Notices & ITC Compliance

GST notice form DRC-01C Part B reply format: reasons for difference

By gstr2bmatch.in Editorial Team · Updated 19 October 2026 · 9 min read

To reply to an automated Form GST DRC-01C intimation, log in to the GST portal, open Return Compliance under Returns, and access Part B within seven days. You must either pay the excess credit via Form GST DRC-03 with Section 50 interest, explain the difference by selecting the correct predefined reasons from dropdown options 1 to 8, or provide a split response combining both. Failing to file Part B within seven days triggers automatic blocking of your Form GSTR-1 under Rule 59(6)(e) and recovery under Section 79.

Receiving an intimation in Form GST DRC-01C means the net input tax credit claimed in Table 4(A) of your Form GSTR-3B exceeded the eligible input tax credit auto-populated in your Form GSTR-2B by a predetermined percentage and amount. Unlike regular scrutiny notices issued manually by a jurisdictional proper officer, Form GST DRC-01C is an automated system intimation generated by GSTN servers. For liability differences between GSTR-1 and GSTR-3B, read our companion guide on GST notice Form DRC-01B mismatch reply, review our overview of DRC-01C ITC mismatch notice reply, check the procedural breakdown in GST notice DRC-01C reply format, and inspect payment rules in DRC-03 voluntary payment vs notice settlement.

Statutory rule 88D mechanism and the seven-day deadline

Rule 88D was inserted into the Central Goods and Services Tax Rules via Notification No. 38/2023-Central Tax. The statutory rule mandates that where input tax credit availed in Form GSTR-3B exceeds the credit available in Form GSTR-2B by a specified percentage and amount recommended by the GST Council, an automated intimation in Part A of Form GST DRC-01C is delivered to the taxpayer on the portal and registered email. The official notification and updated rules can be examined directly on the CBIC Tax Information Portal.

Once Part A is generated, you have exactly seven days to complete one of two actions:

  1. Pay an amount equal to the excess credit along with applicable interest under Section 50 using Form GST DRC-03.
  2. Submit a formal reply on the common portal in Part B of Form GST DRC-01C setting out the factual reasons for the difference.

If you take no action within seven days, the common portal invokes Rule 59(6)(e). This provision blocks the taxpayer from filing outward supplies in Form GSTR-1 or via the Invoice Furnishing Facility for subsequent tax periods until Part B is submitted. Procedural instructions are outlined in the GSTN DRC-01C Portal Advisory and general return rules on the GST Common Portal.

Recovery risk under Section 79: The seven-day deadline is statutory. Under Rule 88D(3), any differential amount that remains neither paid nor explained within the prescribed time is referred directly to the proper officer for recovery proceedings under Section 79 of the CGST Act without issuing a separate show cause notice under Section 73 or Section 74.

Predefined dropdown reasons in Part B (options 1 to 8)

When drafting your reply in Part B on the GST portal, you cannot submit unformatted plain statements alone. Section B of Part B requires you to select one or more predefined dropdown categories that explain the variance between Table 4(A) of GSTR-3B and GSTR-2B:

  1. Input tax credit not availed in earlier tax periods: Applicable when eligible tax invoices or debit notes from previous tax periods of the same financial year were not claimed earlier due to non-receipt of goods or services, transit delays, or invoice processing lags, and are claimed in the current period within Section 16(4) deadlines.
  2. Inadvertent error in GSTR-3B Table 4(A): Used when a clerical typo or punch mistake was made while entering credit amounts in Table 4(A) of Form GSTR-3B, such as swapping digits or entering gross values instead of eligible net figures.
  3. ITC on reverse charge supplies omitted from 2B: Relevant for tax paid under Section 9(3) or 9(4) on inward supplies liable to reverse charge, where self-invoices or unregistered vendor supplies do not generate GSTR-2B line items.
  4. Import of goods where ICEGATE data is delayed: Pertains to integrated tax paid on bills of entry where custom data was delayed in porting from ICEGATE into GSTR-2B, but the taxpayer claimed credit based on valid customs assessment records.
  5. Inward supplies received from Input Service Distributor: Applicable when input service distributor distribution credit reflected late or was reported in GSTR-3B Table 4(A)(4) following distribution from head office.
  6. Excess reversal of ITC in earlier tax periods now reclaimed: Covers situations where credit was reversed under Rule 42 or Rule 43 in previous months and subsequent true-up calculations confirm eligible reclaim in the current month.
  7. Re-credit of Rule 37 reversal: Pertains to second proviso of Section 16(2) read with Rule 37, where credit originally reversed after 180 days of non-payment is re-claimed in the current period upon making actual payment to the supplier.
  8. Any other reason: Free text explanation field allowing up to 500 characters accompanied by a PDF attachment up to 500 KB to justify genuine business situations not covered by categories 1 to 7.

Supporting evidence required: If you select Reason 8 (Any other reason), you must provide concise remarks and attach a clear invoice-level reconciliation schedule. Selecting Reason 8 with vague remarks such as 'ITC matched as per books' without invoice details often triggers officer rejection and subsequent recovery notices.

