GST portal has been issuing DRC-01C intimations to enterprises

Thanks for sharing this update, Ram Avtar!

Yes, the GST portal issuing DRC-01C intimations has become a key compliance alert for many enterprises since November 2023.

What’s happening with DRC-01C?

• The portal is cross-verifying Input Tax Credit (ITC) claimed in GSTR-3B with the actual GSTR-2B auto-drafted ITC.

• When ITC claimed in GSTR-3B exceeds the available ITC in GSTR-2B, the portal issues DRC-01C to notify the taxpayer about excess ITC claim.

• This is a preventive action by the department to curb wrongful or excess ITC claims upfront.

Why should enterprises be cautious?

• Excess ITC claims can lead to blocking of next month’s GSTR-1 / IFF filings, affecting sales reporting and ITC availability for buyers.

• It may also trigger demand notices under Sections 73 or 74 (for scrutiny or audit) if excess ITC is not reversed timely.

• This impacts cash flows and compliance standing.

Recommended Action Steps:

1. Reconcile your GSTR-3B ITC claims with GSTR-2B regularly before filing returns.

2. If excess ITC is identified, reverse the excess in the subsequent GSTR-3B filing proactively.

3. Respond timely to DRC-01C intimations on the GST portal with supporting documents.

4. Maintain detailed records of invoices, debit/credit notes, and correspondence.

5. Consult your GST practitioner or tax advisor for a thorough review.