GST portal introduces DRC-01B for liability mismatch between GSTR-1 and GSTR-3B

The government is aggressively tracking differences between GSTR-1 and GSTR-3B and wants explanations from taxpayers for such differences within a limited time frame. The new update is the online compliance going live in Form DRC-01B – ‘Intimation of difference in liability reported in the statement of outward supplies and that reported in return’.

GST Network released an advisory last week informing that the functionality has gone live on the GST portal. 

DRC-01B is system generated statement to inform the taxpayers if sales reported in GSTR-1/IFF exceed the liability reported in monthly or quarterly GSTR-3B by more than a defined threshold limit or percentage.

GST Rule 88C was notified in December 2022, bringing this change into effect. Taxpayers get the intimation on the GST portal itself. Additionally, they also get an email and SMS for the intimation. 

They have seven days to respond in part B of DRC-01B, either making payment in sub-part-1 or responding with reasons for differences in sub-part-2 or a combination of both. Any payment towards the demanded amount must be made along with the interest charge. 

The GST Rule 88C further states that recovery provisions under Section 79 get attracted if the taxpayer fails to respond through tax demand payment or by providing reasons for differences. Moreover, the advisory states that the taxpayer cannot file or use subsequent period’s GSTR-1/IFF unless the response is filed.

Once the system generates intimation in DRC-01B Part A, the taxpayer will get the Reference Number assigned. The email and SMS will also have the Reference Number. Keep the Reference Number handy for reference and correspondence in the future. To check if you have received any intimation, login to the GST portal and navigate to ‘Services’> ‘Returns’> ‘Return

Compliance’> click on ‘Liability Mismatch DRC-01B’.

There are some points to note-

• Check if ARN is valid and DRC-03 is mapped to right GSTIN
• DRC-03 should be filed on or after the date of issue of intimation in part-A of DRC-01B
• The payment cause must be “Liability mismatch – GSTR1 to GSTR-3B”
• The overall tax period must be the period for which DRC-01B Part-A is issued

There are some reasons pre-listed on the GST portal under this form. Some of these include-

• Excess liability paid in earlier tax periods in GSTR-3B
• GSTR-1/IFF was filed with inaccurate details and will be corrected or amended in the next tax period. For instance, any typographical error or wrong tax head classification
• Errors while reporting advances received and adjusted

There is an option for taxpayers also to report any other reason. Further, the taxpayer must report the reasons for the selected differences.

Suppose there is a delay in response, GSTR-1 or IFF, as may be applicable, gets blocked. You can immediately file GSTR-1 or IFF after filing the reply for DRC-01B Part-B. In case of any issue, one needs to log out and log back again after some minutes.

The automated functionality will aid taxpayers in conveniently accessing liability mismatches without undergoing the rigorous adjudication process. Moreover, it will motivate them to file GSTR-3B cautiously by avoiding notable differences with GSTR-1.

For any clarifications/feedback on the topic, please contact the writer at annapoorna.m@clear.in