Understanding Form DRC-01B: A Comprehensive Guide for GST Taxpayers

If you're a GST taxpayer, especially one who files GSTR-1 or GSTR-3B returns, then understanding Form DRC-01B is crucial for maintaining compliance and avoiding operational disruptions. With the introduction of automated return compliance checks, taxpayers are now more than ever expected to reconcile discrepancies between outward supply data and actual tax paid.

This guide will walk you through everything you need to know about Form DRC-01B, including:

• What it is
• Why it's issued
• Who it applies to
• How to respond to it
• Consequences of non-compliance
• Step-by-step filing instructions
• Common errors and how to avoid them
• When to seek professional help

Whether you're a regular taxpayer, a casual taxpayer, or part of a Special Economic Zone (SEZ), this blog has been written to serve as a one-stop resource for all your DRC-01B-related queries.

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What is Form DRC-01B?

Form DRC-01B is an intimation generated by the GST system when there's a mismatch between the liability declared in GSTR-1/IFF and the amount paid via GSTR-3B/3BQ for a given tax period.

The system automatically compares the liability reported in GSTR-1 (outward supplies) with the liability actually paid in GSTR-3B (monthly/quarterly return). If the difference exceeds a pre-defined monetary threshold or percentage limit, the system generates an intimation in Part A of DRC-01B.

This form is not a notice or penalty—it is simply a compliance tool used by the government to ensure that taxpayers accurately report and pay their liabilities.

Structure of Form DRC-01B

Form DRC-01B consists of two parts:

Part A – Intimation of Liability Mismatch

Generated automatically by the system when a discrepancy is detected. It includes:

• Reference Number
• Return Period
• Nature of mismatch
• Amount of discrepancy

You cannot edit or modify Part A. It serves as a notification only.

Part B – Response from Taxpayer

This is where you respond to the mismatch. You can either:

• Provide the ARN of DRC-03 if payment was made for the difference
• Select a reason for the discrepancy
• Or both

Filing Part B is mandatory if you want to continue filing GSTR-1 or IFF in the next tax period.

When is Form DRC-01B Generated?

The system runs a reconciliation check after you file your GSTR-3B/3BQ. The following conditions trigger a DRC-01B intimation:

Condition	Description
Monetary Threshold Exceeded	The liability declared in GSTR-1 is higher than what was paid in GSTR-3B by a certain amount.
Percentage Threshold Exceeded	The percentage difference between GSTR-1 liability and GSTR-3B liability crosses a pre-set limit.

These thresholds are configurable by the GST authorities and may vary from time to time.

Who is Required to File Form DRC-01B?

Form DRC-01B applies to various categories of taxpayers, including:

• Regular taxpayers (including SEZ units and developers)
• Casual taxpayers
• Taxpayers who have opted in or out of the composition scheme

Whether you're a monthly filer or a quarterly filer under QRMP, if you receive an intimation in DRC-01B Part A, you must file Part B to proceed with future filings.

What Happens if You Don't File DRC-01B?

Failing to respond to Form DRC-01B Part B can lead to serious consequences:

You will not be allowed to file GSTR-1 or IFF for the subsequent tax period until you resolve the issue.

This restriction ensures that taxpayers address discrepancies promptly and maintain clean records.

Additionally, unresolved mismatches could trigger further scrutiny from tax authorities, including:

• Scrutiny notices
• Demand notices
• Interest and penalties for unpaid taxes

How Will You Be Notified About DRC-01B?

Once the system generates an intimation in DRC-01B Part A, you will be notified in the following ways:

• Email sent to the registered email ID
• SMS sent to the registered mobile number
• Direct notification on the GST Portal under Return Compliance > Liability Mismatch (DRC-01B)

Make sure to regularly check your inbox and SMS for such notifications.

Step-by-Step Guide to Filing Form DRC-01B Part B

Here's how to file Form DRC-01B Part B step by step:

Step 1: Log in to the GST Portal

Visit www.gst.gov.in and log in using your credentials.

Step 2: Navigate to Return Compliance

Go to: Services → Returns → Return Compliance

Click on the Liability Mismatch (DRC-01B) tile.

Step 3: View Pending Intimations

Click VIEW to see pending DRC-01B intimations.

You can search by:

• Reference Number
• Return Period
• Status (Pending or Completed)

Step 4: Open the Specific Record

Click on the Reference Number hyperlink to open the details of the intimation.

Step 5: Fill Out Part B of DRC-01B

Sub-Section 1: Payment via DRC-03

• Enter the ARN of DRC-03 (if payment was made).
• Click VALIDATE to verify the ARN.
• Ensure the ARN corresponds to the same GSTIN, was filed after the DRC-01B issue date, and specifies the cause as "Liability mismatch – GSTR-1 to GSTR-3B".

Sub-Section 2: Reason for Discrepancy

Select one of the four pre-defined reasons:

1. Rectification in subsequent period
2. Mistake in earlier period
3. Data entry error
4. Any other reason (with explanation up to 500 characters)

Failure to provide an explanation will result in an error.

Step 6: Submit the Form

• Check the declaration box
• Select the authorized signatory from the drop-down list
• Enter the place of filing
• Click SAVE, then FILE GST DRC-01B
• Authenticate the filing using EVC or DSC

Step 7: Download and Save the Acknowledgment

After successful submission, download the final PDF of Form DRC-01B for future reference.

Common Errors While Filing DRC-01B and How to Fix Them

Error	Cause	Solution
Invalid ARN	Incorrect ARN format or mismatched period	Ensure ARN is valid, corresponds to the correct GSTIN, and relates to the correct period
No Explanation Provided	"Any Other Reason" selected without text	Always enter a reason in the text box if you select "Any Other Reason."
Unable to Deselect a Selected Reason	Attempting to deselect without deleting explanation	Delete the entered explanation first before deselecting the reason

Tips to Avoid Receiving DRC-01B Intimations

To reduce the chances of receiving a DRC-01B notice, follow these best practices:

• Reconcile GSTR-1 and GSTR-3B data regularly
• Verify outward supply entries before filing GSTR-1
• Ensure timely payment of liabilities as per GSTR-3B
• Use accounting software integrated with GST systems
• Train your finance team on GST return processes

Why You Should Consult a GST Expert for DRC-01B Compliance

While the process seems straightforward, many taxpayers struggle with:

• Understanding the root cause of liability mismatch
• Choosing the correct reason for discrepancy
• Ensuring accurate payment via DRC-03
• Avoiding technical errors during filing

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Conclusion

Filing Form DRC-01B is a critical compliance requirement for all GST taxpayers. Ignoring or delaying the response can lead to blocked GSTR-1/IFF filings, which in turn affects your business operations. By understanding the process and taking proactive steps, you can ensure smooth compliance and avoid unnecessary penalties or interruptions.

If you need expert assistance, don't hesitate to reach out. Let's keep your GST compliance in order together!

Frequently Asked Questions (FAQs)

Q1: Can I file DRC-01B Part B without paying the dues?

Yes, you can file DRC-01B Part B even without making the payment. However, it is recommended to clear any outstanding liabilities to avoid future complications.