTR-1 (to be reported in the next GSTR-1)
- Amount
- ₹12,000
- Treatment
- Explain
Why the difference arises
Invoices in GSTR-1 and the books, tax short-paid in GSTR-3B
- Amount
- ₹15,000
- Treatment
- Pay
Total = difference in the notice
₹90,000
Explain ₹75,000 · Pay ₹15,000
Illustrative figures for a fictional business, shown as totals across tax heads for readability; a real reply states each tax head. The treatment shown is one possible view: whether to pay or explain depends on the facts, and is the Chartered Accountant’s decision. Any amount paid goes through DRC-03 with interest under section 50.
Frequently asked questions
What is a DRC-01B notice?
It is an intimation under Rule 88C of the CGST Rules that the tax liability declared in GSTR-1 or IFF for a tax period is higher than the tax paid in GSTR-3B by more than the prescribed limit. Part A shows the difference; you respond in Part B.
How many days do I have to reply to DRC-01B?
Rule 88C asks you to pay the difference or explain it within seven days of the intimation.
What happens if I do not reply?
GSTN’s advisory states that taxpayers who do not reply will not be able to file GSTR-1 or IFF for the subsequent period. Under Rule 88C, an amount that remains unpaid and unexplained is recoverable under section 79 of the CGST Act.
Can I pay part of the difference and explain the rest?
Yes. Rule 88C allows you to pay the difference fully or partially, with interest under section 50, through DRC-03, and to give reasons in Part B for the part you do not pay.
Is DRC-01B a show-cause notice?
No. It is an intimation asking you to pay or explain the difference. It is the first step; an amount that is neither paid nor satisfactorily explained can be recovered.
What difference triggers a DRC-01B?
Rule 88C applies when the difference is more than an amount and percentage recommended by the GST Council. GSTN describes it as a predefined limit or threshold percentage; this guide does not quote a figure.
How is DRC-01B different from DRC-01C?
DRC-01B is about output tax: GSTR-1 or IFF vs GSTR-3B. DRC-01C is about input tax credit: ITC claimed in GSTR-3B being higher than the ITC in GSTR-2B.
How does CATools help with a DRC-01B?
Upload the DRC-01B, GSTR-1 and your sales register as exported from Tally or Busy. CATools matches them invoice by invoice, places every rupee of the difference on a line, and drafts the Part B reply with an invoice annexure and an Excel workbook. You choose Explain or Pay for each line and file on the portal yourself; CATools never asks for your GST portal password.
Reply to your DRC-01B with every rupee explained
Upload the notice and your files; CATools matches them invoice by invoice and drafts the Part B reply. You review, decide and file.
Sources
- Rule 88C, CGST Rules, 2017, inserted by Notification No. 26/2022–Central Tax dated 26 December 2022
- GSTN advisory: online compliance pertaining to liability mismatch between GSTR-1/IFF and GSTR-3B (29 June 2023)
Last reviewed 26 October 2026. This guide explains the rules in general terms. It is not legal advice; treatment of each item is for the Chartered Accountant to decide.