DRC-01C (GST): Meaning, Reasons & How to Respond in 2026

DRC-01C (GST): What This Automated ITC Mismatch Notice Means and How to Respond in 2026

If you've recently filed GSTR-3B and found yourself blocked from filing your next GSTR-1, there's a good chance a Form DRC-01C is sitting in your GST portal account, waiting for a reply. It's one of the newer additions to GST's enforcement toolkit, and unlike a traditional show-cause notice, no officer reviewed your return before it landed in your inbox. The system did.

Here's what DRC-01C actually is, why you got one, and exactly what to do about it before the seven-day clock runs out.

What Is Form GST DRC-01C?

DRC-01C is a system-generated intimation under Rule 88D of the CGST Rules, flagging a gap between the input tax credit shown as available in your GSTR-2B and the ITC you actually claimed in GSTR-3B. The full title on the form itself is "Intimation of difference in input tax credit available in auto-generated statement containing the details of input tax credit and that availed in return."

In plain terms: GSTN now runs an automatic comparison every return period. GSTR-2B is checked against GSTR-3B, and if the ITC you claimed exceeds what's reflected in GSTR-2B by more than a threshold set by the GST Council, the system fires off a DRC-01C automatically — no human reviewer involved at any stage.

This isn't a one-off measure either. The mechanism traces back to a Council decision well before its rollout. Back at the 50th GST Council meeting, the Council decided to send intimations for excess ITC claims in GSTR-3B compared to GSTR-2B above a certain limit through DRC-01C, specifically to seek a taxpayer response before any further action. What's changed since then is the scale and speed at which it's now being enforced.

Who Receives a DRC-01C Notice

DRC-01C applies to regular taxpayers, including SEZ units and developers, casual taxpayers, and businesses that have opted out of the composition scheme. If you're filing GSTR-3B and claiming ITC, you're in scope.

The notice doesn't discriminate by company size. Whether you're a small trader or a large manufacturer with multiple GSTINs, the comparison runs the same way: GSTR-2B as the baseline, GSTR-3B as the claim, and a configurable threshold deciding when the gap is large enough to flag.

Why the Gap Happens in the First Place

This is the part most taxpayers get wrong: a DRC-01C notice does not automatically mean you've done something improper. GSTR-2B is a static, auto-drafted statement, and it doesn't always capture every legitimate credit a business is entitled to in the period it's claimed. Some of the common, entirely legal reasons a mismatch shows up include:

• ITC on SEZ inward supplies that simply doesn't get reflected in GSTR-2B, even though the credit is valid.
• Re-credit of previously reversed ITC, either because payment was eventually made to the supplier or because the supplier later filed their return, restoring credit reversed earlier under Rule 37.
• Timing differences, where ITC related to an invoice appearing in an earlier GSTR-2B is claimed later because the goods or services hadn't actually been received in that period.
• Genuine filing errors, such as a typo or an incorrect tax rate entered in GSTR-3B, that gets corrected in a subsequent period.
• Import-related credit, claimed against a Bill of Entry, which technically falls outside Section 16(2)(aa) of the CGST Act since that provision refers only to invoices and debit notes, not bills of entry — meaning a DRC-01C triggered purely by import ITC is arguably not even applicable in the first place.

The point is straightforward: read the notice carefully before assuming the worst. A lot of these gaps are explainable with documentation you already have on file.

What Happens If You Ignore It

This is where DRC-01C has real teeth, and it's worth taking seriously.

Both DRC-01B and DRC-01C notices require action within seven days from the date of intimation, and taxpayers must either pay the differential amount with interest or submit a satisfactory explanation through Part B of the form. Skip that window and the consequences aren't theoretical.

If you don't file any response by the due date, you won't be able to file GSTR-1 or IFF for the next return period. That alone can cascade into late filing penalties, disrupted invoicing for your buyers, and strained vendor relationships if your own GSTR-1 starts slipping.

Beyond the filing block, an unpaid amount under DRC-01C becomes recoverable under Section 79 without the department needing to issue a separate show-cause notice first. In other words, silence doesn't buy you time — it accelerates recovery action.

How to Check for a DRC-01C Notice on the GST Portal

You'll typically get a heads-up by email and SMS, but it's worth checking the portal directly rather than relying on notifications landing in the right inbox. Here's the path:

1. Log in to gst.gov.in with your credentials.
2. Go to Services >> Returns >> Return Compliance.
3. Click View on the ITC Mismatch (DRC-01C) tile.
4. Click the reference number hyperlink to open the notice.
5. You'll see Part A and Part B. Part A shows the ITC difference as calculated by the system; Part B is where you submit your reply.

You can also search by reference number, return period, or status (pending versus completed) if you're trying to locate a specific notice.

How to Respond to DRC-01C Part B

Once you're in the form, you have essentially two routes, and you're allowed to combine them:

Pay the difference. If, after reviewing your records, the excess ITC claim genuinely looks incorrect, the cleanest path is to pay the differential through Form DRC-03 and reference that payment in your Part B reply.

Explain the difference. If the gap is legitimate, you select the relevant reason from the portal's drop-down list. Common reasons available include ITC not availed in earlier tax periods because goods or services hadn't been received yet, including cases of goods received in instalments, and ITC availed now that relates to invoices reported in an earlier GSTR-2B but not disclosed in 4(D)(1) of that period's GSTR-3B. There's also an "Others" category for situations that don't fit the pre-listed reasons, where you can add free-text remarks.

