What is GSTR-3B and when is it due?

GSTR-3B is a monthly self-declared summary GST return. For regular taxpayers, it is due by the 20th of the following month. Late filing attracts ₹50/day late fee (₹25 CGST + ₹25 SGST), capped at ₹5,000.

How do I reply to a DRC-01 GST notice?

DRC-01 is a show-cause notice for tax demand. Log in to GST portal, go to Services > User Services > View Additional Notices, select the notice and file a reply within 30 days — either agreeing and paying, or disputing with supporting documents.

What is the late fee for filing GSTR-1 late?

Late fee for GSTR-1 is ₹50/day (₹25 CGST + ₹25 SGST). For nil returns it is ₹20/day. Maximum cap is ₹10,000 per return. GSTR-1 is due by the 11th of each month for monthly filers.

Can I claim ITC on hotel and restaurant bills?

ITC on restaurant food and beverages is blocked under Section 17(5) CGST Act — not claimable. However, ITC on hotel accommodation is allowed if used for business purposes and the hotel provides a GST invoice with your GSTIN.

What is the GST registration threshold in India?

GST registration is mandatory if annual aggregate turnover exceeds ₹40 lakhs for goods (₹20 lakhs for special category states) or ₹20 lakhs for services (₹10 lakhs for special category states). E-commerce sellers must register regardless of turnover.

DRC-01A vs DRC-01 vs DRC-07 — Complete GST Notice Guide 2026

sai krishna
Jun 27
4 min read

Last updated: June 2026 | Written by a State Tax Officer, Commercial Taxes Department, Telangana

The Short Version

DRC-01A is a pre-notice intimation — an informal warning before the formal show cause notice. DRC-01 is the actual Show Cause Notice demanding tax. DRC-07 is the final demand order that makes the tax recoverable. Each escalates from the previous. Most businesses can resolve matters at DRC-01A or DRC-01 stage and never reach DRC-07.

DRC-01A — The Pre-Show Cause Intimation

DRC-01A is issued under Rule 142(1A) of the CGST Rules, 2017. It is not a mandatory notice — the officer may issue it before a formal SCN. It gives the taxpayer a chance to either pay voluntarily or submit a representation before DRC-01 is issued.

Two options on receiving DRC-01A:

Option A — Accept and pay: File DRC-03 (voluntary payment) for tax + interest. This often avoids the formal SCN stage entirely and carries zero penalty.
Option B — Disagree and represent: Submit a written response explaining why the demand is incorrect. The officer will then decide whether to proceed with DRC-01 or drop the matter.

There is no prescribed statutory form for the DRC-01A reply. A written representation addressed to the proper officer, with supporting documents and legal grounds, is the standard practice.

Key point: DRC-01A is your cheapest exit. Penalty is zero if you pay at this stage. Use Option A when the discrepancy is genuine. Use Option B when you have a strong factual or legal defence.

DRC-01 — The Show Cause Notice

DRC-01 is a Show Cause Notice (SCN) issued under Section 73 or Section 74 of the CGST Act, or from FY 2024-25 onwards, under the newly unified Section 74A. Receiving DRC-01 means the officer has completed preliminary assessment and believes tax is owed.

Section 73 vs Section 74 vs Section 74A

Section 73 (up to FY 2023-24): Non-fraud cases. Tax not paid, short paid, or ITC wrongly claimed without any intent to defraud. Penalty: 10% of tax or ₹10,000, whichever is higher.
Section 74 (up to FY 2023-24): Fraud, wilful misstatement, or suppression of facts. Penalty: 100% of the tax demanded.
Section 74A (FY 2024-25 onwards): Unified provision replacing both 73 and 74. Penalty slab depends on whether fraud is alleged. Per CBIC Circular 254/11/2025, the AC/DC bracket covers CGST demands of ₹10 lakh to ₹1 crore.

