written by Khatabook | June 25, 2021

DRC 03 Applicability and Procedure To Pay Additional Tax

DRC full form in GST is Demand and Recovery Forms. It may happen that certain GST liability was not recorded while filing GST returns. Later, such errors may come to your notice and need to be corrected. Now, these errors can be rectified in two ways. Either you notice the error and voluntarily correct it or you get a Show Cause Notice (SCN) for the same. When you get a Show Cause Notice (SCN), you should pay it and make necessary corrections within 30 days. The government provides a facility to correct such errors in Form DRC 03.

Applicability for Paying Tax in Form DRC 03

CAUSES

EXPLANATION

1. Audit/ Reconciliation Statement

The auditor conducts an audit for a year. If he observes any case of GST not paid, then the taxpayer shall pay on their own through form DRC 03 in GST. This payment includes taxes, interest and penalties. This could happen in case of more credit claimed or fewer sales shown than the actual.

2. Investigation & others

While investigating, if it is found that the taxpayer has made less payment of tax, then he can solve his error. Form DRC03 offers an option to make such payments.

3. Annual Return

Before filing the annual return, a mismatch report is made for finding any errors. In case any errors are noticed, the taxpayer can rectify them in the DRC 03 payment facility provided. 

4. Demand or response to show cause notice

There are two cases where SCN can come into the picture- Section 73 and Section 74:

Section 73(5) voluntary in GST,  when tax is not paid or paid less in cases other than the intention of fraud.

Section 74 when tax is not paid or paid less in case of the intention of fraud.

So you can pay the amount of tax, interest or penalty within 30 days of SCN in Form GST DRC 3.

You can also make the payment before receiving the SCN. DRC-03 allows for payment on a self-declaration basis as per Section 73(5) GST.

5. Liability or ITC mismatch

Liability mismatch occurs when GSTR 1 and GSTR 3B sales data of taxpayer does not match with each other. Here, the taxpayer can pay the difference amount in GST DRC 03. This reason can be selected if a taxpayer has received a notice and agrees with such differences.

ITC Mismatch means that GSTR 2A/2B does not match with GSTR 3B after the extra 5% credit allowed as per CGST Rule 36(4). This may result in reduced tax payment if more purchases are shown. The GST Authority may send a notice in case of such a mismatch. If the taxpayer agrees, then he can pay the amount in GST DRC 3 by mentioning such a reason for the same.

You can use the balances in the Electronic Ledgers for the payment of tax. But, you can only pay cash for payment of interest and penalty.

Also Read: All About Reverse Charge Under GST

How to file DRC 3 in GST

Login into GST Portal (www.gst.gov.in) using the login ID and password. Then under the ‘Services’ tab, go to ‘User Services’ and click on ‘My Applications’ as shown below.

The next step involves choosing from the three cases for a taxpayer to make payment.

Let’s look at the steps in each case.

Case 1 - No payment made and no Payment Reference Number (PRN) generated

  1. Step 1 - Under the Application Type, select ‘Intimation of Voluntary Payment – DRC – 03’ and click ‘New Application’.

  1. Step 2 - Taxpayer will have to select any one of the two options- 
    • Voluntary payment- the date of payment will appear without giving you an option to edit.
    • Payment against SCN- Enter the SCN Number. Select the date of issue and make this payment in 30 days.

You can save this application of intimation of payment at any stage of completion. The maximum period of saving is 15 days. After the 15th day, the GST portal will remove it from the database.

  1. Step 3 - Choose the section, choose the financial year and the start and end date of the period for which tax is being paid.
  2. Step 4 - Select the payment period, type of the GST - CGST, SGST, IGST or UTGST, Place of Supply. Enter the amount of tax, interest and penalty. You can include additional details by clicking on the ‘Add’ button. Then click on ‘Proceed to Pay’.

  1. Step 5 - Page for voluntary details will display into 3 sections as follows:
    • Liability details
    • Cash Ledger Balance
    • Credit Ledger Balance

Liability details - You can see your liability in this section.

Cash Ledger Balance - You can view the cash available in your Electronic cash ledger as of that date. This can be used for adjusting the payment for which you are liable. Enter the amount under the relevant tabs.

Credit Ledger Balance - You can see the amount available as credit of purchases and expenses. A taxpayer can enter the amount of liability payable through ITC and click on ‘Set-Off’.

  1. Step 6 - After clicking on ‘Set-off’, a pop-up screen will appear. It will mention that payment is successful by utilizing cash and credit balance. Then click ‘Ok’, you will receive a PRN along with a message of successful payment.

