In India's GST system, maintaining proper records is always quite important. GSTR-1 shows the sales. GSTR-3B indicates a summary of tax payable. GSTR-3B sometimes happens smaller than the one on GSTR-1. This attracts a notice from tax authorities. The notice is called Form DRC-01B. Tax authorities will tell the business to rectify the error. A company can either pay the difference or explain why a mismatch exists. Quick reaction is imperative. This avoids penalties and keeps the business in compliance with GST rules. Sound compliance necessitates knowledge about tax payments.

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What is Form DRC-01B?

To rectify differences between GSTR-1 and GSTR-3B, the GST Department of India introduced Form DRC-01B. This form is one of the important GST documents.

The GSTR-1 document represents sales made by the business. The GSTR-3B document represents tax paid, due, and input tax credit. Sometimes, these two documents show a mismatch. In case GSTR-3B shows lesser tax than GSTR-1, then the GST department sends Form DRC-01B to the taxpayer.

This form makes the taxpayer aware of his mistake. There are two options before the taxpayer in that case:

• The difference in tax paid, or
• Thus, one knows why there is a difference.

It is very much essential to handle such cases as soon as possible in order not to impose penalties and put the business on track again with GST rules.

Difference between GSTR-1 and GSTR-3B

When is Form DRC-01B issued?

The department issues Form DRC-01B if the department finds mismatches between GSTR-1 and GSTR-3B. Some of the common reasons are:

• Sale reported in GSTR-1 is more than the tax in GSTR-3B.
• There is an empty invoiced or taxable amount in GSTR-3B.

The department usually sends Form DRC-01B as a warning when such issues arise. Taxpayers are supposed to respond promptly so they do not suffer penalties or legal action. This is very important.

Procedure to file part B of Form DRC-01B

You'll have to reply using Part B of the Form DRC-01B if you receive it. Follow these steps-

Step 1: Log in to the GST portal.

Step 2: Tap the login button. Append your username, password, and captcha code for login.

Step 3: Then, after login, go to the Services menu. Now tap on Returns and then on the Return Compliance option.

Step 4: You should now see a section marked 'Liability Mismatch (DRC-01B).' Click 'View' to view details.

Step 5: At this stage, you will be presented with a summary and details page of the essentials found in your file; these include your Reference Number, Form Type, Financial Year, Return Period, and Status. Click on the hyperlink located in your Reference Number.

Step 6: Using this hyperlink will take you directly to the Liability Mismatch (DRC-01B). There are two parts:

• Part A: It is an auto notice showing liability difference between GSTR-1 (sales) and GSTR-3B (summary return). This part cannot be modified.
• Part B: You will give your answer regarding the difference in this part.

Step 7: Answer options regarding the difference in liability:

• Possibility 1: If you agree with the difference, you have to pay the difference amount.
• Possibility 2: If you do not accept the difference, then you must proffer a valid reason why you do not accept the difference.
• Possibility 3: If you accept part of the difference, pay that and then explain the remaining difference.

Step 8: In Part B you will fill in the relevant details:

• If you accept the difference then state the ARN of DRC-03 as proof of your payment.
• If you don't like the variation, mention your reason. You can choose one from the below options or just type in another reason.

Step 9: Check the box. From the drop-down list, mention the name of the person who is authorized and a description of the place of signing

Step 10: Now hit SAVE on your response

Step 11: Once all the details are verified, file GST DRC-01B.

Conclusion

Form DRC-01B is another important document for GST compliance. This will enable the authorities to trace mismatches between GSTR-1 and GSTR-3B. The taxpayer has to respond quickly to this form. You can either pay the tax difference or provide an explanation for the mismatch. Frequent checks on the returns prevent the appearance of such notices. Such process ensures GST compliances become smooth and hassle-free. Maintaining your records accurate is important. It saves time and efforts in the long run. Thus, GST filings organized avoid penalty charges. It would really help make the affair smooth for all concerned if individuals proactively took the initiative.

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