Form DRC-01C

In the 50th GST Council meeting held on 11 July 2023, the Government of India introduced a mechanism to address ITC mismatches between GSTR-2B and GSTR-3B. Subsequently, CGST Rule 88D was notified on 4 August 2023, vide CGST Notification No. 38/2023, enabling the GST system to send automatic notifications to taxpayers for significant ITC discrepancies between these returns.

If the difference between the ITC available in GSTR-2B and the ITC claimed in GSTR-3B exceeds a pre-defined limit, a notification is issued in Form GST DRC-01C.

Form GST DRC-01C consists of two parts:

• Part A: Intimation of the difference between the ITC available as per the auto-generated statement (GSTR-2B) and the ITC claimed in the return (GSTR-3B).
• Part B: Reply by the taxpayer to the intimation of ITC difference. This part is divided into two sub-parts:
  • Sub-part 1: Make payment for the ITC difference
  • Sub-part 2: Select the reason for the ITC difference and provide an explanation

File Form DRC-01C

To file Form DRC-01C:

• Log in to the GST portal.
• Click the Services dropdown at the top of the page and select Return Compliance under Returns, or click Return Compliance under Dashboard.
• On the Return Compliance page, click View in the ITC Mismatch (DRC-01C) tile.

You can also use the Reference number, Return period, or Status filters at the top of the ITC Mismatch (DRC-01C) page and search for the acknowledgement number.

To filter Form DRC-01C by Reference Number:

• Click Reference Number at the top of the ITC Mismatch (DRC-01C) page.
• Enter the ARN and click Search.

If the status of the record is Pending, you can file Form DRC-01C.

To filter Form DRC-01C by Return Period:

• Click Return Period at the top of the IT**C Mismatch (DRC-01C) page.
• Select the Financial Year and Return Period for which you want to file Form DRC-01C.
• Click Search.

To filter Form DRC-01C by Status:

• Click Status at the top of the ITC Mismatch (DRC-01C) page.
• Select Status and click Search.

On the ITC Mismatch (DRC-01C) page, you can view the acknowledgment number of all the return periods for which you received the notification in Form DRC-01C Part A.

As a taxpayer, you must either make payment for the difference in ITC reported or select a reason for the difference in ITC reported and provide an explanation in Part B of Form DRC-01C.

Make Payment for the Difference in ITC Reported

To make payment for the difference in ITC reported in Part B of Form DRC-O1C:

• In the Paid the difference amount through DRC-03 section of the Part B of Form DRC-01C, enter the ARN of the period for which you received the DRC-01C Part A notification.
• Click Validate.

The summary of the payment details made through DRC-03 towards the difference in ITC will be displayed.

If you get the error message “Please provide valid ARN for DRC-03”, check the following:

• Ensure that the ARN is valid and that it corresponds to the DRC-03 and GSTIN for which you received the DRC-01C Part A notification.
• Verify that the cause of payment specified in DRC-03 is ITC mismatch – GSTR-2A/2B to Form GSTR- 3B.
• Ensure that the DRC-03 has been filed on or after the date on which you received the DRC-01C Part A notification was issued.
• Confirm that the overall tax period aligns with the period for which the DRC-01 Part A notification was issued.
  • If you file your GSTR-3B return every month, ensure that the from and to dates match the period.
  • If you file your GSTR-3B return every quarter, ensure that the period covers at least one month within the quarter.

If you haven’t made payment for the difference in liability reported, click Click Here for DRC-03 and complete the payment.

Select Reason for the Difference in ITC

To select a reason for the difference in ITC reported in Part B of Form DRC-01C:

• In the Select and explain the reason for difference section of the Part B of Form DRC-01C:
  • Check the checkbox with the relevant reason and provide a detailed explanation in the text box next to the reason. The reason can be up to 500 characters.
  • If your reason is not listed, check Any Other Reason and provide a detailed explanation in the text box next to it.
  • Click Save.
  • Check the declaration checkbox at the bottom.
  • Select the Name of the authorized signatory and the Place. The Designation/Status and Date fields will be auto-populated.
  • Click Save.

You will receive a notification that the details have been saved.

• Click File GST DRC-01C.
• Click Download DRC-01C to download a system-generated draft order. Check the draft order carefully to rule out any discrepancies.
• In the pop-up that appears, click Proceed.
• On the following page choose whether to file using an Electronic Verification Code(EVC) or a Digital Signature Certificate(DSC). Click File DRC-01C With EVC or File DRC-1C With DSC.
• Enter the OTP sent to the email address and mobile number of the primary authorized signatory registered on the GST portal, and click Verify.

• In the pop-up that appears, click OK.

You have filed your reply to the DRC-01C Part A notification. You can check the status using the Status filter in the ITC Mismatch (DRC-01C) page.