GST Compliance – Form DRC-01C (ITC Mismatch)

A. The Law

Relevant Sections – CGST Act, 2017

• Section 16: Conditions for claiming Input Tax Credit (ITC).
• Section 37 & 39: Furnishing details of outward supplies and filing returns.
• Section 73 & 74: Recovery of tax not paid/short paid or ITC wrongly availed/utilized.
• Section 61: Scrutiny of returns.
• Section 168: CBIC empowered to issue instructions for compliance.

Relevant Rules – CGST Rules, 2017

• Rule 36(4): Restricts ITC availment based on GSTR-2B.
• Rule 88C: Intimation of difference in liability reported in GSTR-1 vs GSTR-3B.
• Rule 88D (Inserted w.e.f. Dec 2023): Intimation of difference in ITC between GSTR-2B and GSTR-3B.
  • When ITC claimed in GSTR-3B/3BQ > ITC available in GSTR-2B beyond a threshold (limit prescribed by CBIC), system issues intimation in DRC-01C.
  • Taxpayer must either:
    1. Pay differential ITC with interest via Form DRC-03; or
    2. Explain reason for mismatch in Part B of DRC-01C.

B. How Do I – Step-wise Process for Filing Form GST DRC-01C

Step 1: Login

• Visit gst.gov.in → Login with credentials.

Step 2: Navigate

• Go to Services > Returns > Return Compliance.
• On “ITC Mismatch (DRC-01C)” tile, click View.

Step 3: Access Intimation

• Pending DRC-01C(s) will be displayed.
• Search using:
  • Reference Number (ARN), or
  • Return Period, or
  • Status (Pending/Completed).
• Click on Reference Number hyperlink.

Step 4: Understand the Intimation

• Part A (System Generated):
  • Shows ITC as per GSTR-2B vs ITC claimed in GSTR-3B.
  • PDF can be downloaded for records.
• Part B (Taxpayer Reply):
  Two options available:

1. Payment of Difference:

• 1. • Enter ARN of DRC-03 challan through which ITC difference was paid.
     • Validate ARN.

2. Provide Reason for Difference:

• 1. • Select from dropdown (e.g., ITC not reflecting due to late filing by supplier, technical glitches, ineligible ITC reversal already done, etc.).
     • Provide explanation (max 500 characters).

• • Taxpayer may fill either payment ARN, reason, or both.

Step 5: Save & File

• Select declaration checkbox.
• Choose Authorized Signatory, enter Place.
• Click Save → then File GST DRC-01C.

Step 6: Authentication

• File using DSC or EVC (OTP on registered email/mobile).
• Success message + ARN generated.

Step 7: Download Final Copy

• After filing, status changes to “Completed”.
• Download final PDF from Reference Number link.

C. FAQs (15 Practical Clarifications & Errors)

1. When is DRC-01C generated?
   When ITC claimed in GSTR-3B exceeds ITC in GSTR-2B beyond threshold.
2. Is filing DRC-01C mandatory?
   Yes, if not filed, GSTR-1/IFF of next period cannot be filed.
3. Who is covered?
   Regular taxpayers, SEZ units/developers, casual taxpayers, QRMP taxpayers (excluding composition).
4. What is the frequency?
   Monthly for monthly filers, quarterly for QRMP taxpayers.
5. How will I be intimated?
   Email & SMS sent with Reference No. Also visible on GST Portal.
6. What if I do not file response?
   Portal blocks filing of GSTR-1/IFF for subsequent period.
7. What options do I have in Part B?
   • Pay difference via DRC-03, OR
   • Provide valid reason, OR both.
8. Do I need to compulsorily pay?
   No. If genuine reason exists (e.g., supplier filed late), explanation can be given instead of payment.
9. What if ARN of DRC-03 is rejected?
   • Check ARN belongs to same GSTIN.
   • Filed after issue of DRC-01C.
   • Cause of payment = “ITC Mismatch 2B vs 3B”.
   • Tax period matches intimation period.
10. Can I deselect a reason after entering it?
    No, system asks to delete details first.
11. When can I file GSTR-1 after response?
    Immediately after filing Part B. If error persists, logout/login after few minutes.
12. Can I preview before filing?
    Yes, “Preview DRC-01C” generates draft order for review.
13. What if I make mistake in Part B?
    Cancel before filing, correct and re-file.
14. Can I provide both payment & reason?
    Yes, system allows combination of both.
15. How to download final filed form?
    Returns → Return Compliance → ITC Mismatch (DRC-01C) → Completed → Reference No. → Download PDF.

D. Fillable Checklist – Form GST DRC-01C