Form DRC-01B: Everything you need to know about!

Form DRC-01B serves as an official communication from the GST authorities to taxpayers, indicating a discrepancy in the reported liability between their GSTR-1/ IFF and GSTR-3B returns. In this article, we will share details of the newly released form DRC-01B and understand When can Form DRC-01B be filed, for whom it is applicable and other significant information.

What is Form DRC-01B?

Form DRC-01B plays a vital role in ensuring compliance with the Goods and Services Tax (GST) regime by maintaining accurate return records. It serves as a monitoring mechanism that identifies discrepancies between the liability reported in GSTR-1/IFF and the liability paid in GSTR-3B /3BQ for each return period. If the variance exceeds a predefined limit, Form DRC-01B is issued to the concerned-party. This form is instrumental in managing and reconciling these discrepancies. However, failure to respond to Form DRC-01B Part B can hinder subsequent filing of GSTR-1/IFF.

The intimation will contain the following details:

The taxpayer’s GSTIN
The tax period for which the mismatch has occurred
The amount of the mismatch
The reasons for the mismatch, as provided by the taxpayer
The action that the taxpayer needs to take, such as paying the differential tax liability or providing further explanations

When can Form DRC-01B be filed?

Form DRC-01B can be filed when there is a significant disparity between the liability declared in GSTR-1/IFF and the liability paid in GSTR-3B/3BQ for a given return period. If the liability stated in GSTR-1 exceeds the liability settled in Form GSTR-3B by a predefined limit or if the percentage difference between the liabilities declared in GSTR-1 exceeds the configurable threshold from the liability paid in Form GSTR-3B, an intimation is issued to the taxpayer.

Upon receiving an intimation in Form DRC-01B, indicating a difference beyond the configurable threshold limit, the taxpayer is required to submit their response using Form DRC-01B Part B.

Note: It is important to note that failure to file a response to Form GST DRC-01B for a previous tax period will result in the taxpayer being unable to file their Form GSTR-1/IFF for subsequent tax periods.

To which Class of Taxpayers is Form DRC-01B Applicable?

Form DRC-01B is applicable to a wide range of taxpayer categories, encompassing regular taxpayers (including SEZ units and SEZ developers), casual taxpayers, as well as taxpayers who have chosen to opt in or opt out of the composition scheme.

What is the next step to follow if a taxpayer gets an intimation in form DRC-01B?

Upon receipt of an intimation in Form DRC-01B, when there are variations between the liability reported in GSTR-1/IFF and the liability paid in GSTR-3B that exceed the configurable threshold limit, taxpayers are required to furnish a response in Part B of Form DRC-01B.

Taxpayers can pay the differential tax liability and file Form GST DRC-03, which is a payment acknowledgment form.
Taxpayers can provide further explanations for the mismatch in Form GST DRC-01B.
If they do nothing, in which case the GST authorities may take further action, such as issuing a demand notice or initiating penalty proceedings.

How will taxpayers be notified to submit a response in Form DRC-01B Part B?

Once Form DRC-01B Part A is generated, a Reference Number will be allocated to the intimation. You will receive the intimation through email and SMS, containing the Reference Number. It is important to check both your email and mobile messages for the intimation and keep the Reference Number readily accessible for future reference and correspondence. Additionally, you can also access this intimation on the GST Portal by navigating to Services > Returns > Return Compliance > Liability Mismatch DRC-01B.

Note: It is important for taxpayers to respond to Form DRC-01B in a timely manner. Failure to do so may result in penalties or other enforcement action by the GST authorities. The response to Form DRC-01B must be filed within 7 days of the date of intimation.

Important Points to Note

Failure to submit Form DRC-01B Part B for any period after receiving an intimation in Form DRC-01B Part A will result in the inability to file GSTR-1/ IFF for the subsequent period. Timely submission of Form DRC-01B Part B is crucial to ensure the uninterrupted filing of GSTR-1/IFF.
Form DRC-01B will be generated, if applicable, for quarterly filers (QRMP) after they have filed their quarterly GSTR-3B. Conversely, for monthly filers, Form DRC-01B will be generated on a monthly basis following the filing of their monthly GSTR-3B. As a result, the filing of Form DRC-01B Part B can be done either on a monthly or quarterly basis, depending on the frequency of GSTR-3B filing.

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