GSTN issues Advisory on DRC-01C Compliance for ITC Discrepancies

Advisory in respect of introduction of Compliance Pertaining to DRC-01C (Difference in Input Tax Credit (ITC) available in GSTR-2B & ITC claimed in the GSTR-R3B)

Dear Tax Payers

1. The Government vide Notification No. 38/2023 – Central Tax dated 04th Aug, 2023 inserted the Rule 88D in CGST Rule, 2017 dealing with difference in input tax credit available in GSTR-2B and ITC availed in GSTR-3B. This functionality vis a vis this rule has now started operating on the GST portal.

2. The system now compares the ITC available as per GSTR-2B/2BQ with the ITC claimed as per GSTR-3B/3BQ for each return period. If the claimed ITC exceeds the ITC available as per GSTR-2B by predefined limits, as directed by competent authority, the taxpayer shall receive an intimation in the form of Form DRC-01C.

GSTN issues Advisory on DRC-01C Compliance for ITC Discrepancies
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3. Upon receiving the intimation, the taxpayer must file a response using Form DRC-01C Part B. The taxpayer has the option to either provide details of the payment made to settle the difference using Form DRC-03 or provide an explanation for the difference out of the options provided in the form or even choose a combination of both options and file it.

4.In case, no response is filed by the impacted taxpayers in Form DRC-01C Part B, such taxpayers will not be able to file their subsequent period GSTR-1/IFF.

5. To further help taxpayers with the process, a detailed manual containing the navigation details is available on the GST portal. It offers step-by-step instructions and addresses various scenarios related to the functionality. The link is stated below:

https://setupfiling.in/wp-content/uploads/2023/11/return_compliance_itc_mismatch_intimation_in_form_gst_drc_01c.pdf

FAQs on Return Compliance in Form DRC-01C (Intimation of difference in ITC available and ITC claimed)

1. When can Form DRC-01C be filed?

If you have not filed Form DRC-01C Part B for any period for which you received an intimation in Form DRC-01C Part A, you will not be able to file GSTR-1/IFF for the subsequent period. It is important to ensure timely filing of Form DRC-01C Part B to avoid any interruptions in the filing of GSTR-1/IFF.

2. On which class of taxpayers is Form DRC-01C applicable?

Form DRC-01C is applicable to various types of taxpayers, including regular taxpayers (including SEZ units and SEZ developers), casual taxpayers, and taxpayers who have opted out of the composition scheme.

3. I have not filed the Form DRC-01C for the previous Tax period. Can I still file GSTR-1/IFF for the current Tax period?

If you have not filed Form DRC-01C Part B for any period for which you received an intimation in Form DRC-01C Part A, you will not be able to file GSTR-1/IFF for the subsequent period. It is important to ensure timely filing of Form DRC-01C Part B to avoid any interruptions in the filing of GSTR-1/IFF.

4. How will I be intimated that I have to submit reply in Form DRC-01C Part B?

Once the intimation in Form DRC-01C Part A is generated, a Reference Number will be assigned. You will receive the intimation via email and SMS, which will include the Reference Number.
Please ensure to check both your email and mobile messages for the intimation and keep the Reference Number handy for future reference and correspondence

5. Can Form DRC-01C Part B be filed monthly or quarterly?

For quarterly filers (QRMP), Form DRC-01C will be generated, if applicable, after filing the quarterly GSTR-3B. On the other hand, for monthly filers, Form DRC-01C will be generated on a monthly basis after filing the monthly GSTR-3B. Therefore, Form DRC-01C Part B can be filed
either on a monthly or quarterly basis, depending on the frequency of filing GSTR-3B.

6. After filing the reply for DRC-01C Part B, how much time will it take to unblock the form GSTR-1/IFF? When will I be able to file GSTR-1/IFF?

After filing the reply for DRC-01C Part B, you can instantly file GSTR-1/IFF. If you are facing any issue while filing GSTR-1/IFF, then you need to log out and log in again after a few minutes.

7. While entering the ARN for filing the reply for DRC-01C Part B, I am getting an error message stating that ‘Please provide valid ARN of DRC-03’. Why am I getting this error message?

If you encounter an error message while entering the ARN to file the reply for DRC-01C Part B, please check the following points:

  • Ensure that the ARN is valid and corresponds to the same DRC-03 and GSTIN.
  • The DRC-03 should have been filed on or after the date when DRC-01C Part A was issued.
  • Confirm that the cause of payment specified in the DRC-03 is “Liability mismatch – GSTR1 to GSTR-3B.”
  • The overall tax period should align with the period for which DRC-01C Part A was issued.
    • For monthly filers, the period should be the same, including both the “From” and
      “To” dates.
    • For quarterly filers, it should cover at least one month within the quarter.
8. How can I deselect any reason for the payment difference, after providing the details for the reason selected earlier?

If you deselect any reasons for difference after providing the details, the system will display an error message, requesting for deletion of details already provided. So, after deleting the details entered for the reason selected earlier, you will be able to deselect that reason.