DRC-01B Reply for GSTR-1 and 3B Mismatch: Step by Step

To reply to DRC-01B, log in to the GST portal within seven days, open Services, Returns, Return Compliance, and file Part B. There you either give the reference number of a DRC-03 payment for the shortfall, or explain why GSTR-1 shows more tax than GSTR-3B, or do both. Until then your next GSTR-1 stays blocked.

What is DRC-01B and why did you get it?

GSTR-1 is where you declare your sales. GSTR-3B is where you pay the tax on them. The two should agree. When the tax in GSTR-1 (including GSTR-1A or the invoice furnishing facility, IFF) is higher than the tax paid in GSTR-3B by more than a set amount and percentage, the portal compares them and issues Part A of form DRC-01B. You get an email and an SMS with a reference number. The portal guide does not publish the amount or percentage that triggers it.

The reason for the rule is simple. Your buyers take credit based on your GSTR-1. If you declare sales there but pay less in GSTR-3B, the Government has given credit for tax it never received. Rule 88C closes that gap quickly, without waiting for an audit years later.

It is an intimation, not a demand order. Nobody has decided you owe the money. You are being asked to pay or explain. Monthly filers get it after the monthly GSTR-3B. Quarterly filers get it after the quarterly GSTR-3B, with the three months' GSTR-1 and IFF added together.

First, find the reason for the gap

Before you touch the reply form, reconcile the month. Most gaps fall into one of these.

How to file the reply, step by step

1. Log in to the GST portal. Go to Services > Returns > Return Compliance and open Liability Mismatch (DRC-01B).
2. Click VIEW against the reference number. Part A shows the GSTR-1 liability, the GSTR-3B payment and the difference, tax head by tax head.
3. If you are paying, use the CLICK HERE FOR DRC-03 button. In DRC-03 choose the cause of payment Liability mismatch - GSTR-1 to GSTR-3B, pick the same tax period, add interest and pay. Note the ARN (the acknowledgement number).
4. Back in Part B, enter the DRC-03 ARN and click VALIDATE. You can add more than one ARN.
5. If you are explaining, tick the reason or reasons that fit from the list on the screen. If none fits, choose the option for any other reason and write your explanation. The box takes up to 500 characters, so be short and specific.
6. Tick the declaration, select the authorised signatory, enter the place and click SAVE.
7. Click FILE GST DRC-01B, proceed past the warning and sign with EVC (an OTP on your phone and email) or DSC.
8. Check that the status has changed to Completed and download the filed PDF for your records.

Once Part B is filed, the block on GSTR-1 lifts at once, according to the portal guide.

What makes a DRC-03 payment acceptable here?

The portal validates the ARN against four checks. The DRC-03 must be filed on or after the date of Part A. The cause of payment must be the liability mismatch option. The tax period must be the same as in the intimation; for quarterly filers, at least one month of that quarter. And it must be filed under the same GSTIN. A DRC-03 that fails any of these will not validate.

A worked example

Your GSTR-1 for August shows tax of Rs 1,80,000. Your August GSTR-3B paid Rs 1,26,000. Part A shows a difference of Rs 54,000.

You reconcile and find two causes. One marketplace's sales report was missed while preparing GSTR-3B, which explains Rs 36,000. The other Rs 18,000 belongs to a July invoice that you added late in the August GSTR-1, although you had already paid its tax in the July GSTR-3B.

So you file a DRC-03 for Rs 36,000 plus interest. If you pay 25 days after the due date and interest runs at 18 percent a year, that is Rs 36,000 x 18 percent x 25 / 365, about Rs 444. Confirm the rate before you pay. In Part B you enter the ARN, and for the balance you write something like: "Rs 18,000 relates to invoice 214 dated 28 July, reported in August GSTR-1. Tax was paid in July GSTR-3B. No amount is outstanding." You file, the status turns to Completed and your September GSTR-1 opens up.

The usual mistake

The most common slip is paying first and reading later. Sellers rush to file DRC-03 under the general voluntary payment option, or for the wrong month, and then find the ARN will not validate in Part B. The money is with the Government, but the reply is still pending and GSTR-1 is still blocked. Start the DRC-03 from the button inside DRC-01B.

The second mistake is a vague explanation such as "figures are correct". An officer can find the explanation unacceptable, and the rule then allows recovery of the unexplained amount. Give the invoice number, the month and the amount, and keep the working papers.

What if you ignore it?

Two things follow. Under rule 59(6), you cannot file GSTR-1 or use IFF for any later period until you pay or reply, which means your business buyers stop getting credit for your invoices. And under rule 88C(3), an amount that stays unpaid and unexplained is recoverable under section 79, the provision the department uses to collect dues, for example from your bank account. For the wider picture of notices sellers receive, see our guide to GST notices for online sellers.

Should you reply yourself?

If the gap has one clear cause and you can trace it to an invoice, you can file Part B on your own. Get help when the difference runs into lakhs, spans several months, or comes from how marketplace returns and credit notes were reported, because the explanation then needs a proper reconciliation behind it.

Frequently asked questions

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