DRC-01B and DRC-01C explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
The GST portal now raises two system-generated mismatch notices before any officer looks at your file. FORM GST DRC-01B says your GSTR-1 shows more tax than your GSTR-3B. FORM GST DRC-01C says you claimed more ITC in GSTR-3B than GSTR-2B allows. Each gives you seven days to pay or explain, and the two differ sharply in what happens next.
Rule 88C (DRC-01B) compares tax payable per GSTR-1 (as amended by GSTR-1A) or IFF with tax payable per GSTR-3B. Rule 88D (DRC-01C) compares ITC availed in GSTR-3B with ITC in GSTR-2B. Both ask you to pay with interest under section 50 through FORM GST DRC-03, or explain, within seven days. An unanswered DRC-01B can go to recovery under section 79. An unanswered DRC-01C can only lead to a demand under section 73, 74 or 74A.
The two rules side by side
| Point | Rule 88C / DRC-01B | Rule 88D / DRC-01C |
|---|---|---|
| Trigger | Tax per GSTR-1 (as amended in GSTR-1A, if any) or IFF exceeds tax per GSTR-3B | ITC availed in GSTR-3B exceeds ITC per GSTR-2B |
| Gap measured by | "Such amount and such percentage" as the Council recommends | "Such amount and such percentage" as the Council recommends |
| Part A | Portal intimation, copy to registered e-mail | Portal intimation, copy to registered e-mail |
| Pay | Differential tax plus section 50 interest, via DRC-03 | Excess ITC plus section 50 interest, via DRC-03 |
| Part B | Details of payment, or reply with reasons | Details of payment, or reply with reasons |
| Window | 7 days | 7 days |
| If unpaid and no acceptable reply | Recoverable under section 79 | Liable to be demanded under section 73, 74 or 74A |
| In force from | 26.12.2022 | 04.08.2023 |
Both rules let you pay fully or partially and explain only the unpaid part. The dates come from the Background Material's notes on the notifications that inserted the rules. If a DRC-01B is already sitting on your portal, a GSTR-1 vs GSTR-3B mismatch review helps you decide between paying and explaining before the seven days run out.
The threshold is not in the rule
The rules say the notice goes out where the gap exceeds an amount and percentage "as may be recommended by the Council". The Background Material says these words have not been formally prescribed by notification. Based on para 8.11.2 of the minutes of the 48th GST Council meeting, the portal has been operationalised to issue DRC-01B where the differential liability exceeds 20% as well as Rs. 25 lakh. After GSTR-1A was introduced, the net of GSTR-1 and GSTR-1A is compared with GSTR-3B. The material gives no equivalent figure for DRC-01C, so do not assume one. Because the thresholds come from Council minutes and the portal, they can change without an amendment to the rules.
Worked example: a DRC-01B (illustration)
A manufacturer reports tax of Rs. 1,20,00,000 in GSTR-1 for a month and pays Rs. 80,00,000 in GSTR-3B, having forgotten to carry one large invoice into 3B. The difference is Rs. 40,00,000, well above both the 20% and Rs. 25 lakh markers.
- The portal issues DRC-01B, Part A, showing the Rs. 40,00,000 gap.
- Within seven days the taxpayer either pays it with interest through DRC-03 and records this in Part B, or replies with reasons.
- If the gap is genuine, paying is usually the cleaner route. If GSTR-1 is wrong, the reply must say so and the correction follows in the next period.
The Background Material lists the Part B reply options for DRC-01B: excess liability paid in earlier periods in GSTR-3B; transactions of an earlier period declared late in GSTR-1 or IFF but already taxed in that period's 3B; GSTR-1 or IFF filed with incorrect details to be amended next period (typographical errors, wrong tax rates and so on); a mistake in reporting advances received and adjusted against invoices; and any other reason. It notes that not every mismatch admits unpaid arrears, and that Instruction 1/2022-23 GST dated 07.01.2022 recognises bona fide reasons for a GSTR-1 and GSTR-3B difference.
