In 2025, thousands of GST-registered businesses in India – including shopkeepers, small traders, startups, and service providers – are receiving GSTR-1 vs GSTR-3B Mismatch Notices in 2025. The GST department is now using AI-based auto-scrutiny to catch even small errors.
In this blog, we’ll explain:
- What is the difference between GSTR-1 and GSTR-3B?
- Why mismatch happens?
- Which legal sections apply?
- How to handle notices like ASMT-10, DRC-01, Rule 88C?
- Real-life case example and how it was resolved
- Prevention tips and compliance checklist
Table of Contents
What is GSTR-1 vs GSTR-3B?
GSTR-1
This return reports outward supplies (sales) made during the month or quarter. It includes invoice-level data:
- B2B Sales (GSTIN buyers)
- B2C Large (above ₹2.5 lakh interstate)
- Exports
- Debit/Credit Notes
It determines the ITC available to your buyers (auto-populated in GSTR-2A/2B).
GSTR-3B
This is a monthly self-declaration return where you:
- Declare total outward tax liability (summary)
- Claim eligible Input Tax Credit (ITC)
- Pay net GST (after ITC adjustment)
Why GSTR-1 vs GSTR-3B Mismatch Notices in 2025 Being Issued?
GSTIN (GST Network) is now auto-matching:
- Outward tax liability in GSTR-1 vs GSTR-3B
- ITC claimed in GSTR-3B vs available in GSTR-2B
Mismatch triggers automated notices under:
- Section 61 (Scrutiny)
- Rule 88C (Mismatch in sales)
- Rule 88D (Mismatch in ITC)
These notices ask for:
- Clarification with supporting documents
- Payment of shortfall via DRC-03
- Or reply with explanation within 7/15 days
Real-Life Example – Mismatch Case in Delhi (2025)
Business: IT Hardware Supplier in Nehru Place, Delhi
Turnover: ₹3 crore annually
Software Used: Tally + GSTR-1 filed by accountant manually
Problem:
- In April 2025:
- GSTR-1 showed ₹25,00,000 in outward taxable supplies
- GSTR-3B filed with only ₹20,00,000
A difference of ₹5 lakh in declared sales (tax not paid on this ₹5L)
Notice Received:
- ASMT-10 under Section 61, with 15 days to reply
- Also received 88C intimation via portal message & email
Reason for Mismatch:
- One large B2B invoice was missed in GSTR-3B due to a software sync issue.
Steps Taken:
- Downloaded both returns from portal
- Prepared reconciliation of invoice-wise data
- Found missing invoice and cross-matched books
- Filed a reply with:
- Reconciliation sheet
- Ledger extract
- GSTR-1 summary
- Paid ₹90,000 in tax & interest using DRC-03
Outcome:
- Case disposed within 3 weeks
- No penalty levied
- Status: “Notice Closed – Voluntary Compliance”
Legal Sections and Rules Involved
| Law | Description |
|---|---|
| Section 37 of CGST Act | Furnishing of GSTR-1 (outward supplies) |
| Section 39 | Furnishing of GSTR-3B |
| Section 61 | Scrutiny of Returns – ASMT-10 |
| Rule 88C | Intimation for tax liability mismatch between GSTR-1 and GSTR-3B |
| Rule 88D | Mismatch between ITC in GSTR-2B vs GSTR-3B |
| Section 73 / 74 | Show Cause Notice if tax is unpaid or claimed wrongfully |
| Form DRC-03 | Voluntary payment of tax with interest |
Common Reasons for Mismatches
| Reason | Explanation |
|---|---|
| Missed invoices in GSTR-3B | Especially if you file GSTR-1 using software and GSTR-3B manually |
| Advance received not shown in 3B | But invoice shown in GSTR-1 |
| Credit notes entered wrongly | Double counted or missed |
| Wrong tax rate applied | Leading to mismatch in tax amount |
| Delayed invoice reporting | GSTR-1 of Month 1, GSTR-3B of Month 2 |
What to Do If You Receive a Notice?
Step-by-Step Action Plan:
- Login to GST portal and download the notice (ASMT-10 / 88C etc.)
- Reconcile books of accounts, GSTR-1, and GSTR-3B
- Use Excel-based reconciliation tools or GST software
- If mismatch is genuine:
- Pay shortfall with interest via DRC-03
- File reply on portal (reply to notice tab)
- If mismatch is explainable:
- Prepare a justification letter
- Attach invoice summary, ledgers, and GSTR filings
Sample Format of Reply (Brief)
Subject: Response to ASMT-10 Notice for GSTR-1 and 3B mismatch – April 2025
Respected Sir/Madam,
I am a registered taxpayer under GST with GSTIN [GST No.].
The mismatch pointed out for the period [April 2025] is due to non-reflection of one invoice in GSTR-3B due to system error.I have now reconciled the data and paid the tax difference along with interest via DRC-03. Copy of challan and reconciliation sheet is attached.
Kindly consider this submission and close the notice.
Regards,
[Name & Signature]
How to Avoid These Notices in the Future?
- Always file GSTR-1 first, then GSTR-3B using same data
- Use proper GST software or tools for auto-match
- Reconcile every month – GSTR-1 vs 3B vs Books
- Avoid backdated invoice entries
- Conduct monthly internal audits
- Maintain invoice logs and digital backup
Conclusion
With automated scrutiny now active in 2025, even small mismatches between GSTR-1 and GSTR-3B are triggering notices. The key is to maintain proper records, file accurately, and reconcile regularly. The good news is: if the mistake is genuine and payment is made voluntarily, the department usually closes the case without penalty.
If you’ve received a mismatch notice or need help with reconciliation and DRC-03 filing, reach out to our expert GST team at TaxGiveIndia.com – we’re here to assist you with fast and hassle-free resolution.