Key takeaways
What this article covers, in order:
- Why do the three returns disagree in the first place?
- DRC-01B: your sales tax doesn't match your payment
- DRC-01C: your ITC is more than GSTR-2B shows
- ASMT-10 and show cause notices
- Which mismatch, which notice?
- How do I stop these happening?
The email subject says "Intimation of difference in liability", and suddenly the GSTR-1 for next month won't file. GST mismatch notices come from the portal comparing three returns that should agree: what you reported as sales in GSTR-1, what you paid in GSTR-3B, and what credit your suppliers reported for you in GSTR-2B. If GSTR-1 shows more tax than GSTR-3B paid, you get DRC-01B. If GSTR-3B claims more ITC than GSTR-2B allows, you get DRC-01C. Both need a reply, payment or explanation, within 7 days. Bigger or older gaps can turn into an ASMT-10 scrutiny notice or a show cause notice.
The good part: almost every one of these is preventable with a monthly half-hour reconciliation. Let's look at each notice, then the routine.
Why do the three returns disagree in the first place?
They're filed at different times, by different people, from different data.
GSTR-1 is your sales, filed by the 11th (or 13th for QRMP). GSTR-2B is your purchases as your suppliers reported them, generated around the 14th. GSTR-3B is your summary and payment, filed by the 20th (or 22nd/24th for QRMP). If your sales register, your purchase register and the portal aren't looked at side by side before the 20th, gaps creep in.
Typical causes:
- A sales invoice in GSTR-1 that someone forgot to include in GSTR-3B (less common now that GSTR-3B liability is auto-filled and locked, but older periods still carry these)
- An invoice added to GSTR-3B by hand that was never put in GSTR-1
- ITC claimed from your purchase register when the supplier hasn't filed yet
- A supplier reporting your invoice under the wrong GSTIN
- Credit notes treated differently in the two returns
- Timing: an invoice dated 31 Mar 2026 reported by the supplier in Apr 2026
DRC-01B: your sales tax doesn't match your payment
What triggers it. Rule 88C. The portal compares the tax liability in GSTR-1 (or IFF) with the tax paid in GSTR-3B for a period. If GSTR-1 is higher by more than the threshold the system is configured for, you get Part A of DRC-01B. The GST Council's original recommendation was a gap of both more than 20% and more than ₹25 lakh, but GSTN describes the threshold as configurable, so don't rely on staying under a number.
What happens if you ignore it. You can't file GSTR-1 or IFF for the next period until you respond. That's the pain point, because a blocked GSTR-1 means your buyers stop getting credit and start ringing you.
How to reply. Part B, within 7 days. You can:
- Pay the difference with interest through DRC-03 and quote the DRC-03 reference, or
- Explain the difference (for example, the invoice was reported in GSTR-1 for Mar 2026 and the tax paid in GSTR-3B for Apr 2026; or a GSTR-1 amendment already corrected it), or
- A mix of both.
Keep the explanation short and factual, with invoice numbers and periods. "Tax on INV/25-26/0981 dated 31 Mar 2026 was paid in GSTR-3B for Apr 2026, ARN ..." is the kind of thing that works.
Is it rarer now? For periods from Jul 2025 onwards, GSTR-3B liability is auto-populated from GSTR-1, GSTR-1A and IFF and can't be edited, so a fresh GSTR-1 vs GSTR-3B gap is much harder to create. Older periods can still throw these up.
DRC-01C: your ITC is more than GSTR-2B shows
What triggers it. Rule 88D. If the ITC you claimed in GSTR-3B is more than what's available in GSTR-2B for that period, beyond the configured threshold, you get Part A of DRC-01C.
What happens if you ignore it. Again, your GSTR-1 for later periods gets blocked.
How to reply. Part B, within 7 days. Either pay back the excess ITC with interest through DRC-03, or explain. Valid explanations include ITC on imports (which comes through a different route), ITC reclaimed after an earlier reversal, credit relating to invoices from an earlier period that only appeared in this GSTR-2B, or a supplier whose GSTR-1 was filed late but has now appeared.
Why it's the more common one now. Your ITC in Table 4 is still editable in GSTR-3B, and many people fill it from their own purchase register. Since GSTR-2B is the legal limit, any claim beyond it is exposed.
ASMT-10 and show cause notices
DRC-01B and DRC-01C are automatic. An ASMT-10 is a scrutiny notice issued by an officer after reviewing your returns, often for a full financial year, and it can cover several mismatches at once: GSTR-1 vs GSTR-3B, GSTR-3B vs GSTR-2B, GSTR-3B vs e-way bills, even GSTR-3B vs your income tax data. You reply in ASMT-11 within the time given (usually 30 days).