Step-by-step portal workflow to file Part B

Follow these portal navigation steps to access, complete, and submit Form GST DRC-01C Part B:

  1. Sign in to the GST portal using your credentials.
  2. Go to Services → Returns → Return Compliance.
  3. Click the ITC Mismatch (DRC-01C) tile to view issued intimations.
  4. Locate the reference number for the disputed period and click Part B.
  5. For tax payment (Section A): If paying any portion, input the ARN of Form GST DRC-03 and click Validate. The portal fetches the payment details from cash or credit ledgers.
  6. For factual reasons (Section B): Select the applicable reason code from options 1 to 8, enter descriptive remarks up to 500 characters, and upload supporting documents in PDF format up to 500 KB.
  7. Check the declaration box, select the authorized signatory from the dropdown, and sign using DSC or EVC.
Log in to GST Portal → Return Compliance → Open DRC-01C Part B → Validate DRC-03 ARN or Pick Reasons 1 to 8 → Sign with DSC/EVC

Worked example: resolving an ITC difference in Part B

Consider Pragati Industrial Components Private Limited, an auto parts manufacturer in Faridabad, Haryana. For the September 2026 tax period, the company reported ITC in Form GSTR-3B exceeding Form GSTR-2B, leading to an automated DRC-01C intimation.

ItemIGSTCGSTSGSTTotal ITC
ITC claimed in GSTR-3B Table 4(A)(5)₹8,20,000₹3,40,000₹3,40,000₹15,00,000
ITC available in GSTR-2B₹6,50,000₹2,50,000₹2,50,000₹11,50,000
Excess ITC flagged in Part A₹1,70,000₹90,000₹90,000₹3,50,000
Reason 7: Re-credit of Rule 37 reversal₹1,20,000₹50,000₹50,000₹2,20,000
Reason 4: Import of goods (ICEGATE delay)₹50,000₹0₹0₹50,000
Reason 2: Inadvertent typing error (tax paid)₹0₹40,000₹40,000₹80,000

The total variance of ₹3,50,000 is settled in Part B using both payment and factual explanations:

  1. Tax payment via DRC-03: The clerical error of ₹80,000 (CGST ₹40,000, SGST ₹40,000) was paid via Form GST DRC-03 along with Section 50 interest of ₹1,200 under the payment head ITC mismatch - GSTR-2A/2B to GSTR-3B. The ARN was validated in Section A of Part B.
  2. Dropdown Reason 7: For ₹2,20,000, the company selected Reason 7, attaching bank payment advice proving supplier settlement after earlier 180-day reversal.
  3. Dropdown Reason 4: For ₹50,000 IGST, the company selected Reason 4, attaching the Bill of Entry and ICEGATE duty payment challan.

Sample reply text for Form GST DRC-01C Part B

You can adapt this draft for your portal remarks or for written submissions to the jurisdictional officer:

To, The Proper Officer, Ward / Range Circle, State / Central GST Department. Sub: Submission of Explanation in Form GST DRC-01C Part B for Tax Period September 2026 Ref: Intimation Reference DRC01C/06AAAAA0000A1Z2/092026/00098 Dated 24 October 2026 Respected Sir / Madam, With reference to the system generated intimation in Form GST DRC-01C Part A issued under Rule 88D regarding the difference between Input Tax Credit claimed in Form GSTR-3B (INR 15,00,000) and available in Form GSTR-2B (INR 11,50,000) for September 2026, we submit our reply as under: 1. Settlement of Inadvertent Error via Form GST DRC-03: Out of the total difference of INR 3,50,000, an amount of INR 80,000 (CGST INR 40,000, SGST INR 40,000) was claimed due to a typographical punching error. The said amount along with interest under Section 50 of INR 1,200 has been paid through Form GST DRC-03 vide ARN AD0610260021458 dated 28 October 2026, duly validated under Section A of Part B. 2. Lawful Re-credit under Second Proviso to Section 16(2) and Rule 37: An amount of INR 2,20,000 (IGST INR 1,20,000, CGST INR 50,000, SGST INR 50,000) represents eligible re-credit. This credit was originally reversed in Form GSTR-3B for January 2026 upon exceeding 180 days of non-payment. Full payment has now been cleared to vendors via banking channels in September 2026. Bank debit statements and ledger accounts are attached. 3. Import of Goods Credit Delayed on ICEGATE: The balance difference of INR 50,000 IGST represents credit paid on import of goods under Bill of Entry No. 8923411 dated 18 September 2026. The customs assessment record was delayed in porting to GSTR-2B for September 2026. Copy of Bill of Entry and customs duty receipt are enclosed. In view of the payment made and factual justification submitted, we request that our reply in Part B be accepted and proceedings dropped. Yours faithfully, For Pragati Industrial Components Private Limited Authorized Signatory

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Frequently asked questions

What is the statutory deadline to submit a reply in Form DRC-01C Part B?

Under Rule 88D(1) of the CGST Rules, you must submit your reply in Part B of Form GST DRC-01C within seven days of the intimation being generated on the portal.

What happens if you do not reply to Form DRC-01C within seven days?

If you do not reply or pay within seven days, the portal automatically blocks filing of your outward Form GSTR-1 or IFF under Rule 59(6)(e). In addition, recovery proceedings under Section 79 can be initiated.

Can you submit Part B of DRC-01C with both tax payment and factual reasons?

Yes. Part B permits split reporting. You can validate a Form GST DRC-03 payment ARN for any portion of wrongly availed credit and select dropdown reasons for the remaining legitimate difference.

Which cause of payment must you choose in Form GST DRC-03 for DRC-01C dues?

Select the reason ITC mismatch - GSTR-2A/2B to GSTR-3B in Form GST DRC-03 so that the common portal validates your ARN inside Part B.

Reconcile your purchase register before filing GSTR-3B

Catch missing vendor invoices, identify timing differences, and verify ITC totals before filing your monthly return to avoid automated Rule 88D notices. Your GSTR-2B and purchase register files are read in your browser and never uploaded to any server.

Reconcile GSTR-2B →

Last checked: 19 October 2026. Sources: CBIC Tax Information Portal, GSTN DRC-01C Portal Advisory, GST Common Portal.