DRC 03 payment method

Dear Mam Sir ,

We have already paid ITC-03 (Composition Scheme) for ITC input reversal. We have now received a notice from GST dept to pay 18% interest. Please guide me on how to pay this interest via DRC-03.
Replies (2)
Quick Summary
This discussion provides a step-by-step guide on how to pay GST interest on ITC reversals using Form DRC-03. It explains how to log in to the GST portal, navigate to the DRC-03 section, and accurately fill in details such as the tax period and interest amount. The guide also covers important considerations like verifying calculations, keeping payment records, and responding to GST department notices.

To pay the interest on ITC reversal via DRC-03, follow these steps:

Step-by-Step Process 1. *Login to GST Portal*: Log in to the GST portal with your credentials. 

2. *Navigate to DRC-03*: Go to the "Services" tab > "User Services" > "Payment of Tax" > "DRC-03". 

3. *Fill in Details*: Fill in the required details, including: - 

*Act*: Select "Goods and Services Tax". - *Tax Period*: Enter the tax period for which the interest is payable. - 

*Tax Liability*: Select "Interest" as the reason for payment. - *Interest Amount*: Enter the interest amount calculated (18% of the ITC reversal amount). 4. 

*Generate Challan*: Generate the challan and proceed to make the payment. 5. *Make Payment*: Make the payment using the preferred payment mode (e.g., net banking, credit/debit card). Additional Considerations - 

*Verify Calculation*: Ensure that the interest calculation is correct and verify it with your GST consultant or accountant if needed. -

 *Keep Records: Keep a record of the payment, including the challan and payment confirmation, for future reference. -

Respond to Notice*: Respond to the GST department's notice, providing details of the payment made, to avoid any further action [1]. If you need further assistance or clarification, feel free to ask.

Form DRC-03 is used to make voluntary payments of GST, interest, and penalty ,  either before a show cause notice (SCN) or after receiving one.

Here is how the payment works:

Step 1: Log into the GST portal. Go to Services > User Services > My Applications > Show Cause Notice > Initiate Payment (or directly via Ledgers > Payment of Tax > DRC-03 for voluntary payment).

Step 2: Select the reason for payment: pre-SCN voluntary payment (Section 73/74/74A), or payment against DRC-01.

Step 3: For TAX and INTEREST: You can use the ITC balance in your Electronic Credit Ledger (IGST credit can offset CGST+SGST liability in the prescribed order).

For PENALTY: Must be paid from the CASH ledger. ITC CANNOT be used for penalty payment.

Step 4: After payment, the DRC-03 acknowledgement is available under User Services > My Applications.

IMPORTANT: If you are paying within 30 days of DRC-01 (SCN) receipt under Section 74 (fraud cases), penalty is 25% of tax. If you pay before the SCN under Section 73, no penalty is due.

This [GST DRC-01 notice guide](https://taxgarden.in/blog/gst-drc-01-show-cause-notice-reply-drc-06-guide-india-2026) explains the full DRC process including Section 73/74/74A penalty reduction steps.

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