Form DRC-01B – Online Compliance Covering Liability

Goods Services Tax (GST) is an indirect tax that replaces multiple taxes levied by the different tiers of government such as; such as the excise duty, VAT, services tax, etc. Introducing GST in India aimed to create a unified tax structure which makes it a single domestic indirect tax law. GST is levied on the supply of goods and services.

To ensure compliance with GST, GSTR-1 and GSTR-3B play a crucial role.  One aspect of GST compliance involves aligning the differences between GSTR-1 (the return for outward supplies) and GSTR-3B (the summary return of inward and outward supplies. Filing these forms accurately is required to stay compliant and avoid penalties. This is where Form DRC-01B comes into the picture. Form-DRC-01B has been introduced to address discrepancies and rectify the liability differences between GSTR-1 and GSTR-3B.

This form allows businesses to rectify errors and maintain accurate records. These forms contribute to the coherence of the GST registration framework in India. In this article, we are going to provide you insights into Form DRC-01B, the procedure and requirements to fill the form and the difference between GSTR-1 and GSTR-2.

A Brief Outlook on Form DRC-01B

The government added a new rule, i.e., Rule 88C, in December 2022 to the Central Goods and Services Tax (CGST) Rules. Form-DRC-01B directly notifies the taxpayers about the mismatch between their GSTR-1 (sales details) and GSTR-3B (tax payment). Form DRC-01B is required to be filled out to rectify the errors and avoid any penalties or legal repercussions.     

Form DRC-01B facilitates the taxpayers to address the differences in liability between two important elements of GST; GSTR-1 and GSTR-3B. Understanding the differences between these two is very crucial for intact tax compliance. Form DRC-01B serves as a mechanism for:

• Identifying discrepancies
• Rectifying errors
• Ensuring compliance with GST provisions

The form ensures that businesses and the GST authorities are on the same page in the matter of tax dues and payments.

Form DRC-01B is a two-part compliance form:

• Part A: Issued by the tax department to notify about discrepancies.
• Part B: Submitted by the taxpayer to explain or reconcile the issues.

Applicability of Form- DRC-01B

Form DRC-01B is applicable to any GST-registered taxpayers, including;

• Regular Taxpayers
• SEZ Developers, SEZ Units
• Casual Taxpayers
• Taxpayers opting for composition scheme

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When is Form DRC-01B Issued?

The department directly sends a notice using Part A of Form GST DRC-01B if;

• The tax reported in GSTR-1 is higher than what was paid in GSTR-3B by a certain amount or percentage.
• There is an empty invoice or taxable amount in GSTR-3B.

Procedure to Fill out Part-B of the Form DRC-01B

The overview of the process to reply in Part B of the form DRD-01B is given below;

• To access the form DRD-01B, log in to the GST portal using their credentials
• Go to ‘Services’ then ‘Return’ and choose ‘Return Compliance’ from the available options.
• You will see a form ‘Liability Mismatch 01B’. Click on View.
• This presents a detailed page including reference number, form type, financial year, return period, and status. Click the hyperlink on the reference number, which will direct you to Liability Mismatch, DRC-01B.
• The form contains two parts; Part A – Intimation of difference in liability as reported in the statement of outward supplies (GSTR-1) and that reported in return (GSTR-3B) and Part B – Reply by the taxpayer regarding intimation of difference in liability.
• Part A cannot be modified, start filling the Part B of the form-
• In case you agree with the difference, make a payment and upload the proof.
• In case you don’t agree, provide a valid reason for it.
• In case you accept a part of the difference, then make payment of the part and for the remaining, give your reasoning.
• Select the declaration checkbox and the name of the authorized signatory from the drop-down list and enter the place of signing.
• Save the response.  
• Now Click on File DRC-01B.

Time Frame to File Form DRC-01B

When you receive a notice as a warning, you are required to pay the extra tax and any interest due or explain the differences within seven days using Part B of the form DRC-01B. 

Applicable Penalties for Non-filing of Form DRC-01B

On the failure to reply to the notice on time or fulfill your obligation, GSTR-1 gets blocked until you pay the specified amount. Form DRC-01B emphasizes the importance of accurate GST filings.   

GSTR-1: Outward Supply Return

GSTR-1 is a report reflecting all the sales business made during a specific period whether to other businesses or directly to customers. GSTR-1 is required to be filed every month or quarterly to declare the outward supplies of goods and services. It includes details of:

• Invoices issued
• Credit and debit notes
• Zero-rated supplies

 This form is crucial as it reflects the sales data that customers use to claim input tax credit (ITC). It helps to keep track of the business’s revenue.

GSTR-3B: Summary Return

GSTR-3B is a summary return that a business files to report its sales. This is required to be filed every month which ensures the discharge of GST liability on time. GSTR-3B gives an overview of the business’s total turnover which includes;

• Total sales
• Total tax liability
• Input tax credit claimed

Difference between GSTR-1 and GSTR-3B

Knowing the differences between GSTR-1 and GSTR-3B helps you manage your taxes well. Following is the table comparison between GSTR-1 and GSTR-3B;

In the Nutshell

In conclusion, Form DRC-01B is an essential tool for GST compliance which has been introduced to address discrepancies and rectify the liability differences between GSTR-1 and GSTR-3B. Understanding the differences between GSTR-1 and GSTR-3B helps businesses manage their taxes well. Form DRC-01B contributes to the coherence of the GST framework and fosters a healthier tax ecosystem in India.

To get expert assistance in GST registration and GST return filing, visit https://corpbiz.io/.

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