A few practical points worth keeping in mind when filing:

• For QRMP (quarterly) filers, DRC-01C is generated after the quarterly GSTR-3B is filed; for monthly filers, it's generated monthly — so the response cadence matches your filing frequency, not a fixed monthly cycle regardless of how you file.
• Once you submit your Part B reply, GSTR-1 or IFF filing unblocks almost immediately. If it doesn't, logging out and back in after a few minutes usually resolves it.
• If you're referencing a DRC-03 payment in your reply, that payment needs to be made on or after the date Part A of the notice was issued, and the tax period covered should align with the period the DRC-01C itself relates to.
• The form is filed using DSC or EVC, same as most other return-related submissions on the portal, so make sure your authentication method is ready before you start.

DRC-01C vs. DRC-01B: Don't Mix Them Up

These two get confused constantly because they arrived around the same time and share a numbering pattern, but they're checking completely different things.

DRC-01B flags a mismatch between the tax liability declared in GSTR-1 (or IFF) and the tax actually paid through GSTR-3B — it's an output-side check, looking at whether you paid what you reported as your liability.

DRC-01C, by contrast, is entirely about the input side: ITC claimed in GSTR-3B against what your GSTR-2B says you're eligible for. Both carry the same seven-day response window and the same filing-block consequence if ignored, but they're triggered by different data comparisons and need different documentation to resolve.

Why This Matters More in 2026 Than It Did at Launch

GST enforcement has shifted decisively from manual scrutiny to automated, data-driven triangulation. Tax authorities now cross-validate GSTR-1, GSTR-3B, GSTR-2B, e-invoicing, and e-way bill data simultaneously, identifying discrepancies at scale and issuing intimations without any officer needing to look at the file first. DRC-01C was one of the earliest forms built specifically for this kind of automated triangulation, and its scope and threshold sensitivity have only tightened since rollout.

That means the old habit of "we'll sort out the ITC mismatch at year-end during GSTR-9 reconciliation" doesn't really hold anymore. By the time annual reconciliation rolls around, a DRC-01C may have already blocked a filing cycle, triggered interest, or escalated toward recovery under Section 79.

How to Avoid Getting One in the First Place

The practical fix is unglamorous but effective: reconcile GSTR-2B against your purchase register and GSTR-3B before you file, not after. A few habits that meaningfully cut down DRC-01C exposure:

• Match every ITC claim in GSTR-3B against what's actually reflected in that period's GSTR-2B before submitting the return, rather than relying on memory or last month's numbers.
• Keep a clear audit trail for any ITC claimed in a later period than when it first appeared in GSTR-2B — instalment receipts, delayed goods receipt, and similar timing gaps are common and defensible, but only if you can document them.
• Track vendor filing behaviour. A supplier who files late or inconsistently is the single biggest driver of GSTR-2B versus GSTR-3B gaps that have nothing to do with your own bookkeeping.
• Don't wait for the notice to do this reconciliation. Running it proactively each return period is far less disruptive than untangling it under a seven-day deadline with GSTR-1 filing on hold.

conclusion

DRC-01C is a system check, not an accusation. Plenty of legitimate ITC scenarios trigger it — SEZ supplies, re-credited amounts, timing differences, even import-related credit that arguably shouldn't be flagged at all. But the seven-day window is real, and the GSTR-1 filing block that follows non-response is immediate and disruptive. The safest position is to know what's in your GSTR-2B before you file GSTR-3B, so a DRC-01C, if it shows up at all, is something you can explain in five minutes rather than scramble to investigate from scratch.

Frequently Asked Questions

What is Form DRC-01C under GST?

It's an intimation of difference in input tax credit, comparing the ITC available in your auto-generated GSTR-2B statement against the ITC actually availed in your GSTR-3B return, issued automatically once the gap crosses a Council-prescribed threshold.

How many days do I have to respond to a DRC-01C notice?

Seven days from the date the intimation is issued. You can either pay the differential with interest or file an explanation through Part B.

What happens if I don't respond to DRC-01C in time?

You won't be able to file GSTR-1 or IFF for the next return period, and the unpaid amount becomes recoverable under Section 79 without the department issuing a separate show-cause notice.

Is DRC-01C the same as DRC-01B?

No. DRC-01B checks GSTR-1 liability against GSTR-3B tax paid (an output-side mismatch). DRC-01C checks GSTR-2B ITC against GSTR-3B ITC claimed (an input-side mismatch). Both carry a seven-day response window.

Can I still claim ITC after receiving a DRC-01C?

Yes, provided your underlying claim is genuine and properly documented. The notice is a prompt to explain or correct the gap, not an automatic disallowance of credit.

How do I check if I have a pending DRC-01C notice?

Log in to the GST portal, go to Services >> Returns >> Return Compliance, and open the ITC Mismatch (DRC-01C) tile to see pending and completed records.

Does DRC-01C apply to quarterly (QRMP) filers?

Yes. For QRMP filers, DRC-01C is generated after the quarterly GSTR-3B is filed; for monthly filers, it's generated every month in line with their filing cycle.