Tax Consultant
1645 Points
Posted on 04 August 2026
Use GSTR-3B for routine ITC reversals and DRC-03 for demand-related payments. Here is when each applies:
GSTR-3B (Table 4B):
- Routine reversals: blocked ITC under Section 17(5), Rule 42 proportionate reversal (exempt supplies), Rule 43 (capital goods), IMS-related reversals for supplier mismatches
- These form part of the regular return record and are the first place to report any reversal for ongoing compliance
DRC-03:
- Voluntary payment of tax, interest, or penalty in response to a notice (DRC-01A, DRC-01) or before an assessment order
- Paying the interest component separately , this is critical
- Pre-deposit before filing an appeal
The key distinction: if the reversal has associated interest liability, you MUST pay the interest via DRC-03. GSTR-3B cannot carry an interest payment. So in practice a reversal of wrongly claimed ITC typically requires both: report reversal in GSTR-3B Table 4(B)(2) AND pay the interest separately via DRC-03.
This [ITC reversal guide covering Rule 42 and Rule 43](https://taxgarden.in/blog/itc-reversal-rule-42-43-common-credit-capital-goods-gst-india-2026) walks through the specific tables and the interest computation under Section 50(3).