GST DRC-01 Show Cause Notice: A Practical Reply Guide

Form DRC-01 is the show cause notice issued under GST when the department proposes a tax demand along with interest and penalty. It is preceded in many cases by DRC-01A (an intimation) and, for input tax credit mismatches, by DRC-01C. Treat it seriously — an unanswered DRC-01 usually leads to an adverse order in DRC-07.

Common triggers

• Input tax credit mismatch between GSTR-2B and GSTR-3B.
• Difference in turnover reported in GSTR-1 versus GSTR-3B.
• Alleged excess or ineligible ITC, or non-payment of tax.

How to reply

File your reply within the time allowed on the GST portal, addressing each ground with reconciliations and documentary proof — invoices, ledgers, e-way bills and payment records. Where the demand is factually or legally wrong, say so clearly and support it. If a personal hearing is offered, use it.

Don't lose your credit by default

Many demands are the result of reconciliation gaps rather than actual evasion. A precise, evidence-backed reply often reduces or removes the demand entirely.

Read our related guide on responding to income tax scrutiny, and check notice formats on the official GST portal.

Received a DRC-01 or DRC-01C? Talk to our GST team before the reply window closes.