How to Reply to DRC-01

Read the SCN carefully. Note the section invoked (73 or 74 or 74A), the tax period, and the exact demand amount.
File your reply in Form DRC-06 on the GST portal within 30 days of the SCN date.
Attach all supporting documents: GSTR-2B, purchase register, reconciliation, invoices, DRC-03 payment receipt (if partially accepting).
Request a personal hearing in your DRC-06 reply. The officer is required to provide an opportunity of hearing under Section 75(4).
If you wish to pay and close, pay the full demand + interest via DRC-03 and inform the officer. This ends the proceedings.

Limitation periods for DRC-01: Under Section 73, the SCN must be issued within 3 years from the due date of the annual return. Under Section 74, within 5 years. Any DRC-01 issued beyond these periods is legally challengeable.

DRC-07 — The Final Demand Order

DRC-07 is the adjudication order passed after the officer evaluates the DRC-06 reply and conducts a hearing. It confirms the final tax, interest, and penalty payable. Once DRC-07 is issued, the amount appears in your Electronic Liability Ledger as a confirmed, recoverable demand.

If you disagree with DRC-07, you have 3 months to file an appeal in Form GST APL-01 before the Appellate Authority. A pre-deposit of 10% of the disputed tax is required to file the appeal.

Do not ignore DRC-07. Recovery proceedings under Section 79 can begin after the order: attachment of bank accounts, property, or third-party debt recovery.

DRC-01A vs DRC-01 vs DRC-07 — Side-by-Side Comparison

DRC-01A: Rule 142(1A) | Pre-SCN intimation | Two options: pay via DRC-03 or submit representation | Penalty: zero | Stage: pre-adjudication

DRC-01: Section 73 / 74 / 74A | Show Cause Notice | Reply in DRC-06 within 30 days | Penalty: 10% (Sec 73) or 100% (Sec 74) | Stage: adjudication

DRC-07: Section 73 / 74 | Final demand order | Appeal in APL-01 within 3 months (10% pre-deposit) | Penalty: confirmed | Stage: post-adjudication, recovery

Frequently Asked Questions

Is DRC-01A mandatory before DRC-01?

No. DRC-01A is optional. The officer can issue DRC-01 directly. DRC-01A is typically issued in cases coming from ASMT-10 scrutiny or where the department wants to give the taxpayer a chance to settle before formal proceedings.

Can I pay after receiving DRC-01 to reduce penalty?

Yes. If you pay the full demand via DRC-03 before the SCN is adjudicated (before DRC-07 is issued), the penalty under Section 73 cases reduces to 25% of the demand. Under Section 74 fraud cases, it reduces to 50% if paid before the adjudication order. These concessions are under provisos to Sections 73 and 74.

What is the difference between DRC-03 and DRC-06?

DRC-03 is a payment form used for voluntary tax payment at any stage (DRC-01A, DRC-01, or even ASMT-10). DRC-06 is the reply form specifically for responding to a DRC-01 show cause notice. You often file both together: pay via DRC-03, then reference the payment in your DRC-06 reply.

Which officer has jurisdiction to issue DRC-01 for large demands?

Under CBIC Circular 254/11/2025 and Section 74A (applicable from FY 2024-25 onwards), the Assistant Commissioner or Deputy Commissioner handles CGST demands between ₹10 lakh and ₹1 crore (IGST: ₹20 lakh to ₹2 crore). Demands below ₹10 lakh CGST go to the Superintendent. Demands above ₹1 crore CGST go to the Joint Commissioner.

Can DRC-07 be challenged in court?

Yes, but exhaust the administrative appeal route first. File APL-01 before the Appellate Authority within 3 months of DRC-07. If that fails, APL-05 goes to the Appellate Tribunal (GSTAT). Only after exhausting both tiers can a writ petition to the High Court be filed. Courts generally direct taxpayers back to the statutory appellate process.

Summary

Resolve at DRC-01A if you can — zero penalty, and it keeps the formal SCN from being issued. If DRC-01 arrives, file DRC-06 within 30 days with full documentation and request a hearing. If DRC-07 is issued against you, file APL-01 within 3 months with 10% pre-deposit. At every stage, the cost of action is lower than the cost of ignoring.

For more guides on GST notices, ITC reconciliation, and return filing, visit gstvala.com. All content is free, written by GST enforcement professionals with field experience.