A GST notice in Form DRC-01 is the summary of a show cause notice (SCN) in which the tax officer proposes a demand of tax, interest and penalty against you. You reply in Form DRC-06 on the GST portal within the time stated in the notice, either by contesting the demand point by point with documents or by paying the amount through DRC-03. Paying early can reduce or remove the penalty, so act as soon as the notice arrives.
What Is a DRC-01 Notice?
Under Rule 142(1)(a) of the CGST Rules, 2017, whenever a show cause notice is issued, the proper officer must also upload a summary of it electronically in Form GST DRC-01. The SCN is the detailed document that sets out the facts, the legal grounds and the amount proposed; DRC-01 is the summary that appears on your GST portal account. Courts have held that the summary cannot replace a proper SCN, so always download and read both.
DRC-01 is issued for demands under several provisions, most commonly:
- Section 73 – tax not paid, short paid, wrongly refunded or ITC wrongly availed, without fraud (periods up to FY 2023-24).
- Section 74 – the same, but where fraud, wilful misstatement or suppression of facts is alleged (periods up to FY 2023-24).
- Section 74A – a single provision for both types of cases for FY 2024-25 onwards, in force from 1 November 2024.
- Other sections such as 52, 76 and 122 to 130 (TCS, tax collected but not paid, penalties and confiscation).
DRC-01 vs DRC-01A and Other DRC Forms
Many taxpayers confuse the different DRC forms. Here is what each one does in a demand case:
| Form | Purpose |
|---|---|
| DRC-01A | Pre-notice intimation of tax ascertained as payable. The officer may issue it before the SCN; you can pay or object in Part B. |
| DRC-01 | Summary of the show cause notice (the formal start of adjudication). |
| DRC-03 | Voluntary payment of tax, interest or penalty by the taxpayer. |
| DRC-04 | System acknowledgement of a DRC-03 payment. |
| DRC-05 | Order concluding the proceedings after payment. |
| DRC-06 | Your reply to the show cause notice. |
| DRC-07 | Summary of the final order, which also acts as the recovery notice. |
If you received a scrutiny notice in ASMT-10 earlier and did not resolve it, a DRC-01 is often the next step. See our guide on how to reply to an ASMT-10 notice.
Time Limits for Show Cause Notice and Order
Before drafting a reply, check whether the notice itself was issued in time. A time-barred notice is a strong legal ground in your reply.
| Section | Period covered | Last date to issue SCN | Last date for order |
|---|---|---|---|
| 73 (no fraud) | Up to FY 2023-24 | At least 3 months before the order deadline | 3 years from the due date of the annual return |
| 74 (fraud) | Up to FY 2023-24 | At least 6 months before the order deadline | 5 years from the due date of the annual return |
| 74A (all cases) | FY 2024-25 onwards | 42 months from the due date of the annual return (or date of erroneous refund) | 12 months from the date of the SCN, extendable by up to 6 months |
Under Section 74A, no notice is issued if the tax involved for a financial year is less than Rs. 1,000.
Penalty and the Benefit of Paying Early
If part or all of the demand is genuinely payable, paying tax with interest through DRC-03 at the right time reduces the penalty sharply:
| When you pay tax + interest | Section 73 | Section 74 | Section 74A (no fraud) | Section 74A (fraud) |
|---|---|---|---|---|
| Before the SCN | No penalty | 15% of tax | No penalty | 15% of tax |
| After the SCN | No penalty if paid within 30 days | 25% of tax if paid within 30 days | No penalty if paid within 60 days | 25% of tax if paid within 60 days |
| After the order | 10% of tax or Rs. 10,000, whichever is higher | 50% of tax if paid within 30 days of the order | 10% of tax or Rs. 10,000, whichever is higher | 50% of tax if paid within 60 days of the order |
Interest is payable in every case where tax was short paid. Always pay through DRC-03 and quote the ARN in your reply so the officer can conclude the case with DRC-05.
How to Reply to a DRC-01 Notice: Step by Step
Step 1: Download the SCN and DRC-01
Log in to the GST portal and go to Services > User Services > View Additional Notices/Orders. Open the case and download the notice and all attachments. Note the section invoked, the tax period, each allegation, the amount proposed and the reply date.
Step 2: Check the legal validity of the notice
Confirm the notice was issued within the time limit, by the proper officer, with a detailed SCN (not just a summary), and under the correct section. If Section 74 or the fraud limb of 74A is invoked, check whether the notice actually shows fraud or suppression; if not, that is a key point to argue.