Worked example: a DRC-01C (illustration)
A trader claims Rs. 6,00,000 of ITC in GSTR-3B. GSTR-2B shows Rs. 4,50,000. The gap is Rs. 1,50,000. The trader holds a bill of entry for imported goods that is not in GSTR-2B.
The Part B reply options for DRC-01C include: ITC not availed in earlier periods due to non-receipt of supplies (including goods received in instalments); ITC not availed earlier by mistake; ITC on import of goods not reflected in GSTR-2B; ITC on inward supplies from an SEZ not reflected in GSTR-2B; excess reversal in earlier periods now reclaimed; re-credit after payment to the supplier following a Rule 37 reversal; re-credit after the supplier files its return following a Rule 37A reversal; GSTR-3B filed with incorrect details to be amended later; and any other reason. Here the import credit fits option (c), so the reply is an explanation, not a payment.
The Background Material warns that the choice of response implicitly contains an admission of wrongdoing, and that without clearly denying the liability a reply can be read against you. Word the reply carefully.
What happens if you do not reply
- DRC-01B unanswered, or reply not accepted: under Rule 88C(3) the amount is recoverable under section 79. The material also mentions Rule 142B, which prescribes a further intimation in FORM GST DRC-01D before recovery for an unsatisfactory or missing response. Rule 88C came in on 26.12.2022, but direct recovery action under Rule 142B applies from 04.08.2023. The material flags whether action under Rule 88C was deferred until then as an open question.
- DRC-01C unanswered, or reply not accepted: under Rule 88D(3) the amount is liable to be demanded under section 73 or 74 or 74A. Unlike Rule 88C, it does not open recovery under section 79. You still get a show cause notice process. For the choice between these sections see section 73 time limits.
Avoiding the notice
Most DRC-01B notices come from a late invoice that never reached GSTR-3B. Use GSTR-1A to correct the same period before filing 3B; see GSTR-1A: amend GSTR-1 before filing GSTR-3B. Most DRC-01C notices come from credit claimed ahead of GSTR-2B. The rule behind this is covered in Rule 36(4): ITC only as per GSTR-2B. Individual explainers exist for Rule 88C and Rule 88D.
Need help with a mismatch notice?
A seven-day window leaves little room to dig through invoices. If you have received a DRC-01B or DRC-01C, or want to check your returns before the portal does, our team can match your outward and inward data and prepare the Part B reply through our GSTR-1 vs GSTR-3B mismatch service. Where the issue is credit above GSTR-2B, a GSTR-2B and books reconciliation usually finds the cause.
Key takeaways
- DRC-01B (Rule 88C) covers tax shown in GSTR-1 or IFF but not paid in GSTR-3B; DRC-01C (Rule 88D) covers ITC in GSTR-3B above GSTR-2B.
- Both give seven days to pay through DRC-03 with interest, or to explain in Part B.
- The portal currently issues DRC-01B where the gap exceeds 20% and Rs. 25 lakh, per the 48th Council minutes; this has not been formally prescribed.
- Unresolved DRC-01B can go to recovery under section 79; unresolved DRC-01C leads to a demand under section 73, 74 or 74A.
- Every Part B option is also a statement to the department, so choose the wording with care.
- Correct the same period through GSTR-1A before filing GSTR-3B, and claim ITC only as per GSTR-2B.
Read next
- Rule 37A: ITC reversal when the supplier does not file GSTR-3B
- GSTR-3B auto-populated liability and hard-locking
- Rule 36(4): ITC only as per GSTR-2B
- GSTR-1A: the amendment return and what it fixes
Disclaimer: Positions stated as on 30 September 2026, based on the CGST and IGST Acts and Rules as amended, the Finance Act 2026, and the ICAI Background Material on GST (14th Edition, July 2026). Verify current notifications before acting.