DRC-01B: GSTR-1 vs GSTR-3B Liability Mismatch

In short

• The GST portal compares the tax on your sales in GSTR-1 (or IFF) with the tax you paid in GSTR-3B. When GSTR-1 is higher by more than the limit in the rules, it sends Part A of Form DRC-01B.
• You answer in Part B. Either pay the difference with interest through Form DRC-03, explain it, or do part of each.
• If you do nothing, the portal will not let you file GSTR-1 or IFF for a later period. The unpaid amount can also be recovered from you directly.

What the intimation is, and the law behind it

DRC-01B comes from rule 88C of the CGST Rules, 2017. The rule applies when the output tax in GSTR-1 or IFF for a period is higher than the output tax in GSTR-3B for that period, by more than the amount and percentage recommended by the GST Council. The limits currently used on this site are in the box below this guide. Both limits are set by notification and can change, so check that box and the intimation itself.

The intimation is computer-generated. It is sent to your registered email and appears on the portal under Services → User Services → View Additional Notices/Orders and on the return dashboard. It is not a show cause notice, and no officer has decided anything yet. It is a system check asking you to settle or explain the gap.

Part B of DRC-01B gives you three ways to answer:

1. Pay the difference in full. Pay it with interest through DRC-03 and quote that payment in Part B.
2. Explain the difference. Choose a reason and add an explanation, for example "tax paid in a later GSTR-3B" or "GSTR-1 reported wrongly and amended".
3. A mix. Pay the part you accept and explain the rest.

The time to reply is printed on the intimation. The figure this site uses is in the box below.

What happens if you ignore it

• GSTR-1 gets blocked. Rule 59(6)(d) stops you filing GSTR-1 or IFF for a later period until you pay or reply. For a marketplace seller this quickly matters: B2B buyers cannot see your invoices in their GSTR-2B, and the next GSTR-3B cannot be prepared from a filed GSTR-1.
• The amount can be recovered. Rule 88C(3) treats the unpaid, unexplained amount as recoverable under section 79 of the CGST Act. Section 79 covers recovery from your bank account, from people who owe you money, and other routes.
• It can lead to a demand. An explanation the officer does not accept can still become a show cause notice. That would come under section 73 or 74, or section 74A for FY 2024-25 onwards.

Why ecommerce sellers receive it

The gap is almost always one of the patterns below. Find which one before you reply.

• GSTR-1 and GSTR-3B come from different data. GSTR-1 is often built from the marketplace's tax report. GSTR-3B is often worked out from the books or a summary sheet. Returns, cancellations and replacement orders are handled differently in each, so the totals drift apart.
• Returns are deducted in one return only. A sales return booked as a credit note reduces tax in GSTR-1. A seller who also nets returns off in GSTR-3B, or nets them off twice, creates an artificial gap.
• Timing. Sales reported in GSTR-1 for one month and paid in the next GSTR-3B show as a mismatch in the first month. This is common in the month of a marketplace sale event, and when a month is closed early.
• Amendments. A GSTR-1 amendment in a later period changes the earlier month's figures, but the GSTR-3B of that month cannot be revised.
• Multiple marketplaces and the seller's own website. One channel is left out of GSTR-3B, usually the website sales, or the B2B invoices raised outside the marketplace.
• Rate or place-of-supply errors. The tax amount itself differs because GSTR-1 and GSTR-3B used different rates, or split CGST/SGST and IGST differently.
• Hard-locked GSTR-3B. From the July 2025 tax period, the tax liability that GSTR-3B fills in from GSTR-1, GSTR-1A or IFF cannot be edited in GSTR-3B. Corrections have to be made through GSTR-1A before GSTR-3B is filed. A seller who corrects only in their books, not in GSTR-1A, carries the difference into the comparison.

