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.
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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The GST MIS report is IRIS GST Software’s smart feature that enables top management or decision-makers to quickly assess the compliance level. MIS reports will offer a thorough analysis of mismatches, total GST turnover, maximum ITC utilization, and other decision-making criteria. We have different types of reconciliations like GSTR 1 vs E-invoice, GSTR 1 vs E-way bill data, and GSTR 2A/2 B-based reconciliation with the facility of tracking invoices for ITC in GSTR 3B.
- Bulk Data upload facility – It helps to upload data for multiple GSTINs in one go
- 2P Summary – Provides a summary of uploaded data. Check your uploaded data with the count of invoices getting considered for reconciliation
- Bulk download of GSTR 2A and GSTR 2B– For multiple periods, send ’Get GSTR 2A/ 2B data’ request in one go
- Smart reconciliation – It runs on your data and provides the recon results with summary\
- Advanced reconciliation – It helps to extend the scope of comparison between data that is in the supplier-only and purchaser-only category. Some rules that help in better reconciliation are:
1. Checking invoices across the financial years
2. Fuzzy invoice no. Logic
3. Checking exact values ignoring invoice number
4. Checking invoices within the tolerance provided by you
- Monthly reconciliation results with monthly GSTR 2A and 2B report – Helps to decide monthly ITC and how much you can claim
- Net vendor summary – Gives a glance reconciliation status for each vendor
- PAN level reports and GSTIN level reports – It helps to analyze in detail of your purchaser-only and supplier-only invoices
- Send Mail – By using this feature you can easily communicate discrepancies to your vendor
- Vendor Cockpit – Includes recommendations for vendor payment release report and know your supplier report