If the explanation isn't accepted, the next step is a show cause notice demanding tax, interest and possibly penalty. This is firmly CA territory. Don't reply to an ASMT-10 or a show cause notice off the cuff.
Which mismatch, which notice?
| Comparison | Notice | Typical cause | First fix |
|---|---|---|---|
| GSTR-1 tax more than GSTR-3B tax | DRC-01B | Sales left out of 3B, period differences | Pay via DRC-03 or explain with invoice references |
| GSTR-3B ITC more than GSTR-2B ITC | DRC-01C | Claiming from purchase register, supplier not filed | Pay back excess or explain timing and import credit |
| Several gaps across a year | ASMT-10 | Pattern of mismatches | Reconcile the whole year, reply with your CA |
| GSTR-3B sales less than e-way bills or e-invoices | ASMT-10 or SCN | Unreported sales, cancelled bills not cancelled | Reconcile e-way bills, cancel unused ones in time |
How do I stop these happening?
Here's the routine we'd suggest, around 30 minutes a month for a small business.
By the 10th: check every sales invoice is in your books, with the right GSTIN and place of supply. File GSTR-1 from that same data.
By the 14th: open IMS and act on supplier invoices. Reject the ones that aren't yours, keep pending the ones you're not sure about.
15th to 18th: download GSTR-2B and match it to your purchase register. List the missing invoices and message those suppliers.
Before filing GSTR-3B: confirm liability equals GSTR-1 (it should, since it's locked). Set ITC in Table 4 to what GSTR-2B supports, not more. Note any differences and why.
Once a quarter: compare GSTR-1 totals, GSTR-3B totals and your books for the quarter. Check e-way bills against sales if you use them.
Ankit runs an auto-parts shop in Coimbatore with ₹90 lakh turnover. Illustrative, but typical: he was claiming ITC every month from his own purchase entries. Two of his suppliers filed late most months, so his GSTR-3B ITC ran about ₹40,000 ahead of GSTR-2B. Under the threshold, so no DRC-01C arrived. Then the scrutiny for FY 2024-25 added it all up. One small monthly gap became an annual ₹4.8 lakh question. Matching to GSTR-2B every month would have avoided all of it.
Mismatch prevention checklist
- [ ] GSTR-1 filed from the same data as your books
- [ ] IMS reviewed before the 14th
- [ ] GSTR-2B reconciled to purchases every month
- [ ] Table 4 ITC no higher than GSTR-2B (with documented exceptions)
- [ ] Late suppliers chased in writing
- [ ] Credit notes reported the same way in both returns
- [ ] Unused e-way bills cancelled
- [ ] Notes of every known difference kept for the annual return
- [ ] Any DRC-01B or DRC-01C answered within 7 days
How HelloBooks helps
HelloBooks prepares GSTR-1 and GSTR-3B from the same invoices and bills, so the two start out consistent rather than being typed up separately. GSTR-2B reconciliation with ITC tracking is on the Free plan, so you can see which purchase bills are matched, missing or different before you claim. Then you file GSTR-1 and GSTR-3B directly to the GST portal from inside HelloBooks for one GSTIN. Your CA can be invited into the same books when a notice needs a proper reply. More on the GSTR-2B reconciliation page and GSTR returns.
FAQs
How long do I have to reply to DRC-01B or DRC-01C?
7 days from the intimation. If you don't, your GSTR-1 or IFF for later periods is blocked until you respond.
Can I reply partly with payment and partly with explanation?
For DRC-01B, yes, a combination is allowed. For DRC-01C, you can pay the excess or explain; check the options shown on the portal for your case.
Will a small mismatch trigger a notice?
The automatic intimations work on thresholds the system is configured for. Small gaps may not trigger DRC-01B or DRC-01C, but they still add up in an annual scrutiny. Fix them anyway.
I got DRC-01C because my supplier filed late. What do I say?
Explain that the invoice appears in GSTR-2B of a later period, give the invoice number, date and the period it now shows in. That's a common and accepted reason.
Is ASMT-10 the same as a show cause notice?
No. ASMT-10 is a scrutiny notice asking you to explain discrepancies. A show cause notice comes later if the explanation isn't accepted, and it demands tax, interest and penalty.
Reconcile monthly and these notices mostly stop being something you have to think about.
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