Received a GST Notice? Decode It Step by Step
- Most seller notices are automated intimations, not accusations — but ignoring them blocks your next return.
- DRC-01B (Rule 88C): GSTR-1 liability exceeds 3B by more than ₹1 lakh or 20%, whichever is lower. 7 days to respond.
- DRC-01C (Rule 88D): ITC in 3B exceeds GSTR-2B by more than ₹1 lakh or 20%, whichever is lower. 7 days.
- No response means your next GSTR-1 can be blocked under Rule 59(6).
- ASMT-10 is different — a human officer reviewed your return. Reply in ASMT-11 and take it seriously.
On this page
A GST notice is not an accusation and it is usually not a disaster. Most of what sellers receive is a system-generated intimation — software noticed two numbers do not agree and asked you to explain. What turns a routine intimation into a real problem is ignoring it, because several of them block your ability to file the next return.
Find your form number below. It is printed at the top of the notice.
Identify your notice
| Form | What triggered it | Time to respond | Severity |
|---|---|---|---|
| DRC-01B | GSTR-1 liability exceeds GSTR-3B tax paid (Rule 88C) | 7 days | Routine, but blocks filing if ignored |
| DRC-01C | ITC claimed in GSTR-3B exceeds GSTR-2B (Rule 88D) | 7 days | Routine, but blocks filing if ignored |
| ASMT-10 | Scrutiny of return — an officer found a discrepancy | As stated, usually 15–30 days | Human review — take it seriously |
| DRC-01 | Show cause notice with a demand (Sec 73 or 74) | As stated on the notice | Serious — get professional help |
| DRC-03 | Not a notice — this is the form you use to pay voluntarily | — | This is your remedy, not your problem |
| REG-17 | Show cause for cancellation of registration | As stated | Serious — respond immediately |
DRC-01B — the outward supply mismatch
This is the notice eCommerce sellers see most. Rule 88C triggers it automatically when the liability you declared in GSTR-1 exceeds the tax you paid in GSTR-3B by more than ₹1,00,000 or 20% of the GSTR-3B liability, whichever is lower.
What to do
You have 7 days and exactly two options:
- Pay the difference (plus interest under Section 50) using DRC-03, then record the payment details in Part B of the DRC-01B.
- Explain in Part B, if you believe the difference is legitimate.
Explanations that are actually valid
- Timing — the invoice was reported in GSTR-1 for one period and accounted in 3B in another
- Amendment — a correction made in a later period's GSTR-1
- Credit notes reported in a different month from the original invoice
- Advances — tax paid in 3B before the supply appears in GSTR-1
- RCM supplies — reported in 3B but not as outward supply in GSTR-1
Each of these is genuinely accepted. What is not accepted is "we will fix it next month" without paying or explaining.
DRC-01C — the input credit mismatch
The mirror image, under Rule 88D: it fires when the ITC you claimed in GSTR-3B exceeds the ITC available in your GSTR-2B by more than ₹1,00,000 or 20% of the 2B ITC, whichever is lower.
The usual cause is a supplier who has not filed. You bought goods, you hold a valid invoice, but your supplier never reported the sale — so it never reached your 2B, and the credit you claimed has nothing backing it in the system.
Same mechanics: 7 days, either reverse the excess and pay, or explain in Part B. Same consequence for ignoring it — your next GSTR-1 can be blocked.
The structural fix is upstream: check your 2B before claiming, and chase non-filing suppliers early rather than defending their behaviour to the department later.
ASMT-10 — scrutiny of returns
Different in kind from the two above. ASMT-10 means an officer, not an algorithm, reviewed your returns and identified a discrepancy. It is issued under Section 61.
- Respond in ASMT-11 within the period stated on the notice
- If the officer accepts your explanation, they issue ASMT-12 and the matter closes
- If not, it can escalate to a show cause notice under Section 73 or 74
Because a human is reading it, the quality of your reply matters. Answer the specific point raised, attach the working that supports your figure, and keep it factual. This is the stage where involving a practitioner usually pays for itself.
Five rules for responding to anything
- Never let the clock run out. Seven days is seven days. An incomplete reply filed on time is better than a perfect reply filed late.
- Reply on the portal, in the prescribed form. An email to your officer is not a reply. Part B of DRC-01B is a reply.
- Attach your working. "Timing difference" alone is an assertion. "Timing difference — invoice INV-2043 dated 31 March reported in GSTR-1 for March, accounted in 3B for April, working attached" is a reply.
- If you are wrong, pay quickly. Interest runs at 18% per annum from the due date. Arguing a case you will lose is the expensive option.
- Keep a monthly reconciliation note. One line each month recording why GSTR-1 and 3B differ turns a stressful reconstruction into a copy-paste. This is the highest-value habit in this entire article.
Preventing the next one
Nearly every automated notice a marketplace seller receives comes from one of four things:
- GSTR-1 and 3B not reconciled before filing — check it here
- Returns not netted correctly per state and rate — see the GSTR-1 guide
- Wrong place of supply moving tax between IGST and CGST/SGST
- ITC claimed without checking GSTR-2B first
None of these require expertise to avoid. They require the reconciliation to happen before you hit submit rather than after the portal points it out.
The cheapest notice is the one you never receive
GSTWali reconciles your marketplace reports against the return it builds and shows you the totals before you download the JSON — so the numbers agree when the portal checks them.
Generate a clean GSTR-1 free →Frequently asked questions
What is DRC-01B and when is it issued?
DRC-01B is an automated intimation under Rule 88C. It is issued when the tax liability declared in your GSTR-1 exceeds the tax paid in your GSTR-3B by more than Rs 1,00,000 or 20% of the GSTR-3B liability, whichever is lower. You have 7 days to either pay the difference through DRC-03 or explain it in Part B of the form.
What happens if I ignore a DRC-01B notice?
Your ability to file the next GSTR-1 or IFF can be blocked under Rule 59(6). That is usually more damaging than the original difference, because it cascades into late fees and stops your buyers from claiming input credit on your invoices.
What is DRC-01C?
DRC-01C is issued under Rule 88D when the input tax credit you claimed in GSTR-3B exceeds the credit available in your GSTR-2B by more than Rs 1,00,000 or 20% of the 2B ITC, whichever is lower. The most common cause is a supplier who has not filed their return. You have 7 days to reverse and pay, or to explain.
Can GSTR-1 and GSTR-3B legitimately differ?
Yes. Timing differences, amendments made in a later period, credit notes reported in a different month, advances, and reverse charge supplies all produce genuine differences. The department is not asking why they are not identical - it is asking you to explain why they differ, so keep a short monthly note recording the reason.
What is the difference between ASMT-10 and DRC-01B?
DRC-01B is generated automatically by the system when a numeric threshold is crossed. ASMT-10 is issued by an officer under Section 61 after reviewing your returns, so a human is reading your reply. ASMT-10 is answered in Form ASMT-11 and, if accepted, closed with ASMT-12.
Is DRC-03 a notice?
No. DRC-03 is the form you use to make a voluntary payment - it is the remedy, not the problem. You use it to pay the difference identified in a DRC-01B or DRC-01C, then record those payment details in Part B of the intimation.