Did you receive a DRC-01A notice on the GST portal and don’t know what to do? Don’t worry. In this blog, we’ll explain everything – with a real example, how to reply, and how to avoid penalties.
Table of Contents
What is DRC-01A in GST?
DRC-01A is a Pre-Show Cause Notice issued by GST officers when they find issues like:
- You paid less tax
- You claimed excess ITC
- Or there’s a mismatch in returns
It is issued before sending an official SCN (DRC-01) and gives you a chance to:
- Pay the dues voluntarily
- OR Explain your side
Not replying may lead to a heavy penalty or DRC-01 (official Show Cause Notice).
GST Law Section Behind DRC-01A
| Provision | Details |
|---|---|
| Section 73 | For errors without fraud |
| Section 74 | For fraud/wilful misstatement |
| Rule 142(1A) | Requires issuing DRC-01A before DRC-01 |
Real Example – ITC Mismatch Case (FY 2023–24)
Business: XYZ Traders (B2B Electronics Supplier)
Period: July 2023 – March 2024
Issue:
- Claimed ₹5,00,000 ITC in GSTR-3B
- But in GSTR-2B, only ₹4,00,000 eligible ITC
- GST officer issued DRC-01A for ₹1,00,000 difference + interest
DRC-01A Notice Summary:
“As per our records, your ITC claimed exceeds eligible ITC. You are advised to pay ₹1,00,000 + interest using Form DRC-03, or reply to this notice within 7 days.”
How to Reply to Notice?
Option 1: If You Agree
You accept the issue and want to close the case.
Steps to Pay & Reply:
- Login to GST portal→ Go to Services → Returns → Payment → Create Challan
- Select DRC-03 → Pay ₹1,00,000 (tax) + interest
- Download challan receipt
- Go to DRC-01A (Part B) → Select “Agreed and paid via DRC-03”
- Upload challan and submit
This closes the matter – no penalty or further notice.
Option 2: If You Disagree
You believe the ITC is valid and can justify it.
Here’s a sample reply you can submit in Part B of DRC-01A:
Sample Case Reply to DRC-01A – ITC Mismatch
Subject: Response to DRC-01A Notice for FY 2023–24 – Alleged Excess ITC Claim
To,
The Proper Officer,
Goods and Services Tax Department
GSTIN: 06ABCDE1234F1Z5
Legal Name: XYZ Traders
Period: July 2023 to March 2024
Reference: DRC-01A Notice dated 12 July 2025
Respected Sir/Madam,
This is in reference to the DRC-01A notice received by us regarding an alleged excess Input Tax Credit (ITC) claim of ₹1,00,000 for the above-mentioned period.
We respectfully submit the following for your kind consideration:
- The ITC claimed in GSTR-3B for the said period is fully backed by valid tax invoices issued by registered suppliers for goods and services received and utilized for business purposes.
- The mismatch appears to have occurred due to delayed filing of GSTR-1 by certain vendors. As a result, the said ITC was not reflected in the corresponding GSTR-2B but appeared in subsequent months (April 2024 onwards).
- In support of our submission, we are enclosing the following documents:
- Copies of the tax invoices related to the disputed ITC,
- Reconciliation statement of ITC between GSTR-3B and GSTR-2B/GSTR-2A, and
- Copies of communication made with vendors requesting timely filing of returns.
- We would like to clarify that there was no intention to claim ineligible ITC, and the same has already been reflected in later periods as the vendors filed their returns.
In view of the above facts, we humbly request you to drop the proposed demand under DRC-01A.
We are available to provide any further clarification or documents if required.
Thank you for your consideration.
Yours sincerely,
For XYZ Traders
(Authorized Signatory)
Date: 15 July 2025
Email: xyztraders@gmail.com
Mobile: +91-98xxxxxxx21
Attachments:
- GSTR-3B filed copies
- GSTR-2B/GSTR-2A comparison report
- Supplier invoices
- Vendor follow-up emails (if any)
What If You Ignore Show Cause Notice?
Then you will receive a DRC-01 – the actual Show Cause Notice. This leads to:
- Legal proceedings
- Penalty up to 100%
- Possible blocking of ITC
Summary Table
| Form | Purpose | Your Action |
|---|---|---|
| DRC-01A | Pre-show cause | Voluntary Payment or Reply |
| DRC-03 | Payment of liability | File if you agree |
| DRC-01 | Official SCN | Must reply within time |
Tips to Handle This Notice
- File your GSTR-3B and GSTR-1 correctly every month
- Reconcile ITC monthly with GSTR-2B
- Keep vendor communication in record
- Respond quickly to avoid DRC-01
Final Words
DRC-01A is not a final order – it’s a warning with an opportunity. Whether you agree or disagree, replying with facts can save you from penalties. Consult with taxgiveindia.com for notices reply with less complication.