What is a DRC-01C Notice?
Under Rule 88D of the CGST Rules, the GST portal automatically compares the Input Tax Credit (ITC) you claimed in your GSTR-3B return with the eligible ITC reflected in your auto-drafted GSTR-2B statement.
If the ITC claimed in GSTR-3B exceeds the ITC available in GSTR-2B by a specific percentage or amount (as prescribed by the council), the portal automatically issues an intimation in Part A of Form GST DRC-01C.
The 7-Day Deadline
Once the DRC-01C notice is issued, the taxpayer has exactly 7 days to respond in Part B of the form. Failure to respond will result in the immediate blocking of your GSTR-1 for the subsequent tax period, preventing you from conducting business.
How to Reply to a DRC-01C Notice
When you receive the notice, you have two options to resolve it in Part B:
- Pay the excess ITC claimed along with interest: If the excess claim was a mistake, you must reverse the ITC and pay the associated penalty interest under Section 50 using Form GST DRC-03.
- Provide a valid explanation: If the ITC claim is legitimate, you must provide a reason. Acceptable reasons typically include:
- ITC not claimed in previous tax periods due to omission.
- ITC claimed for import of goods (which doesn't reflect in 2B).
- Typographical errors in GSTR-3B.
Calculate Your Risk & Penalty
Use our free diagnostic tool below to see if your current filing variance will trigger a DRC-01C notice, and calculate the potential Section 50 interest penalty if you are forced to reverse the ITC.