In case PRN does not appear, then you can find it from the ‘Electronic Liability Register’ 

Go to Services > Ledgers > Electronic Liability Register

  1. Step 7 - You can also view the draft DRC in GST. Click on ‘Preview’ under ‘Intimation of payment made voluntarily or against SCN’

  1. Step 8 - You can provide any reasons and attach files if you want to. You have to enter ‘Place’, select ‘Authorized Signatory’ and click ‘File’. Then you can use DSC or EVC through OTP sent on registered mail id or mobile number. After filing you will receive a successful message along with ARN.

Also Read: GSTR 9C : Reconciliation Statement & Certificate - Format, Filing & Rules

Case 2 - PRN is generated and is unutilized and makes payment within 30 minutes of generating PRN

  1. Step 1 - You have to follow the same procedure as in Case 1 till the screen ‘Intimation of payment made voluntarily or against SCN’.
  2. Step 2 - In the question asked as ‘Have you made payment?’ select ‘Yes’ and enter the PRN.
  3. Step 3 - You will get a link ‘Get payment details’. Click on it and all details will be auto-populated based on payment made.
  4. Step 4 - You can view draft DRC 3 GST by clicking on ‘Preview’ and follow the steps as per case 1 for applying.

Also Read: GST Certificate Download – Download from gst.gov.in

Case 3 - PRN is generated and is unutilized and payment is made after 30 minutes of generating PRN

  1. Step 1 - You have to follow the same procedure as in Case 1 till the screen ‘Intimation of payment made voluntarily or against SCN’.

  1. Step 2 - In the question asked, ‘Have you made payment?’ select ‘Yes’ and enter the PRN.
  2. Step 3 - ‘Get payment details’ will appear. Select it and enter details unlike Case 2 where details were auto-populated.

The system will check the amount entered and accept if it matches.

You can view draft DRC 3 GST by clicking on ‘Preview’ and follow the steps as per case 1 for applying.

For Case 2 and 3, if PRN is already utilized, an error message is displayed. Then the taxpayer has to enter another PRN which is not utilized.

Also Read: GST Rates in India - List of Goods and Service Tax Rates, Slab

Conclusion

After filing of DRC 03, the status will change to ‘Pending for approval by Tax officer’. The taxpayer will receive an acknowledgement in Form GST DRC 04. Different DRC number forms are available for different scenarios under GST.

FAQs

How can I make voluntary payment based on self-ascertainment?

You can make a voluntary payment of the liability by using Form DRC-03 GST.

You can log in on the GST website and click the tabs as under:

Services> User Services> My Applications> Intimation of Voluntary Payment-DRC-03 option.

Is there any option of saving intimation of voluntary payment?

Application of intimation of voluntary payment can be saved for a maximum of 15 days. Thereafter, the system will remove the data saved. You can view your saved application as:

Services> User Services>My Saved Applications option

How will Electronic Ledgers be affected after filing DRC 3 GST?

The balances in Electronic Liability Register, Electronic Cash ledger and Electronic Credit Ledger will get updated according to the entry. A PRN will also be generated.

What can I do in case of insufficient balance for payment of liability as mentioned in SCN?

You can pay the insufficient balance through Electronic Cash Ledger. On the voluntary payment screen, you can select “Create Challan”. Then GST site will redirect you to the Payment mode. You can fill in the required amounts under appropriate tabs and make payment. Once you have made the payment, you can see this amount in your Electronic Cash Ledger. You can use this to pay the liability as mentioned in SCN.

Can I make a partial payment of the liability mentioned in SCN?

GST Portal does not allow for making partial payments for SCN amounts.

mail-box-lead-generation

Got a question ?

Let us know and we'll get you the answers

Please leave your name and phone number and we'll be happy to email you with information

Related Posts

Difference Between VAT and GST

Difference Between VAT and GST


GST on PPE in India: GST on Face Masks, Sanitisers and Handwash

GST on PPE in India: GST on Face Masks, Sanitisers and Handwash


E-Invoicing for Businesses with Turnover Over Rs.50 Crore

E-Invoicing for Businesses with Turnover Over Rs.50 Crore


Time, Value & Place for Supply for Goods & Services under GST

Time, Value & Place for Supply for Goods & Services under GST


Know About the GST on Motor Cars and Light Motor Vehicles

Know About the GST on Motor Cars and Light Motor Vehicles


Key Aspects of Invoice Furnishing Facility (IFF)

Key Aspects of Invoice Furnishing Facility (IFF)


Effect of GST Rate on Cement Industry

Effect of GST Rate on Cement Industry


What is GST Amnesty Scheme? GSTR-3B Late Fee Relief, Benefits, Eligibility, and Last Date

What is GST Amnesty Scheme? GSTR-3B Late Fee Relief, Benefits, Eligibility, and Last Date


What is EWay Bill? How to Download the EWay Bill in PDF Format?

What is EWay Bill? How to Download the EWay Bill in PDF Format?