Step-by-step: how to deal with it

1. Note the date and the period. Write down when the intimation was generated and which tax period it covers. The reply clock starts from the date on the intimation, not the date you read it.
2. Download both returns for that period. Download the filed GSTR-1 (or IFF and GSTR-1A) and the filed GSTR-3B. Also download the amendments filed in later GSTR-1s that touch the period.
3. Rebuild the gap line by line. Work it out tax head by tax head: IGST, CGST, SGST/UTGST and cess. The difference shown on the intimation must equal the sum of your explanations. A reply that explains a different total is likely to be rejected.
4. Sort every part of the gap into one of three groups:
   • Timing. Tax paid in a later GSTR-3B. Keep the later return's reference number (ARN) and its payment entries.
   • Reporting error. GSTR-1 was overstated, for example a duplicated marketplace report or an invoice cancelled after reporting. Correct it through a GSTR-1 amendment or GSTR-1A where the portal allows. Keep the corrected figures.
   • Real short payment. Tax genuinely due that was never paid. Pay it through DRC-03 with interest.
5. Work out interest on any short payment. Interest under section 50 runs from the due date of the original GSTR-3B to the date of payment. It is charged on the part that had to be paid in cash. Use the rate stated in section 50 as notified, not an estimate.
6. File Part B before the deadline. Choose the right option, quote any DRC-03 reference and its date, and write a short, factual explanation. Keep a copy of the filed reply.
7. Watch the next filing. Check that GSTR-1 for the following period files normally. If the block stays after a reply, raise it on the GST helpdesk with the Part B acknowledgement.

Documents to gather

• Filed GSTR-1/IFF, GSTR-1A (if any) and GSTR-3B for the period, plus any later return that settled the difference.
• Marketplace tax reports for the period. These are the order-level sales and returns reports each marketplace provides for GST.
• Your sales register, credit-note register and the return/cancellation report, by channel.
• Proof of payment: the cash ledger and DRC-03 for any amount paid.
• A one-page reconciliation: GSTR-1 tax, minus each explained item, equals GSTR-3B tax.

How to word the reply

Keep Part B short, factual and arithmetic. A structure that works:

The difference of [amount] for [period] is made up of: (a) [amount] — tax on sales reported in GSTR-1 for [period] and paid in GSTR-3B for [later period], ARN [number]; (b) [amount] — sales returns from [marketplace] reported as credit notes in GSTR-1 and also deducted in GSTR-3B, corrected in [GSTR-1A/amendment, period]; (c) [amount] — paid through DRC-03 on [date], reference [number], with interest of [amount]. A reconciliation is attached.

Avoid general statements such as "data mismatch due to technical issues". They give the officer nothing to check, and they often lead to a show cause notice.

Common mistakes

• Paying the full difference to make the intimation go away. Part of the gap may be a reporting error, so this overpays tax. A refund of excess payment is a separate, slower process.
• Explaining a timing difference without interest. Tax paid late still carries interest, even if the total for the year is right.
• Replying with a different total. The explanations must add up to the difference on the intimation.
• Ignoring it because the annual return will fix it. The block on GSTR-1 applies now, and GSTR-9 does not cancel an unanswered intimation.

Preventing it next time

• Compare before filing. Before filing GSTR-3B each month, compare the liability in your draft GSTR-3B with your filed GSTR-1. The GST return mismatch checker below does this.
• Use one source for both returns. Build GSTR-1 and GSTR-3B from the same channel-wise sales file. Book returns once, as credit notes.
• Correct through GSTR-1A. Make corrections through GSTR-1A before GSTR-3B is filed, while the period is still open.
• Keep a monthly reconciliation file. Keep one file per GSTIN, so a future officer's question can be answered from records rather than rebuilt from memory.

When to take professional help

Take help when:

• the difference is large;
• it is part of a pattern across several months;
• GSTR-1 is already blocked;
• the intimation is followed by a show cause notice under section 73, 74 or 74A.

A demand order can be appealed, but the time limits for appeals are strict. Act from the date of the order.