Step 3: Reconcile your records
Compare GSTR-1, GSTR-3B, GSTR-2A/2B, GSTR-9/9C, books of accounts and e-way bills for the period. For each allegation, decide whether it is correct, partly correct or wrong.
Step 4: Pay the admitted amount, if any
For points you accept, pay tax and interest (and penalty where applicable) through DRC-03 within the reduced-penalty window shown above.
Step 5: File the reply in DRC-06
- In the case details page, open the Replies tab and choose Add Reply.
- The notice type, SCN reference, date and financial year are pre-filled.
- Enter your reply and upload your reply letter and supporting documents.
- Select whether you want a personal hearing.
- Complete the verification, preview the reply and click File.
- Sign with DSC or EVC and save the ARN.
Step 6: Attend the personal hearing
Under Section 75(4), an opportunity of hearing must be given if you request it in writing or if an adverse decision is contemplated. Under Section 75(5), adjournments can be granted for sufficient cause but not more than three times. After the hearing, the officer passes an order, with its summary in DRC-07.
DRC-01 Reply Format (Sample Structure)
To,
The Proper Officer,
[Office / Ward / Range]
Subject: Reply to Show Cause Notice No. [reference] dated [date]
and summary in Form GST DRC-01
GSTIN: [your GSTIN] Financial year: [FY] Section: [73/74/74A]
Respected Sir/Madam,
1. Preliminary submission: We deny the allegations except where
expressly admitted below.
2. Legal objections (if any):
a) The notice is time-barred under section [__].
b) No fact of fraud or suppression is shown; section 74/74A(fraud)
cannot be invoked.
3. Point-wise reply:
Allegation 1: [as in SCN]
Our reply:
Allegation 2: [as in SCN]
Our reply: [admitted; tax Rs. __ and interest Rs. __ paid
through DRC-03 ARN ____ dated ____]
4. Documents enclosed: reconciliation statements, invoices,
ledgers, returns, payment challans.
5. We request that the proposed demand be dropped and that we be
granted a personal hearing before any adverse order is passed.
Thanking you,
[Authorised Signatory]
[Name of business] Date: Place:
You can download a ready reply draft and other GST notice formats free from our formats library. Always adapt the draft to the facts of your notice.
Documents to Keep Ready
- Show cause notice, DRC-01 summary and any earlier DRC-01A or ASMT-10
- GSTR-1, GSTR-3B, GSTR-2A/2B and GSTR-9/9C for the period
- Reconciliation statement for each allegation
- Sales and purchase registers, ledgers, invoices, credit and debit notes
- E-way bills and transport documents, where relevant
- DRC-03 challans for any payment made
- Authorisation letter for the signatory or representative
Common Mistakes to Avoid
- Ignoring the notice: the officer can pass an ex parte order confirming the full demand.
- Missing the reduced-penalty window because payment was delayed.
- Replying only to the DRC-01 summary without reading the detailed SCN.
- Giving a general denial without reconciliation or documents.
- Not raising limitation or wrong-section objections at the reply stage.
- Paying through the regular return but not informing the officer through DRC-03.
How Company Mitra Helps
Our experts review your SCN and DRC-01, check limitation and legal grounds, reconcile your returns with your books, draft a point-wise reply with annexures, file DRC-06 on the portal and help you prepare for the personal hearing. Where some amount is payable, we calculate tax and interest correctly and file DRC-03 within the reduced-penalty window. To avoid future notices, you can hand over monthly compliance to our GST return filing service, and new businesses can start with our GST registration service.
FAQs on GST Notice DRC-01
Is DRC-01 a demand order?
No. It is the summary of a show cause notice that proposes a demand. The demand becomes final only when the officer passes an order, summarised in DRC-07.
In which form do I reply to DRC-01?
In Form GST DRC-06, filed online on the GST portal and verified with DSC or EVC.
What is the time limit to reply?
Reply within the period stated in your notice. If you need more time, request it in writing before that date expires.
Can I avoid penalty by paying?
In non-fraud cases, yes. Paying tax with interest within 30 days of the SCN under Section 73, or within 60 days under Section 74A, means no penalty and the proceedings are concluded.
What is the difference between DRC-01 and DRC-01A?
DRC-01A is an optional pre-notice intimation that gives you a chance to pay or explain before an SCN. DRC-01 is issued with the SCN itself and formally starts adjudication.
What if I do not reply?
The officer can decide the case on the available record and confirm the full tax, interest and penalty, which can then be recovered from your bank account or other assets.
Need help? Chat with our experts on WhatsApp: https://wa.me/919565039651
This article is for general information; please verify with the latest notifications or consult a professional before acting.
